From: Ian Hunt (ian.hunt@FLINDERS.EDU.AU)
Date: Sun Sep 25 2005 - 20:54:15 EDT
Dear Ian, Sorry, I meant, "why would the maximum rate of profit be set by the natural reproduction rate of horses?" I agree that the difficulty is greater in a Sraffa style system where the wage is part of a division of the net product. It is also true that the standard commodity is developed is to show that the maximum rate of profit is a dimensionless feature of the input-output relations of the the industry producing the standard commodity. It is not clear to me, though, that the maximum rate of profit of non-basic industries is ever a dimensionless feature of the industry producing the commodity, since their input-output matrices are never like that of the standard commodity, which is a 'self-reproducing' commodity by definition. Notionally, you could imagine an example where a non-basic is like the standard commodity, but in this case (the examples, even of 'beans', are not very realistic) assumption of a uniform rate of profit would entail that the price of the output is not determined by its cost of production. Maybe I am missing something here... Cheers, Ian >Hi Ian > >Before thinking about "race horses" I need to explain the full >generality of the problem as described in the literature. I >mentioned a single "self-reproducing non-basic", such as "beans", >only for simplicity, and to follow Sraffa's original mention of the >problem. But in general, if the maximum eigenvalue of the non-basic >subsystem is less than that of the basic subsystem then >"complications arise". In essence, this is the case when the >limiting factor of the whole input-output structure is not a >property of the basic subsystem, but the non-basic. > >So we don't need to identify a particular non-basic commodity that >enters into its own production. > >On 9/22/05, Ian Hunt ><<mailto:ian.hunt@flinders.edu.au>ian.hunt@flinders.edu.au> wrote: > > Clearly, a good deal of labour and other resources go into the >production of racing horses - just ask the trainers. Production of >race horse stock also requires much labour and resources - just ask >the breeders. > > >Yes, I agree. But Sraffa doesn't quite agree with us. > >For example, the surplus portion of the real wage consumed by the >labour force that works in the production of racing horses is not >counted as an indirect cost by Sraffa. So if workers consume "cake", >and cake is a non-basic good, then cake is not considered as an >input to the "race horse" sector. > > >In these circumstances, why would the rate of profit in the industry >be set by the natural reproduction rate of horses? > > >It wouldn't. The rate of profit is assumed uniform and varies with >the real wage. The rate of profit can range from zero to G, where G >is the maximum growth rate of the basic sector. A problem arises >when the maximum growth rate of the non-basic sector G* is less than >G. For profit rates less than G* everything is ok. Speaking a little >loosely, for profit rates equal to G* the price of non-basics is >undetermined, for profit rates greater than G*, prices are negative. > >In this example, the natural reproduction rate of horses is a >limiting factor on the amount of race horses that can be produced in >a given period, i.e. it is a datum that determines G*. > >-Ian. -- Associate Professor Ian Hunt, Dept of Philosophy, School of Humanities, Director, Centre for Applied Philosophy, Flinders University of SA, Humanities Building, Bedford Park, SA, 5042, Ph: (08) 8201 2054 Fax: (08) 8201 2784
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