Samuelson's Implicit Criticism against Sraffa and the Sraffians and Two Other Questions

Samuelson’s“A Ricardo-Sraffa Paradigm” (2001) is an implicit criticism againstneo-Ricardianswhocouldnotprovideanytheorybeyondthesmallopeneconomy.Thenecessityofconstructingatradetheorywithtradedintermediateproductswasevident and was challenged by both strands: neo-Ricardians and mainstreameconomists. Theattemptfailedandthethemehasbeenabandonedsincelong. Myrecent paper shows that a Ricardo-Sraffa type trade theory, with tradedintermediate goods, is possible. In view of this theory, it is shown that theSamuelson’sConjectureofLimitedSubstitutionisfalse. Therelevanceofanewtheoryisillustratedbya recent debate onthe gainsfrom trade.