Re: [OPE-L] SV: [OPE-L] what is irrational in the functioning ofcapitalism?

From: Diego Guerrero (diego.guerrero@CPS.UCM.ES)
Date: Thu Nov 30 2006 - 17:34:00 EST


Re: [OPE-L] SV: [OPE-L] what is irrational in the functionHi Rakesh,

Do you know if Spencer Pack thinks that the following is a model of total automation?

            28 bottles of wine => 56 bottles of wine
          16 bottles of wine => 48 units of gold
          12 bottles of wine => 8 units of wheat
          56 bottles of wine => 56 bottles of wine, 48 units of gold, 8 units of wheat


Cheers,
    Diego





  ----- Original Message ----- 
  From: Rakesh Bhandari 
  To: OPE-L@SUS.CSUCHICO.EDU 
  Sent: Thursday, November 30, 2006 6:09 PM
  Subject: Re: [OPE-L] SV: [OPE-L] what is irrational in the functioning ofcapitalism?


  Ajit and others may be interested in this post I sent four years ago to OPE-L


  http://ricardo.ecn.wfu.edu/~cottrell/OPE/archive/0208/0056.html


  A model of total automation; Spencer Pack gives a simple example.



  28      56      0       0
  16      0       48      0
  12      0       0       8
  56      56      48      8


  What we have in the first column is inputs of computers (28,16,12, 56
  total) needed to make 56 computers, 48 units of gold, and 8 units of
  wheat.

  That is, 28 computers => 56 computers
            16 computers => 48 units of gold
            12 computers => 8 units of wheat
            56 computers => 56 computers, 48 units of gold, 8 units of wheat


  The economy is in simple reproduction because it produces only 56 new
  computers, and 56 computers are needed to produce computers, gold and
  wheat at the same scale again.

  There is no direct labor in this economy; there is not even indirect
  labor as computers, gold and wheat are themselves the products of
  commodities--the literal production of commodities by commodities.

  According to Pack this economy can be solved for relative prices and
  a uniform profit and absolute prices as well if we assume by
  definition that the price of one unit of gold equals $1.

  (1 + r)  (28pc) = 56 pc
  (1 + r)  (16pc) = 48
  (1 + r)  (12pc) = 8pw

  r is the profit rate while pc and pw are the unit prices of computers
  and wheat.

   From the first equation we know the profit rate has to be 100%; price
  of one computer is $1.50 and price of one unit of wheat is $4.50.

  So contrary to the LTV, there can be a positive rate of profit and
  relative prices in a totally automated economy.


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