Hayek and Sraffa Duel over the Meaning of Equilibrium: Neoclassical Market-Clearing Versus Long-Run Cost-of-Production

Here it becomes quite clear that to Sraffa equilibrium means ‘classical’ long-run cost-of-production equilibrium (that is, price equals cost of production), a norm from which market prices always diverge, while to Hayek equilibrium is ‘neoclassical’ market-clearing equilibrium in all markets (what neo-Ricardians nowadays call ‘supply-and-demand equilibrium’) with no particular regard being paid to the difference between the long and short run. And here, then, we have got to the bottom of our dispute and are provided with a clue to most of the other points at issue between the two contestants.

--Ludwig Lachmann, "Austrian Economics under Fire: The Hayek-Sraffa Duel in Retrospect," in Expectations and the Meaning of Institutions: Essays in Economics, ed. Don Lavoie, Foundations of the Market Economy (London: Routledge, 2005), 145.