The Economics of Piero Sraffa: A Critique from the Economics of Belonging

This paper critically evaluates the contributions of Piero Sraffa in value theory, capital theory, and interest theory from the perspective of the Economics of Belonging (EoB). While recognizing Sraffa’s formal achievements—particularly his matrix representation of production and the reconstruction of capital as dated labor—the paper argues that his framework fails to provide a general theory of value due to its disconnection from dynamic monetary markets and effective demand. The article demonstrates that Sraffa’s critique of neoclassical capital theory via reswitching does not invalidate the existence of a well-behaved demand for capital within equilibrium, as shown in Obregón’s reconstruction. However, both Sraffa and neoclassical approaches remain incomplete because they neglect the central role of institutions, trust, and belonging in equilibrium selection. The Economics of Belonging introduces a broader framework in which economies are understood as systems with multiple equilibria, where markets ensure efficient allocation within equilibria, but institutions determine equilibrium selection, stability, and distributional outcomes. The paper further provides a formal coordination framework linking institutional strength to macroeconomic performance and crisis dynamics.