In Chapter 1 and in the Historical Notes of the subsequent chapters an attempt was made to lay bare the origins of the concepts used in the present book and to provide a brief summary of the historical development of the ideas and arguments contained in the main text. While these notes may prove useful for a better understanding of some of the roots of the approach elaborated, they cannot, scattered and sparse as they are, replace a pointed discussion of the analytical tradition to which the present investigation belongs. This chapter is designed to make good that lacuna. The emphasis is on the conceptualization of production as a circular flow and the related concept of social surplus. In contradistinction, in Austrian and in much of neoclassical analysis, production is conceived of as a linear flow which leads from the services of the primary factors of production to final goods. The neoclassical theory of production and income distribution will be dealt with in Chapter 14.

A major concern will be with the two main intellectual sources of the present book: Piero Sraffa's Production of Commodities by Means of Commodities (1960) and John von Neumann's essay “Über ein ökonomisches Gleichungssytem und eine Verallgemeinerung des Brouwerschen Fixpunktsatzes” (1937) [“A Model of General Economic Equilibrium” (1945)], and the tradition in the history of economic thought to which these belong. As the reader will have noticed, the approach chosen in this book is essentially a “cross-breed” of the analyses of Sraffa and von Neumann.