From: ajit sinha (sinha_a99@YAHOO.COM)
Date: Tue Mar 20 2007 - 07:38:51 EDT
--- Ian Wright <wrighti@ACM.ORG> wrote: > Sure $1 represents value but is not itself value. > But consider $1 of > money-capital that costs $r to borrow over the > production period. The > $r, the price of money-capital, also represents > value. But what value > does it represent? ______________________ Okay, Ian! I'll make a brief intervention here but then don't expect me to continue. I'm working on a couple of papers that I'll send you after a little while, then you will know why. But any way, let's go step by step. Imagine a subsistence economy. Will there be a positive r for borrowing money in this economy? If not, why not. And if yes, how is it incorporated in the economy? Now think of a one good corn economy with surplus. Suppose 1 ton of corn in one year produces 1.2 tons of corn. Now, in intertemporal context, one would say that the price of 1 ton of corn in period 0 is equal to 1.2 tons of corn in period 1. That is P0 = (1 + 1/5)P1. 1/5 is your r. But the system can generate positive r for not consuming the corn but lending it to somebody only if the system of corn production actually produces 1.2 tons of corn out of 1 ton of corn. Now let me tell you one more shocking thing: in an intertemporal framework Sraffa does not ASSUME input prices to be equal to output prices! Cheers, ajit sinha ____________________________________________________________________________________ Looking for earth-friendly autos? Browse Top Cars by "Green Rating" at Yahoo! Autos' Green Center. http://autos.yahoo.com/green_center/
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