Economics Dictionary of ArgumentsHome
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| Barter economy: A barter economy is a system where goods and services are directly exchanged without using money. Transactions rely on mutual needs and the "double coincidence of wants," making it less efficient than monetary economies. Barter was prevalent in early societies and is still used in limited contexts today._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Piero Sraffa on Barter Economy - Dictionary of Arguments
Kurz I 112 Barter Economy/Sraffa/Kurz: With reference to Wicksell’s definition (Wicksell 1898, pp. 93ff)(1) that interest is the surplus in real units of the exchange of physically homogeneous goods across time, Sraffa emphasized that If money did not exist, and loans were made in terms of all sorts of commodities, there would be a single rate which satisfies the conditions of equilibrium, but there might be at any moment as many “natural” rates of interest as there are commodities, though they would not be “equilibrium” rates. The “arbitrary” action of the banks is by no means a necessary condition for the divergence; if loans were made in wheat and farmers (or for that matter the weather) “arbitrarily changed” the quantity of wheat produced, the actual rate of interest on loans in terms of wheat would diverge from the rate on other commodities and there would be no single equilibrium rate. (Sraffa 1932, p. 49)(2). Next Sraffa illustrated his argument in terms of two economies, one with and the other without money. In both economies, loans can be made in terms of all goods for which forward markets exist. Assume that a cotton spinner at time t borrows a sum of money M for θ periods hence in order to buy on the spot market a certain quantity of cotton at price pt which he at the same time sells on the forward market θ periods later at a price pt+θ. This means that the cotton spinner in fact borrows cotton for θ periods. Sraffa expounds: The rate of interest which he pays, per hundred bales of cotton, cotton, is the number of bales that can be purchased with the following sum of money: the interest on the money required to buy spot 100 bales, plus the excess (or minus the deficiency) of the spot over the forward prices of the 100 bales. (Sraffa 1932, p. 50)(2) >Barter economy/Hayek. Kurz I 113 Equilibirum/SraffaVsHayek: In equilibrium the spot and forward price coincide, for cotton as for any other commodity; and all the “natural” or commodity rates are equal to one another, and to the money rate. But if, for any reason, the supply and the demand for a commodity are not in equilibrium (i.e. its market price exceeds or falls short of its cost of production), its spot and forward prices diverge, and the “natural” rate of interest on that commodity diverges from the “natural” rates on other commodities. (ibid.) Therefore, out of equilibrium, there is not only one “natural rate,” as Hayek had wrongly maintained, but there are many natural rates. Sraffa added that “under free competition, this divergence of rates is as essential to the effecting of the transition [to a new equilibrium] as is the divergence of prices from the costs of production; it is, in fact, another aspect of the same thing”. (Sraffa 1932, ibid.)(2). 1. Wicksell, K. (1898). Geldzins und Güterpreise, Jena: Gustav Fischer. 2. Sraffa, P. (1932). “Dr. Hayek on Money and Capital,” Economic Journal, 42, 42-53. Kurz, Heinz D. „Keynes, Sraffa, and the latter’s “secret skepticism“. In: Kurz, Heinz; Salvadori, Neri 2015. Revisiting Classical Economics: Studies in Long-Period Analysis (Routledge Studies in the History of Economics). London, UK: Routledge._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Sraffa I Piero Sraffa Production of Commodities by Means of Commodities. Prelude to a Critique of Economic Theory (Cambridge: Cambridge University Press). Cambridge 1960 Kurz I Heinz D. Kurz Neri Salvadori Revisiting Classical Economics: Studies in Long-Period Analysis (Routledge Studies in the History of Economics). Routledge. London 2015 |
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