# ABSTRACT OF PAPER

Title: Classical Economists and Sraffa on the notion of ‘given wages’

Author: *Sinha Ajit*

It is generally accepted that the classical economists took wages to be ‘given from outside’ in their theories of value. The wages were also considered part of the capital investment and many of the classical economists went as far as assuming that all capital investments can be reduced, directly and indirectly, to wage advances only. In this context wages are assumed to be given in terms of ‘inventory of goods’. Though the classical economists used the empirically existing ‘money wage’ differentials as the multiplication factor to homogenise heterogeneous labour, the idea of ‘money wages’ receded in the background once this exercise was over. In Sraffa (1960), however, we find that he first begins with the classical notion of given wages as ‘inventory of goods’ as well as it being part of capital investment. But then he systematically parts ways with the classical economists on this issue by first taking given wages in ‘money terms’ and then moving it out of capital investment. Then the ‘money’ is defined as the value of net output and therefore, wages, given in terms of money, turns into a ‘share in the net output’. The ‘share wage’ idea is then given up in favour of pure money wage concept where ‘money’ is redefined as the value of the ‘standard commodity’. After this, the idea of ‘given wages’ is simply removed and in its place the idea of given rate of profits is introduced and so the wages (in terms of the ‘standard commodity’) turns out to be part of the solution set and not a given datum. In this paper we will analyse why Sraffa’s treatment of wages is so different from the classical treatment.

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