From: ajit sinha (sinha_a99@YAHOO.COM)
Date: Wed Sep 12 2007 - 10:26:53 EDT
--- ajit sinha <sinha_a99@YAHOO.COM> wrote: > --- ajit sinha <sinha_a99@YAHOO.COM> wrote: > > > --- Fred Moseley <fmoseley@MTHOLYOKE.EDU> wrote: > > > > > Quoting ajit sinha <sinha_a99@YAHOO.COM>: > > > > _____________________________ > > > > I really don't understand the nature of your > > > problem. > > > > As Ricardo clearly tells you what is a > > circulating > > > > capital for one could be treated a relatively > > > fixed > > > > capital for other. The distinction between > fixed > > > and > > > > circulating capital is a matter of convention. > > > > Ultimately all these differences boil down to > > > > differing time-structure of capital--and this > is > > > the > > > > source of all the problem. Differences in > > organic > > > > composition of capital of Marx must show up as > > > > differences in time-structure of capital of > > > Ricardo. > > > > > > > > > Ajit, this is not my problem. This is a problem > > in > > > Sraffian theory. > > > The problem, as I have explained in an earlier > > post, > > > is that Sraffian > > > theory (in which all capital is treated as > > > circulating capital, because > > > fixed capital is treated as a “joint product”), > > all > > > industries must be > > > assumed to have the same turnover period, if the > > > rate of profit that is > > > determined by the system of equations is to be > > > equalized over the same > > > period of time. If, on the other hand, turnover > > > periods were not equal > > > across industries, then the rate of profit > > > determined by the equations > > > would be equalized for different turnover > periods, > > > which would mean > > > that the annual rate of profit for different > > > industries would not be > > > equal, contrary to the prevailing tendency. > > > > > > For example, if a given capital in one turnover > > > period has a rate of > > > profit of 5%, and it turns over twice a year, > then > > > it will have an > > > annual rate of profit of 10%. If another > capital > > in > > > another industry > > > also has a rate of profit of 5%, but turns over > 10 > > > times in a year, > > > then its annual rate of profit would be 50%. > > > > > > I hope this clarifies the problem. Any > suggested > > > solutions? > > > > > > Fred > > _________________________ > > That definitely clarifies the problem, which is > > that, > > as I had expected, the problem is with your > > understanding of the problem rather than with > > Ricardo > > or Sraffa. Rate of profits is given in terms of > > period > > of time. Now a days banks compound your rate of > > interest on almost daily basis, if your bank tells > > you > > that the rate of interest on your deposit is 5%, > > then > > would you expect that your daily rate of interest > > should be (5x365)%? Why not just read Ricardo? He > > will > > solve all your problem. Cheers, ajit sinha > ________________________ > Fred, What I meant above was "your annual rate of > interest" not daily. Further, your mathematics above > does not take care of the real nature of compounding > of the rate of profits. Cheers, ajit sinha __________________________ Fred, here are Ricardo's last written words. A letter to James Mill written on 5 Sept. 1823. Ricardo fell ill with ear infection on the 6th and died on the 11th. This might help you understand Ricardo better: "...John does not allow for profits increasing at a compound rate. The profits for 5 years are more than 5 times the profits of one, and the profits of one year more than 52 times the profits for one week, and it is this which makes the great part of the difficulty. Beg him to consider this and let me know if I am wrong in my critique on his paper. I have been thinking a good deal on this subject lately but without much improvement--I see the same difficulties as before and am more confirmed then ever that strictly speaking there is not in nature any correct measure of value nor can any ingenuity suggest one, for what constitutes a correct measure for some things is a reason why it cannot be a correct one for others. Yours ever, David Ricardo". "John" in the letter was apparently John Stuart Mill. The paper Ricardo is referring to has not been found. Cheers, ajit sinha ____________________________________________________________________________________ Be a better Globetrotter. Get better travel answers from someone who knows. Yahoo! Answers - Check it out. http://answers.yahoo.com/dir/?link=list&sid=396545469
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