The analysis of production, distribution, and relative prices elaborated in this book derives from the contributions of Sraffa and von Neumann which, as has been argued in Chapter 13, can be strictly located in the “classical” tradition. The abandonment of the classical approach and the development of a different theory, which rose to dominance in the wake of the so-called marginalist revolution in the latter part of the 19th century, was motivated, among other things, by the deficiencies of the received labor theory of value. However, in terms of the method of analysis adopted the early neoclassical economists, including William Stanley Jevons (1871), Léon Walras (1874), Eugen von Böhm-Bawerk (1889), Knut Wicksell (1893, 1901), and John Bates Clark (1899), essentially followed the classical authors: the concept of “long-run equilibrium” is the neoclassical adaptation of the classical concept of long-period positions (see also Chapter 1).

This chapter is devoted to a brief discussion of major versions of the neoclassical theory of value and distribution. Attention will focus on those versions in which the long-period method of the classical economists is preserved; however, other, that is, more recent, versions will also be dealt with. In order to distinguish the former from the latter, which abandoned the long-period method and the concept of a uniform rate of profit, we shall henceforth call the earlier versions “traditional.” Browsing through contemporary literature one sees that traditional neoclassical theory is still used in many fields of economic theorizing.