‘Marx’s Theory of Price and Its Modern Rivals’ reviewed by Bill Jefferies

Marx’s Theory of Price and Its Modern Rivals

Palgrave Macmillan, London and New York, 2012. 232pp., £60 hb
ISBN 9780230302570

Reviewed by Bill Jefferies

About the reviewer

Bill Jefferies’ book Measuring National Income in the Centrally Planned Economies; Why the …


Marx’s Theory of Price and its Modern Rivals contains three main themes: first it recounts what the author Howard Nicholas considers to be Marx’s theory of value and price; second it explains Nicholas’ criticism of the New Interpretation (NI) and Temporal Single System Interpretation (TSSI); third it criticises other theories, neo-classical, post-Keynesian and that of Piero Sraffa. Nicholas thinks that his critique of Sraffa is the most important and original part of the work. Nicholas argues that value is at the heart of Marx’s explanation of capitalism, that Marx’s theory is logical, consistent, relevant in the age of monopoly and intact after the attack of post-Keynesians and Sraffarians. What makes Nicholas different from virtually every other contemporary Marxist economist is that from the outset Nicholas stresses that Marx’s theory of price needs to explain the production and reproduction of the capitalist system itself as a real mode of production combining actual inputs to produce actual outputs.

For Nicholas price is needed to ensure that the capitalist system can allocate actual resources in order that it can reproduce itself. To that extent the theory of price is an analysis of equilibrium. The theory assumes that it is possible for the capitalist system to exist. Nicholas roots value and price in the world of actual material things. Value represents the relative social productive resources required to produce the commodity. These are actual material inputs, consisting of both direct and indirect labour time, living labour and the products of past labour. Value is the objective worth of a commodity. Exchange value is the amount of another commodity that it commands in the process of exchange. This is the price form. The money price form is the symbol of general exchangeable worth. Price represents the direct or indirect labour time that can be commanded by the commodity in the process of exchange. Price facilitates the production and reproduction of the system of production and so is intimately related to value. Selling goods enables produces to command the necessary labour time to produce and reproduce the system of production.

Prices and values are formed in the same process of production and exchange. That is not to say that actual prices equal equilibrium prices, indeed the separation of production from sale, means that this is highly unlikely, but there are limits to how far they can move apart if the system is to reproduce itself. Consequently, “when producers compute prices in a way which permits the reproduction of their commodities (using money as the basis for this computation), they effectively do so on the basis of values” (14), capitalists must acquire the material inputs necessary to produce commodities, whether they know their values or not. They must combine together the labour of actual workers to produce actual goods and so are responsive to the actual social imperatives of the system, to reduce costs and maximise revenues. Value is separate from the reproduction price, but in the absence of the surplus product equals it (15).

Price is always current and never historic or temporal. Production always takes place in the present. The product of past labour has labour embodied in it during the process of production, but this embodied labour is valued at its current replacement cost. Producers only produce in the present, so the contribution to value added of this embodied labour is what it would cost now, not its price, or its value at some point in the past. These points form the basis of Nicholas’ later critique of the contemporary transformation debate.

Money is a means of circulation, a hoard and a means of payment, it facilitates the transfer of ownership of commodities, to produce and reproduce the system of production. Actual prices will continually deviate from reproduction prices due to the operation of supply and demand. Nicholas makes a distinction between money as a measure of value, and money as a numeraire (18). He considers that as a measure money represents the value of commodities the one to the other, as “intrinsically comparable products of social labour” whereas as a numeraire “money reduces commodities which are not inherently comparable to equivalence” (19). This seems a curious juxtaposition. As these are in effect aspects of the same thing: social labour. The amount of this social labour is both measured and rendered equivalent through the act of exchange with money. Commodities can be exchanged, the one with the other, as they already contain a common property – social labour – within them, which is also the measure of their value.

In Capital I Marx treats value as equal to price as there is no question of a redistribution of value between capitals to equalise the rate of profit (32). In Capital III Marx shows how competition redistributes value between capitals so that price deviates from value. This shift creates prices of production, which are the prices which would need to prevail if the commodity is reproduced in a situation of balanced, expanded reproduction (34). Values are the primary determinants of prices of production. As importantly there can be no understanding of the latter without the former. The rate of profit is established with reference to the individual average producer.

Nicholas explains that critics have taken issue with Marx’s transformation procedure “mostly because of an alleged failure on his part to transform input values into prices of production”, as producers only ever buy transformed inputs in the real world. But if Marx had transformed the inputs from values into prices of production, then his example of the transformation procedure, would have been an example of price determined by price, and therefore, Nicholas continues “it would have been entirely illogical for Marx to have transformed the values of inputs into prices of production when what he was seeking to do was to ‘explain’ the prices of production” (40).

Nicholas has detailed discussions around money and the price of non-produced inputs like land, where he shows how Marx’s method can be extended into monopolies. He then provides a critique of Adam Smith and David Ricardo. According to Nicholas, Marx criticised Smith’s view that “exchange is a necessary pre-condition for the division of labour” (61), so that “Smith failed to see value as antecedent to and independent of, exchange value or price” (61). Nicholas is quite wrong here. In fact it is almost the opposite way round. Marx says “Adam Smith quite correctly takes as his starting-point the commodity and the exchange of commodities.” (Marx 1978, 72) Nicholas makes this distinction because he wants to separate himself from the value form school which credits the work of I.I. Rubin as its inspiration. Rubin insists that the act of exchange is necessary for the transformation of objects into commodities. It was Stalin’s overthrow of this orthodoxy in 1930 that prefigured the current confusion of value and price. How could there be a division of labour based on private property without the exchange of products? One is the condition of the other. A division of labour could only exist without exchange if a central state authority appropriated the product of the individual producers and distributed that product separate from them. This is of course what happened in the centrally planned economies of the USSR and China during their “communist” periods and it explains why there was no value in them. But this was hardly Adam Smith’s concern in his discussion of the relationship between exchange and the division of labour.

Nicholas demonstrates that Marx’s major criticism of Smith was his confusion of social labour with the product of past labour or between value and price, the amount of social labour necessary to produce a commodity and the amount of social labour it can command on exchange. Nicholas explains the major differences between Marx and Ricardo on value, price of production, the quantity theory of money and absolute and differential rent. Nicholas reiterates that he views prices of production as averages of actual prices, not centres of gravity around which prices circulate.

Nicholas explanation of Marx’s theory of value and price and his closely argued relation of that theory to the actual process of capitalist production and reproduction is very clear and persuasive. Nicholas criticises alternative Marxist interpretations on the basis of it. He splits them into two camps; the post-war Traditional Interpretation (TI) of Sweezy, Dobb and Meek and the more recent NI and TSSI. The TI accepted the criticism of Bohm-Bawerk and Von Borkiewicz that Marx had failed to transform the inputs values in his example of the transformation procedure. This did not particularly matter if there could only be a social numeraire, but Sraffa’s 1960 The Production of Commodities by Means of Commodities claimed to find an alternative physical numeraire to Marx’s social one. If true, it meant that every aspect of Marx’s transformation of values into prices was wrong.

The TI resolved this problem by deciding that the identity of value and price was less important than the identity of surplus value and profit and so concluded that Marx’s explanation of price was not so pivotal to his explanation of capitalism, of course this left the door open to Steedman’s 1977 Marx after Sraffa. Steedman developed Sraffa’s argument to comprehensively refute Marx’s system. The NI and later TSSI then accepted Steedman’s argument, but sought to construct a reading of Marx that solved the inconsistencies. It was the requirements of this literary solution that explains the other-worldly assumptions of these models.

Nicholas points out Marx’s transformation model was limited to an explanation of the relationship between values and prices. It did not attempt to compute value and price magnitudes (72). It was not necessary to transform input prices as originally suggested, for the simple reason that the table was not a model of the relationship of prices to prices. If Marx had wanted to show how prices of production circulated he would have needed a different model. Paradoxically, the TI, NI and TSSI base their defence of Marx on the assumptions of the very people they were attempting to defend Marx against, hence their inevitable failure. Nicholas systematically explains their inconsistencies and incoherencies; in short, their claims are not supported in Marx’s text and have no basis in actual commodity production.

Nicholas follows his review of the modern Marxists with a discussion of their key contemporary alternatives, the neo-classical school, post-Keynesians and Sraffa. The very diffuse nature of these schools, and the basically odd nature of the assumptions that underpin the rival models makes such a differentiation problematic. How to judge seriously the merits of models which deny the existence of money, or assume a universal auctioneer that sets prices without reference to the market? More important from the point of view of this book is Nicholas’ examination of Sraffa who created a physical alternative to Marx’s social value through establishing fixed relationships between various different physical inputs and outputs. Nicholas points to many other problems with Sraffa’s system due to his abandonment of social labour time as the basis of value, it is questionable if this really seals the deal with Sraffa, given that Sraffa’s system is precisely intended to avoid the need for a numeraire based on social labour time. To really close Sraffa’s system it is necessary to examine how the commensurability assumed by his physical numeraire is impossible without the outlandish assumption that inputs and outputs are qualitatively identical.

Nicholas’ Marx’s Theory of Price and its Modern Rivals is a concise summary of Marx’s distinction between value and price, their relationship and significance for the reproduction of the capitalist system. His dissection of rival interpretations is an original but welcome return to essentials. His discussion of the weaknesses of neo-classicals is a good examination of their contradictions. All in all Nicholas’ book is a very welcome restatement of Marx’s analysis, well written, clear and convincing.

31 October 2014


  • Marx, K. 1978 Theories of Surplus Value Volume I, Lawrence and Wishart, London


  1. Thank you Bill Jeffries for this concise and lucid review.

    I have not read Nicholas’s book, but the reference to the mistake of the TSSI should be observed. You write that according to Nicholas, “he NI and later TSSI…accepted Steedman’s argument, but sought to construct a reading of Marx that solved the inconsistencies. It was the requirements of this literary solution that explains the other-worldly assumptions of these models….Paradoxically, the TI, NI and TSSI base their defence of Marx on the assumptions of the very people they were attempting to defend Marx against, hence their inevitable failure.”

    One exposition of the TSSI is Andrew Kliman’s. In RECLAIMING MARX’S “CAPITAL”: A REFUTATION OF THE MYTH OF INCONSISTENCY” (2007), Kliman carefully goes into all of the issues you represent in your review. Far from “accepting Steedman’s argument,” Kliman mercilessly criticizes Sraffian readings of Marx. Therefore, the “paradox” seems to be an artifact of this incorrect attribution to the TSSI.

    In 2012, Kliman wrote THE FAILURE OF CAPITALIST PRODUCTION: UNDERLYING CAUSES OF THE GREAT RECESSION. Although it’s not his purpose to go into it, this book is consistent with the TSSI. It is rigorously empirical and very much about a “real mode of production combining actual inputs to produce actual outputs.” (Centrally at issue in this book is the law of the tendential fall in the rate of profit.) True, as a “literary” matter, Kliman sets out in his earlier book to interpret the text of Marx’s CAPITAL, but I think it’s highly mistaken and misleading to call his solution “literary” and “otherworldly.”

    I realize that I should read Nicholas, but I wonder whether you would say more about the criticism of the TSSI in his book.


    Tom Jeannot

  2. Thanks for you comment Tom, I enjoy writing these reviews, but you often wonder if anyone enjoys reading them, I’m glad you did!
    Firstly, on Howard Nicholas’ book, I appreciate that the price is prohibitive however, if you look on the internet it is possible to find it cheaply and so it is possible to read it for yourself.
    Secondly, the point is that the various *solutions* (not just the TSSI) to the transformation problem inherit the framework of the problem from Von B, they assume embodied, constant or historic labour values, (and Marx’s other assumptions from his transformation model, simple labour, equal profit rates, undepreciated or appreciated capital, equal rates of surplus value, no change in the structure of production due to the transformation of values into prices itself etc. which were fine for Marx’s original example, but not when they were used or misused as Von B did) and from Sraffa, that it is possible to have a physical numeraire instead of a social one. They demonstrate this (particularly in the case of Andrew Kliman and Alan Freeman) by the use one commodity models in which the input is the same as the output. In other words, they inherit a set of assumptions, which mean that a labour theory of value is superfluous, as the commensurability of physical inputs and outputs can be established directly without the need for physical outputs to be measured in labour times. If you accept a set of assumptions which mean your answer is ruled out, then your answer cannot be ruled in.
    Paradoxically, the reason Ricardo originally rejected the corn model and adopted a labour theory of value, was precisely because this assumption (physically identical inputs and outputs) violated the nature of the production process itself, which transforms one set of physical inputs into a different, and therefore, incommensurate set of physical outputs. It was this fact, the incommensurability of physical inputs and outputs which meant that a labour value numeraire was necessary.

  3. My article “Piero Sraffa and the Production of Commodities by Means of Magic” published in the Journal of Critical Sociology provides an extended critique of Sraffa’s theory.
    It shows how and why physical commensurability is the premise for his theory and how this is counter posed to the labour theory of value from Ricardo onwards. It also shows how this premise was accepted and used by Samuelson and Steedman to attack the labour theory of value. Most paradoxically it examines how it was also accepted by Marxist critics of Sraffa (and Steedman and Samuelson) like Alan Freeman and Andrew Kliman – in the temporal single system interpretation.
    This false premise in large part explains the failure of these contemporary Marxist defenders of Marx to defend Marx.
    If anyone wants the article then email me billjefferies@gmail.com

  4. I am a former student of IIAS where Dr Nicholas remains a lecturer and obtained my PhD from the University of Amsterdam. I have lectured in the UK. Dr Howard Nicholas is not a Marxist in practice though I admire him struggling on in Marxist discourse. I have read his I believe still unpublished PhD dissertation from UEA which I believe is substandard though he believes otherwise. IIAS is an enclave on The Netherlands which celebrates Dutch Day once a year and unlike zLumumba Universiry in now the Russian Federation I have also visited, all teachings are in Englush not Dutch. Though I got a cum laude and moved on to lecture in the UK, had not realised that socialists called themselves nationalists. I.e. Howard keeps identifying himself nationalistically as a Sri Lankan (burger or settler in Dutch) which is antithetical to internationalism, noting I am mixed race part Sri Lankan or Eurasian and studied in Bill Clinton’s alma mater (I got the Dean’s list) though a republican stronghold so I work against my class and genes. I had eulogised him as did my deceased husband as he invited us to the ISS in Den Haag. He remains an academic unlike Dr Kark Marx and Hiward and Nichilinr were widely involved with the capitalist UNP government of Sri Lanka who like the opposition SLFP is known for genocide also nut not only against the Marcists. The conservative UNP invited him and he remained as a liberal for 10 years without uttering a word of criticism against the regime who are incidentally my relatives. He not expressed remorse or criticism of the massacre of the Marxist JVP or Tamil populace, the former of whom around 100,000 disappeared during the ultra right conservative UNP government who set up the think tank IPS but not only by him.

    My main critique is that one does not appropriate surplus value from socialist Vietnam by investing in stocks and shares for personal gain or profit to be passed on for generations on end to with and kin! This is the era of global banks, hedge funds and money laundering, corruption and fraud of which the other side of the coin is politically exposed persons, refugees and the ultra poor who earn under $1.25 per day, or according to the world bank, oxfam and UN are half the world’s population, which Howatd does not refer to or appear to be versed in. These are the last wills and testament of Marcos and Punochet, noting Howard cannot he compared with them by a long shot. Never mind that decades after the IMF and WB abandoned structural adjustment and stabilisation policies in Socialist Vietnam Howard justifies and indeed romanticises his investments therein, which is now based on mobile companies and garment factories which block trade unions as Engels clearly depicted centuries ago in conditions of the working class in England. Besides, Marx and Lenin though educated in law not economics were multidisciplinary, since disciplinary divisions including differentiation between had science or physics and the social sciences was an invention of Western Enlightenment.

  5. Regrettably I haven’t been to Sri Lanka yet, it is a beautiful country, I want to go, but you do have to watch what you say, because you can get your head shot off, or you can get jailed and fined for speaking out in the wrong way.

    Yes, Sri Lanka now ranks at #71 in 189 countries in the Human Development Index https://www.dailynews.lk/2019/12/10/local/205301/sri-lanka-improves-ranking-human-development-index-2019

    Yet, in 2019, Sri Lanka still ranked only #126 in the World Press Freedom Index (compared to #131 in 2018 – there are 180 countries in the index, see: https://rsf.org/en/ranking_table).

    I went to a lecture here of the Dutch N.O.W. (=Dutch Organization for Scientific Research) on the history of slavery, and I remember that one historian pointed out the case of a slave in Colombo, who, after manumission, bought himself a slave?!

    The situation in Sri Lanka today is not at all like the “fully automated luxury criticism” of “Western Marxist” aristocrats in liberal universities, meditating with their laptops upon developing countries attaining the human rights; the nature of exploitation; the development of the productive forces; and the wider significance of the falling rate of profit.

    In New Zealand and the Netherlands, the countries where I’ve lived long-term, there is more opportunity for free speech than most other places on earth (except for countries like Scandinavia, Belgium, Costa Rica and Switzerland). If you want to say a lot, these are good places to go (but there is also a lot of noise!!!). Yes, you can get ripped off badly there too (both by the criminal Left and the criminal Right), but point is, you are still alive to talk about it.

    For a comparison, the United States (supposedly the greatest “freedom country”) only ranks #48 on Press Freedom, behind Romania at #47. In the USA, every year, lots of people get murdered randomly (not for any particular reason), just because e.g. an American happens to feel like firing a few rounds or clips at a crowd. Maybe he had too much to drink, or was stoned. Or maybe he was angry about something, or didn’t like the taste of his hamburger. Often Americans are arbitrarily murdered, just because of the colour of their skin. America is the place where you can get murdered, “for no particular reason at all” (in Chicago, people have got killed, just because residents fired gunshots in the air, at a celebration). For about half of Americans, this is not a big deal, it is just a reason why you should get your own gun. “Shit happens, people die, but you can wipe out the other guy, before the other guy wipes you out”. “Winner takes all”, that sort of thing.

    There are Wikipedia articles about the background in Sri Lanka, see for example: “List of people killed by Sri Lankan government forces” https://en.wikipedia.org/wiki/List_of_people_killed_by_Sri_Lankan_government_forces

    Okay, the list in that wiki article was never updated after 2009 (the official end of the civil war) anymore, but, since that time, more journalists have apparently been killed in Sri Lanka.

    The Committee to Protect Journalists claims that, in total, 19 journalists were killed in Sri Lanka between 1992 and 2020. https://cpj.org/data/killed/asia/sri-lanka .
    According to Amnesty USA, some twenty journalists left Sri Lanka, because of death threats. https://www.amnestyusa.org/outspoken-journalist-killed-in-sri-lanka/ So anyway you really have to watch them words, in Sri Lanka.

    Quite a few academics and politicians were killed; modern Sri Lanka has a legacy of assassinations of officials, union leaders and public intellectuals, about which there is also a wiki article, “List of assassinations of the Sri Lankan Civil War”. https://en.wikipedia.org/wiki/List_of_assassinations_of_the_Sri_Lankan_Civil_War

    Given all this type of background, it does not surprise me, that Professor Nicholas took a diplomatic approach. He wanted to stay free and alive, and teach people some insights he had about reality and alternatives.

    Here in The Netherlands, Professor Nicholas is known as a very capable teacher, who can explain complicated theories in a way that students can understand them. I support that stance, and I went to a lecture of his in Amsterdam ( https://www.globalinfo.nl/Nieuws/report-of-howard-nicholas-lecture.html ).

    I can understand it too, if he still identifies with his Sri Lankan heritage. It does not mean, that he is not an internationalist. It means that his internationalism is “inter” between real nationalities.

    Today, the Western Left is not interested in internationalism very much, they like to talk about the scare of neo-fascism. Meaning, they are scared of that. That being the case, they should be.

    Internationalism is meaningless though, if you don’t even understand your own national heritage, and what’s good or bad about it (never mind knowing about other nationalities).

    Lots of “lefty” people claim to be “internationalists”, although it’s mainly just abstract rhetoric vented by a clique, and sometimes these “internationalists” even vent prejudices and racist slurs from a safe distance. With friends like that, who needs enemies.

  6. Actually, in 1864 Marx wrote in a letter to Lion Philips that he had invested in stocks. (MECW 41, p. 543). He was very poor, had a family to feed, both he and Jenny suffered health problems, and he thought he could make some money with little time and effort, using a small inheritance he received. He said that this had resulted in an income of 400 pounds. Engels invested in stocks for several years.

    Was it morally sound for Marx to invest in stocks? People who are very poor, sometimes have to do extraordinary things to make a living. I suppose it depends on the circumstances, and on what he invested in, but what it was, I have no knowledge about. It was probably a fairly desperate measure, and when he subsequently started working for the International, he stopped this activity, most likely taking into consideration the political implications.

    If Howard Nicholas invested in Vietnamese stocks, he must have had a specific motive for doing this, a gesture, but what it was or what he invested in, I do not know. Many workers in the West have invested retirement savings in stocks, directly or indirectly, since if they didn’t, their savings would be worth less in the future instead of more. Can you blame them?

    What we ought to look at, is what is being invested in, what is actually done with the money. Back in 2008, I had a look, for example, at the Ontario Teachers Pension Fund, which invested in many foreign countries for better yields, and reported some comments about that. When the financial crash arrived, they must have lost quite a sum, but most investors lost money, even simply because foreign currencies dropped in value. The obvious question arises, why couldn’t they have invested in Canada?

    The concept of “socially responsible investing” is rather vague, but the bottom line is really “what is being invested in” and what the consequences of that are.

    Many public servants have little or no choice in the matter, since they are automatically enrolled in a government pension plan, and have no real control over how the money is invested (though sometimes there has been a furore about investment decisions of the pension plan).

    It is not really feasible to decide the investment of retirement funds “democratically” by plebiscite, but fund managers can certainly take into account the opinions of contributing workers about what would be an acceptable type of investment. The statutes can be modified accordingly.

    In the old capitalism, workers were rewarded for saving, but in modern “financialized” capitalism, they are often punished for saving, insofar as bank deposits have zero real yield, or even a negative real yield. You earn money from work, and then… you can watch your savings decline in value. The only way out of that, is to invest in real estate, durables, stocks or securities etc. for a positive real gain.

    Obviously this promotes “financialization” in the economy, but this is not a matter of greed, but of simple defence of basic self-interest and survival. Right now, trillions of euro’s and dollars are invested in bonds with negative real returns.

    Probably the majority of workers who can save sufficient capital, invest in a mortgage, but even that is not necessarily a secure investment, since in a severe financial crash, when many workers lose their jobs, the value of their home can reduce by 10-30% at the same time. You may be forced to sell, unable to meet your payments, but lose a large chunk of your savings in the process.

    Elmar Altvater talked about “the globalisation of insecurity” in our epoch, i.e. the general reduction of certainty about what will happen to people’s lives in the future. In that situation, more and more people will do all kinds of strange and innovative things, to try and protect the money they worked for.

    Any civil morality ordinarily cannot be sustained for long, if the situation requires people to “do the right thing” when that consistently makes themselves worse off. An acceptable morality assumes, that there is a “give and take” from which all can benefit, even if that is not in exactly equal amounts.

    If there is “too much giving, but nothing to get”, a stage will be reached sooner or later at which people will defend their own interest, even if it does not serve the general or common interest. At that stage, social solidarity is eclipsed by intensifying competition, not really as a matter of “choices” people are making, but out of sheer necessity. In the end, most people would prefer to be winners, rather than losers.

  7. The story of Sraffa is also interesting. From 1927 to his death in 1983, Piero Sraffa, an exiled Italian professor of economics (friends with Antonio Gramsci) mostly worked as teacher, librarian and researcher at Trinity College, in Cambridge UK, holding a permanent residency permit he obtained with help from JM Keynes (Sraffa never applied for British citizenship).

    Sraffa had resigned his Italian post because, among other things, he did not want to swear allegiance to the fascist state. After the end of world war 2, the Italians reinstated his professorship at the University of Cagliari in Sardinia, but Sraffa donated the meagre extra salary he obtained from this position to the local university library, for the purpose of buying books on economics.

    In his will, Sraffa bequeathed his entire personal estate and library (some 8,000 publications) to Trinity College, an institution which had, after all, enabled him to live a comfortable sedentary life. He suffered thrombosis in 1981, and died in 1983, just one month after Joan Robinson died.

    In his obituary appraisal, https://www.thebritishacademy.ac.uk/sites/default/files/71p615.pdf the Hungarian-born economist Nicholas Kaldor (a lecturer at King’s College in Cambridge, who himself died three years later, in 1986) reminisced in a footnote as follows:

    “Though Sraffa was the son of a prosperous lawyer, he was only able to bring a small part of his father’s fortune out of Italy. He disliked gambling, and was also against speculating on the Stock Market, not so much on principle, as out of a conviction that one is bound to lose on unsuccessful bets a large part of the gains made on successful outcomes. Hence his basic principle was to wait for the one occasion when a large speculative gain appeared to be absolutely certain, and then put all the money one can get hold of on this one gamble. The one occasion which appeared to him to satisfy these criteria occurred during the War when the price of Japanese bonds fell to a very low level—something between 5–10 per cent of their nominal value, or not more than 1–2 per cent if one also takes the likely value of unpaid interest payments into account. He was convinced that, however the War might end, the Japanese would fulfill all their foreign financial obligations, whether they were made to do it or not. Hence he put all his money into Japanese bonds, after careful investigation of which most of them appeared undervalued, and he must have made a gain of 40 to 50 times the money he put into it, when, after the War, Japan resumed servicing the bonds and paid the accumulated interest during the years of hostility. It is not known how much money he made on this transaction, but the College valued his bequest at £1.5 million in 1983 [= about £5 million in today’s money], one half consisting of the value of his library” (“Piero Sraffa. (1898-l983)”, Proceedings of the British Academy , Vol. LXXI, 1985, p. 627, note 2, reprinted in Kaldor, Further Essays on Economic Theory and Policy (Duckworth, 1989). This footnote is also cited in J.-P. Potier’s short biography of Sraffa).

  8. As regards Engels, his biographer Tristam Hunt discovered that:

    “Engels’s own portfolio of shares was lucrative and extensive: his probate at death revealed a stockholding valued at £22,600 (some £2.2 million in today’s money) with shares in the London and Northern Railway Company, the South Metropolitan Gas Company, the Channel Tunnel Corporation Ltd, and even some imperial investments – notably the Foreign and Colonial Government Trust Company.” (Tristram Hunt, The Frock-Coated Communist. Penguin Books, 2009, p. 575-576).

    Engels confessed to Eduard Bernstein that he owned stocks and shares, and even joined in a debate about whether the social-democratic newspaper should run a financial page. Engels seems to have believed that stock ownership played a revolutionary purpose, insofar as it promoted the concentration and centralization of capital.

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