John, Thanks for this speedy reply [OPE-L:4583] -- comments interpolated below. 2. Given fixed capital, no one decides to invest or not to invest on the basis of a simple rate of profit. That is, if two capitalists told you what their rates of proft are for a given year, you wouldn't be able to say which of the two has made the better investment. More important, another capitalist would not be able to decide whether or not to make the same investment as either of the two had made. Here I'd like to ask whether you have in mind managers of enterprises, or owners of capital. I'd agree the latter can't (easily) tell whether individual firms have made good investments in particular projects -- but all they need to do is check the overall rate of return (i.e. the "rate of profit") and see how it compares with the return on the market portfolio. As to managers, I would say that their decisions about proposed projects probably get made on the basis of reading the trade press, asking their mates, etc. 3. Sraffa and others do construct simple models with fixed capital in which the RRI's are equal but the rates of profit as usually defined are not. No doubt I'm displaying my ignorance here, but what is the objective of such models? 4. My questions were a result of my confusion concerning how one makes the usual correction of Marx on transfaormation given fixed capital. Here, I think I shall blame the lateness of the hour (8.20 p.m. here) for the fact that I don't right now see why fixed capital makes a difference. Julian
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