Samuelson's Implicit Criticism against Sraffa and the Sraffians and Two Other Questions

Abstract

Samuelson's “A Ricardo-Sraffa Paradigm”(2001) is an implicit criticism against neo-Ricardians who could not provide any theory beyond the small open economy. The necessity of constructing a trade theory with traded intermediate products was evident and was challenged by both strands: neo-Ricardians and mainstream economists. The attempt failed and the theme has been abandoned since long. My recent paper shows that a Ricardo-Sraffa type trade theory, with traded intermediate goods, is possible. In view of this theory, it is shown that the Samuelson's Conjecture of Limited Substitution is false. The relevance of a new theory is illustrated by a recent debate on the gains from trade.