THE IMPORTANCE OF PRODUCED MEANS OF PRODUCTION IN UK AGRICULTURE

Neoclassical production theory assumes that outputs and inputs can be separated into two distinct commodity groups. Ho wever, this fails to take account of the presence of produced means of production in agricu lture which undermine the ceteris paribus assumption on which partial equilibrium analysis is based - a criticism identified as part of the broader Sraffian critique of neoclassical economics. A simulation exer cise designed to investigate the importance of produced inputs in UK a griculture found evidence of perverse aggregate supply response result ing from the use of feedgrain, an output from the cereal sector, as a produced input in the livestock sectors. This empirical result lends s ome support to the Sraffian analysis; however, it is suggested that th e perversity arises from failure to take account of the produced input , and that computing net output equivalents' would re-establish simula ted responses consistent with the law of supply.