AAWE, Economics Dept, New York University, 19 W 4th St, 6Fl., New York NY 10012aawe@wine-economics.org

AAWE Working Paper No. 44 – Business

 

The Value of Designations of Origin in Emilia-Romagna    

Silvia Gatti    

Introduction

The determination of the absolute value of a good is a primary need of each individual, and is historically at the basis of economic theory.
David Ricardo, in the Essay on the Low Price of Corn on the Profits of Stock of 1815 (Ricardo, 1951b, p.9), writes, “Wherever competition can have its full effect, and the production of commodity be not limited by nature, as is the case with some wines, the difficulty or facility of their production will ultimately regulate their exchangeable value”. “The ‘difficulty’ or ‘facility’ of production is judged on the basis of the amount of labour required,” summarizes Fernando Vianello on page XVI of his Italian Introduction to Ricardo’s On the Principles of Political Economy and Taxation (1976). “If commodities are exchanged in proportion to the labour embodied, a commodity always produced by the same quantity of labour meets the requirements of a perfect measure of value” (Vianello, 1976, p. XVIII). Therefore in Ricardo, “The ‘absolute value’ of a commodity always produced by the same quantity of labour is invariable – even though its ‘exchange value’ or ‘relative value’ may change – in the sense that the commodity itself is not subject to that sole cause of variation of the value that acts on other commodities: the variation in the quantity of labour required for their production.” (Vianello, 1976, p. XVIII).

Ricardo’s labour theory of value made it possible – both in the early 19th century and today – to give clear solutions to the role of money (Vianello, 1976, p. XVIII) and rent (Vianello, 1976, p. XXII).
In Italy the lesson of classical economists, combined with the lesson of Schumpeter, was reworked by Sylos Labini both to provide an innovative answer to the theoretical problems of economic analysis (Sylos Labini, 1956) and to offer a direct study tool for the country’s industrial transformations from the 1960s up to today (Sylos Labini, 1972).

 

The focus on labour in Ricardo’s Principles does not, however, lead to a sophisticated treatment of the formation of the wage rate (Vianello, 1976, p. XXVI) and the characteristics of human capital, nor to an analysis of the differences at the international level that have been developed in contemporary labor economics (Ashenfelter, Rouse, 2000; Ashenfelter, Jurajda, 2004).

Ricardo’s work makes possible another point of reference with respect to the themes dealt with in this article.
It has been seen how Ricardo, in his Essay on the Low Price of Corn on the Profits of Stock, refers to products whose value is determined not only by the quantity of labor required for their production, but also by the limits imposed by nature. This is the case, as he writes, of “some wines”. This reference to the natural characteristics (in particular climatic) of the territories of origin of wines for the formation of prices is seen in the analysis that contemporary economics devotes to wine (Ashenfelter, 2008).

For Ricardo, these considerations come forth in his Principles, in the well-known explanation of the advantages of free international commerce: “Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole. By stimulating industry, by rewarding ingenuity, and by using most efficaciously the peculiar powers bestowed by nature, it distributes labour most effectively and most economically: while, by increasing the general mass of productions, it diffuses general benefit, and binds together by one common tie of interest and intercourse, the universal society of nations throughout the civilized world. It is this principle which determines that wine shall be made in France and Portugal, that corn shall be grown in America and Poland, and that hardware and other goods shall be manufactured in England.” (Ricardo, 1951a, pp.133-134).

… It’s true! Since then something has changed in the wine production systems worldwide!

The intention of this paper on the Value of Designations of Origin in Emilia-Romagna is to study what it means today to have a regional policy on designations of origin, first of all, as expressions of the peculiar characteristics of a territory and its population.
It is not by chance that in the designation of origin territories of Emilia-Romagna some of the most characteristic production systems of the Italian economy have developed, such as industrial districts (Brusco, 1982), combined with economic studies that have been able to observe with particular sensitivity the relations between industrial and service activities, agriculture and population and territory (Brusco, 1979).

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