“You say I don’t see how demand can be said to have no influence on prices, unless constant returns. I take it that the drama in enacted on Marshall’s stage where claimants for influence are utility and cost of production. Now utility has made little progress since the 1870s towards acquiring a tangible existence and survives in textbooks at the purely subjective level. On the other hand, cost of production has successfully survived Marshall’s attempt to reduce it to an equally evanescent nature under the name of disutility, and is still kicking in the form of hours of labour, tons of raw materials, etc. This rather than the relative slope of the two curves, is why it seems to me that the influence of the two things on price is not comparable.”
King’s College King’s Parade Cambridge 27.10.1936 Dear Joan, Many thanks for your letter – it is a valuable addition to my museum and I shall hang it next to an extract from Sidgwick where, after lecturing Ricardo on a quantity of labour, he goes on cheerfully himself to talk of quantities of utility. If one measures labour and land by heads or acres the result has a definite meaning, subject to a margin of error: the margin is wide, but it is a question of degree. On the other hand if you measure capital in tons the result is purely and simply nonsense. How many tons is, e.g., a railway tunnel? If you are not convinced, try it on someone who has not been entirely debauched by economics. Tell your gardener that a farmer has 200 acres or employs 10 men – will he not have a pretty accurate idea of the quantities of land & labour? Now tell him that he employs 500 tons of capital, & he will think you are dotty – (not more so, however, than Sidgwick or Marshall). Yours P.S.   — Letter from Piero Sraffa to Joan Robinson, quoted in Harcourt, G.C. (1997). A “Second Edition” of the General Theory, vol. 1. New York: Routledge, p. 131.

King’s College

King’s Parade

Cambridge

27.10.1936

Dear Joan,

Many thanks for your letter – it is a valuable addition to my museum and I shall hang it next to an extract from Sidgwick where, after lecturing Ricardo on a quantity of labour, he goes on cheerfully himself to talk of quantities of utility.

If one measures labour and land by heads or acres the result has a definite meaning, subject to a margin of error: the margin is wide, but it is a question of degree. On the other hand if you measure capital in tons the result is purely and simply nonsense. How many tons is, e.g., a railway tunnel?

If you are not convinced, try it on someone who has not been entirely debauched by economics. Tell your gardener that a farmer has 200 acres or employs 10 men – will he not have a pretty accurate idea of the quantities of land & labour? Now tell him that he employs 500 tons of capital, & he will think you are dotty – (not more so, however, than Sidgwick or Marshall).

Yours

P.S.

 

— Letter from Piero Sraffa to Joan Robinson, quoted in Harcourt, G.C. (1997). A “Second Edition” of the General Theory, vol. 1. New York: Routledge, p. 131.