Piero Sraffa’s ‘The Laws of Returns Under Competitive Conditions’ at 100: A Retrospective Article

This retrospective article provides an overall assessment of Piero Sraffa’s 1926 paper, ‘The Laws of Returns under Competitive Conditions’ (LR), published a century ago in The Economic Journal. In the early 1930s, LR was generally interpreted as a seminal contribution to the literature on imperfect competition, while, at present, it is a key reference in relation to the issues of external economies, increasing returns and the Marshallian theory of value. I recall the genesis of LR and analyse its close connection with its 1925 Italian precursor, ‘Sulle relazioni fra costo e quantità prodotta’ (SR). I further undertake a critical appraisal of selected reactions to LR and advance my interpretation of the goals pursued and the results achieved by Sraffa in his two mid-1920s papers. I conclude with a concise review of a few of Sraffa’s relevant unpublished manuscripts.