From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Tue Jun 06 2006 - 18:08:03 EDT
Ajit > Commodity capital is not in the form of money but in > the form of commodities only. During the period of > production all your inputs including commodity wages > are commodity capital in the hands of the firms. After > the production period the gross outputs are the > commodity capital in the hands of the firms, some of > this capital could be converted into revenue. Ian OK, I assumed you meant working capital, rather than commodity capital, because you raised the issue of double counting. I assumed you were talking about double counting of money amounts. But now I think you might be projecting a money-commodity interpretation onto the circular flow, which is not quite right, as I'll try to explain. I'm a little hesitant to interpret simultaneous equations in terms of the "beginning" of the period and the "end" of the period, but nonetheless. The working capital (which is money) in firm accounts, received from capitalist households, is spent on commodity inputs at the beginning of the period. At the end of the production period there is zero working capital and some commodity capital, about to converted into revenue. The math does not imply that there is both working capital and commodity capital in the hands of the firm at the same time, just as the price and quantity equations do not imply that there is both means of exchange and the bought item in the hands of the purchaser at the same time. ------------------------ Paul Cockshott This is wrong, at the end of the production period the firms have just as much working capital as they started out with. You say that "working capital is spent on commodity inputs at the beginning of the period", well if it is spent on commodity inputs, then who did the firms purchase it from? They purchased it from other firms, so they collectively do not change their holdings of working money capital. The only possible change occurs as a weekly fluctuation of the relative cash balances of the working and capitalist class as a result of the weekly payment of wages, and its reflux during the week as workers buy consumer goods. Moreover, the amount of money working capital is undetermined by the equations, it depends on the velocity of circulation of money. It seems to me that your attribution of a price to money capital and setting this price to be r is a dimensional error, and a conceptual slide analogous to that made by bourgeois economics when it terms interest the price of money. r in the transformation equations has the dimension 1/time price has the dimension units of gold/ units of iron ( substitute other commodities in for iron). This dimensional difference indicates that the r can not be a price.
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