From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Wed Oct 27 2004 - 04:31:57 EDT
Well suppose that electricity is produced this year, but that the atomic waste has to be held for 40 years to cool and is then vitrified and buried. this means that the production of electricity now involves both past and future labour. Normally one just counts the past labour in estimating the costs and thus the profit earned on the sale of a commodity. If one is to deal with the future labour expenditure, then one has to give this a present value. One way to do this is obviously to discount the future costs. What should be the discount rate used? Then there is the more general problem which affects all attempts to use a discount rate in theories of value. This includes the use of a discount or profit rate in Marxian and Sraffian price theories and in Samuelsons treatment of the question. Should this be the real rate of profit or should it be the money rate of interest. I am of the opinion that it is unrealistic to use the real rate of profit in these calculations for not only is the real rate of profit masked by the current rate of interest, but it is impossible to predict what the future rate of profit will be. One could simply take the current interest rate, but that is subject to the problem that the future interest rate may be different and so may incorrectly estimate the actual cost of borrowing to provide for the final vitrification. In part this is a subjective problem. It reflects only our lack of knowledge of the future rate of profit, which objectively speaking, is just as definite as the past rate of profit due to time symmetry. But this lack of knowledge obviously has real effects in that all economic agents are subject to similar temporal short-sightedness. There may thus exist an objectively correct 'price of production' for electricity based upon what the rate of profit over the next 40 years will actually be, but it is unlikely that electricity would ever be marked at this price. It should be noted that the US electricity supply industry is one of the few to which classical Marxian price of production theory seems to apply. When Allin and I did a cross industry study of US profit rates, the electricity industry came out with a rate of profit close to the mean, it bucked the general trend which was for high organic composition industries to have a lower rate of profit. We put this down to it being a regulated monopoly that was allowed to earn the average rate of return on its capital. -----Original Message----- From: OPE-L [mailto:OPE-L@SUS.CSUCHICO.EDU] On Behalf Of Gerald_A_Levy@MSN.COM Sent: 26 October 2004 14:25 To: OPE-L@SUS.CSUCHICO.EDU Subject: (OPE-L) Re: Negative values in pure joint production Clearly there would be other forms of analysis for which keeping track of the waste produced may be more important - for instance the process of disposal of atomic waste is a very long term production process and thus has rate of profit implications. Paul C, What are the rate of profit implications? In solidarity, Jerry
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