The Economics of Piero Sraffa: A Critique from the Economics of Belonging

<p><span>This paper revisits the legacy of Piero Sraffa and offers a systematic critique from the Economics of Belonging. It argues that neither Sraffa nor standard neoclassical theory adequately explains how real economies function because both neglect equilibrium selection.</span></p> <p><span>The paper makes three central contributions:</span></p> <ol> <li><span>It shows that Sraffa’s value theory cannot serve as a general price theory without incorporating monetary markets and effective demand.</span></li> <li><span>It demonstrates that capital demand remains well-behaved within equilibrium, despite reswitching.</span></li> <li><span>It introduces a new framework where institutions, trust, and belonging determine which equilibrium prevails.</span></li> </ol> <p><span>The core insight is that economies are not defined by a single equilibrium but by a set of possible equilibria, and that institutional arrangements determine economic performance, distribution, and stability. This provides a new foundation for understanding growth, crises, and development.</span></p>