A comment on ‘The Sraffian Methodenstreit and the revolution in economic theory’

This is a comment on Nuno Martins’ review article of my book: A Revolution in Economic Theory: The Economics of Piero Sraffa. It clarifies the confusion with respect to Sraffa’s prices and the classical notion of ‘long-term natural prices’ based on the idea of gravitation of ‘market prices’ to ‘natural prices’.

The Methodology of Wealth of Nations

This chapter aims to give an interpretation of Adam Smith’s main methods in Wealth of Nations. It does so by focusing on the crucial analytical distinction between natural prices and market prices. Smith postulates a “natural course” of events in order to stimulate research into institutions and other causes that cause actual events to deviate from it. For Smith, scientific theory is among other functions, a research tool that allows for a potentially open-ended process of successive approximation. Smith’s explanation of the introduction of commerce in Europe is contrasted with that of his friend and forerunner David Hume. Hume’s essay “Of the Populousness of Ancient Nations” may have inspired Smith to develop his method.