Circular vs One-Way Production Processes: Two Different Views on Production and Income Distribution

Enrico Bellino and Gabriel Brondino

Review of Political Economy, 2025, vol. 37, issue 2, 412-430

Abstract: This paper examines two distinct representations of production processes: circular production, where commodities function as both inputs and outputs, and one-way production, which starts with factors of production and ends with finished goods. These frameworks offer different views on profits. In circular systems, profits arise from surplus production, while in one-way systems, they appear to emerge from price differences between final goods and inputs. Using Sraffa’s price equations, we analyse the properties of both systems. We demonstrate that while one-way systems seem to allow for profit increases by raising prices, this is an illusion as it ultimately reduces real wages, the true source of profits. Additionally, we show that one-way systems become circular when real wages are fixed. Finally, the paper discusses how this distinction is important in understanding the shift from Walras’ general equilibrium theory to neo-Walrasian formulations. This study highlights the importance of circularity in the functioning of capitalist economies and its implications for the theory of distribution.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/09538259.2024.2410895 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:revpoe:v:37:y:2025:i:2:p:412-430

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/CRPE20

DOI: 10.1080/09538259.2024.2410895

Access Statistics for this article

Review of Political Economy is currently edited by Steve Pressman and Louis-Philippe Rochon

More articles in Review of Political Economy from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().