The Circular Flow Revisited: A Comparative Exposition of Leontief's Input-Output Analysis and Sraffa's Production of Commodities

Sourish Dutta

Papers from arXiv.org

Abstract: This paper delves into the foundational contributions of Wassily Leontief and Piero Sraffa to the understanding of economic systems as circular processes of production. It provides a comprehensive analysis of Leontief's Input-Output (I-O) framework and Sraffa's model of "Production of Commodities by Means of Commodities," highlighting their distinct yet complementary perspectives on the structure of modern economies. By meticulously examining the mathematical underpinnings and economic assumptions of both models, this paper elucidates their respective treatments of prices, quantities, surplus, and the role of technology. The analysis extends to a comparative exploration of their approaches to value, distribution, and the representation of economic systems, drawing upon detailed examples and the theoretical frameworks presented in the foundational texts. The paper argues that a synergistic understanding of Leontief's empirical framework and Sraffa's theoretical critique offers profound insights into the intricate web of inter-industry relationships that characterise contemporary economies. The appendix part of this paper proposes a rigorous mathematical unification of the classical price theory of Piero Sraffa and the empirical input-output analysis of Wassily Leontief. While both frameworks model the economy as a circular process of production, their theoretical foundations and applications have often been treated separately. We demonstrate that they are two facets of a single, underlying algebraic structure.

Date: 2025-06, Revised 2025-10
New Economics Papers: this item is included in nep-int and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2506.13936 Latest version (application/pdf)

Related works:
Working Paper: The Anatomy of Value Creation: Input-Output Linkages, Policy Shifts, and Economic Impact in India's Mobile Phone GVC (2025)
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:arx:papers:2506.13936

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().