Further developments of Sraffa's system on fixed capital, rent, and joint products

All the findings of this paper derive from the application of fiscal measures to Sraffa’s system. The first result depends on the development of my thesis in 1974, where I studied methods of taxation to modify work shifts. Here it is obvious to make endogenous the duration of plants, when Sraffa’s system is adopted. This gives origin to a situation in which in the last period of operation only intermediate input and labour are relevant for prices. Therefore it is possible the reduction to labour also for fixed capital, and prices may be interpreted in terms of minimization of the present value of incorporated labour. The second result regards taxation of rent in the case of exhaustible minerals. It is found a model for the determination of prices, which differs from Sraffa’s one. In particular, it is no more true that taxation rests on rent, since price and quantities are modified, with constant returns. The third result regards joint products. While in Sraffa’s system the taxation is totally translated into the price of the hit product, this does not hold in the new model, where demand becomes very important for prices. Though, it is not a marginalist outcome, since returns are constant. All these things imply a deep modification of Sraffa’ system. It is shown that alternative three parts are possible. The first part is very similar to the actual one, save the interpretation of prices. The second part regards fixed capital and the change of techniques, which now resemble in their working. The third part regards the role of demand, which is very different though from marginalism. Here there is the place for rent and joint production.