From: ajit sinha (sinha_a99@YAHOO.COM)
Date: Sun Sep 23 2007 - 07:27:46 EDT
--- Fred Moseley <fmoseley@MTHOLYOKE.EDU> wrote:
> Quoting ajit sinha <sinha_a99@YAHOO.COM>:
>
> > Well, I tell you put 2 and 2 together and you tell
> me,
> > well you keep telling me to put 2 and 2 together
> but
> > don't tell me how much do they make. In the
> earlier
> > mail I explained to you that you don't understand
> that
> > *rate of profit* has time dimension. The word
> "rate"
> > should give one the clue that this must be in
> relation
> > to time. But it seems you have not grasped this
> idea
> > yet. In your above example, you have an industry
> which
> > has a rate of profit equal to 25% per year and
> another
> > sector has a rate of profit more than (and not
> equal
> > to) 50% per year. Now, you must know that Sraffa
> takes
> > rate of profits to be equal for all the sectors.
> So,
> > now you should see that your example has nothing
> to do
> > with differences in turn over periods but it is
> rather
> > giving different rates of profits to different
> > sectors. Now, classical economists including Marx
> > assumed that there was something called a
> gravitation
> > mechanism ("a law of value") in the market that
> > ensured that the rate of profits are equalized for
> all
> > the sectors. Sraffians think that Sraffa also
> relied
> > on the classical argument in assuming equal rate
> of
> > profits. I think that equalization of the rate of
> > profits is a logical result of any complex system
> of
> > basic goods as long as the system is not
> interfered
> > with from outside (such as some kind of price
> control
> > etc.). But in any case, how is it a criticism of
> the
> > Sraffian system that it does not solve the price
> > equations with arbitrary rate of profits for
> different
> > sectors? The confusion is in your head not in
> Sraffa's
> > theory. I'm sorry to be responding so late--I was
> > taking vacation in Créte (Greece) for a week,
> which
> > was great! Cheers, ajit sinha
>
> Hi Ajit,
>
> I certainly understand that the rate of profit has
> the time dimension.
> That is my point.
>
> Sraffa's system of equations determines a single
> rate of profit for all
> industries. Therefore, if this rate of profit is to
> apply to the same
> period of time, all industries must be assumed to
> have the same
> turnover period. It's as simple as that.
> Conversely, if industries
> are assumed to have different turnover periods, then
> the single rate of
> profit determined by the system of equations will be
> for different
> periods of time, which means that their rates of
> profit will be
> different for the same period of time (e.g. a year.
>
> What's so hard to understand about that?
>
> Fred
___________________________
No fred, you still don't understand. In your example,
in one sector capital grows from $200 to $250 in a
year, so its rate of profit per year is 25%. In your
sector 2 a $200 is invested at the beginning of the
year. According to the rule of equal rate of profit,
it must grow to $250 after a year too. Now, I leave it
as an exercise for you to work out what 1/2 yearly
rate of profits must be applied to this $200 so that
it grows to $250 in a year. Hint: it is less than
12.5% per 1/2 year. If you still don't understand,
then I have no more time for it right now. Cheers,
ajit sinha
____________________________________________________________________________________
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