Marx and the other Sraffa : the insignificant empirical effect of price-value deviations on economic aggregates

Sraffa's elegant book transformed the treatment of prices of production. He showed that at a theoretical level prices of production and wage-profit curves were capable of complex movement, and the wage-profit frontiers could exhibit reswitching and reverse capital deepening. These results were used to criticize both neoclassical theory and Marx. The material in Sraffa’s archives came as a shock because it showed that he believed, before and after the publication of his book, that Marx was correct in thinking that labor value and price aggregates would be essentially the same at the empirical level. This chapter shows that major economic aggregates derived from six input-output tables between 1947 and 1998 are indeed very close at observed profit shares, and even within a wide range of socially feasible profit shares. Sraffa was correct about Marx being correct.