From: Allin Cottrell (cottrell@WFU.EDU)
Date: Tue Jun 06 2006 - 20:44:40 EDT
On Tue, 6 Jun 2006, Ian Wright quoted Paul C: >> 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). and replied: > In a system without a money-commodity then "r" has dimensions $/$, > i.e. it is the price of money-capital per unit of money-capital > supplied. For example, if a capitalist receives a return of 0.5$ per > 1$ supplied then r=0.5 $/$. In other words 1 unit of money-capital > costs r$. > > In contrast, your suggestion that the dimension of the profit rate is > "1/time" is perhaps closer to the Austrian view. Ian, you are definitely off the rails here. Any magnitude with dimension $/$ has to have a value of 1.0 in any sane system. The interest rate (or rate of profit) necessarily has a time dimension, although "per annum" is generally implicit (and also generally legally enforceable). I offer you 50% on your money. You snap up the offer, but are disappointed by the interest checks you receive. I reply, "Aha, I meant 50% per century!" You can then sue me, with a reasonable probability of success. The Austrians may make a fetish of time, but it's not their property. Allin Cottrell
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