For more than a decade a summer school met in Trieste to try to broker a marriage between Keynes and Sraffa, that is, to base the theory of effective demand on the Classical equations of production, as developed by Sraffa. This objective also provided a basic theme for the 1985 Sraffa Conference in Florence, and the idea runs through The New Palgrave, in the entries of Eatwell and Milgate, among others. By now it has inspired dozens of books and articles. Yet in spite of its obvious appeal, developing a Sraffa-based Classical foundation for Keynesian theory remains a minority project, and resistance is strong, particularly among macroeconomists of all schools.

Part of the problem stems from a methodological difference: the Keynesian approach stresses uncertainty and its effect on investment, money and finance, which, in the hands of post-Keynesians, has led to dynamic analysis and the study of fluctuations, whereas neo-Ricardians, following the Classicals, have stressed the tendencies of the economy to gravitate toward stable “long-period positions.” If the economy is sufficiently orderly that it tends to gravitate toward, or around, such positions, how can there be Keynesian uncertainty? Alternatively, if the latter is prominent, how could the economy center on long-period positions? The questions concern market adjustment. We will argue that patterns of adjustment depend on characteristics of the technology; since these tend to change over time, the way markets adjust will also tend to change.