From: ajit sinha (sinha_a99@YAHOO.COM)
Date: Mon Oct 29 2007 - 08:16:59 EDT
--- Ian Wright <wrighti@ACM.ORG> wrote: > > Ian, you are not distinguishing between classical > > Walrasian GE and the inter-temporal GE. The > Walrasian > > GE has uniformity of the rate of interest as the > > condition of equilibrium and it does require some > kind > > of notion of aggregate capital independent of the > rate > > of interest. The inter-temporal GE does not > require > > uniformity of rate of interest as a condition for > > equilibrium and deals with capital as vector of > > physical goods. Thus it does not need capital > > aggregation. The Sraffian critique applies to the > > classical Walrasian GE but not to the > inter-temporal > > version. When Samuelson talks about GE, he means > > inter-temporal version of GE. Garegnani thinks > that he > > could extent the Sraffian critique to the > > inter-temporal version as well, as their version > of > > savings and investment is not safe from the > > reswitching type of problem. On another note, as > we > > have shown in our 'equilibrium paper' if the > condition > > of the rate of profits to be uniform must be > > maintained, then even in the inter-temporal > framework, > > input prices must be equal to output prices. > Cheers, > > ajit sinha > > No I am relying on Bidard's analysis in "Prices > Reproduction and > Scarcity" (1991) where in Chapter 21 he shows that > the "marginal > productivity of capital" is well-defined in > Sraffa-type models and is > equal to the rate of interest even in multi-sector > models. Bidard > points out that Gargegnani's critique is based on a > self-contradictory > definition of the "marginal productivity of capital" > that depends on > the numeraire; when the concept is defined in this > way "it is > pointless to enter into a discussion on whether it > is equal to the > rate of interest". --------------------- I don't remember Bidard's specific argument and leaving Garegnani aside, I would think that if you assume smooth substitution posibilities at least around equilibrium point) then the marginal productivities of physical capital goods would be well defined. And if you assume constant returns to scale then those marginal productivities have to be equal to the rate of interest or the rate of profits because given the wages, the total profits must be exausted. But this does not mean that you can rank techniques (which is the basis of substitutability) as more or less capital or labor intensive. I think, Sraffa, for one, did not mean to say anything more than that. Reswitching was not a big deal for Sraffa. If it was so, he could have closed the book after chapter 6. The purpose of chapter 12 was to show that the proposition regarding inverse wage-profit relationship remains robust even in the case of technical change when one loses the Standard commodity to measure the wages. The reswitching proposition was made in a matter of fact manner, "The points of intersection where the prices are equal correspond to the switching from one to the other method as the rate of profits changes. THERE MAY BE ONE OR MORE SUCH INTERSECTIONS WITHIN THE RANGE OF POSSIBLE RATES OF PROFIT, BY ANALOGY WITH WHAT WE HAVE SEEN IN THE CASE OF TWO DISTINCT COMMODITIES (para 48)." This is ALL you have on reswitching! Interestingly the chapter is entitled, 'SWITCH IN THE METHODS OF PRODUCTION' and not (RE)SWITCH .... Cheers, ajit sinha __________________________________________________ Do You Yahoo!? Tired of spam? Yahoo! Mail has the best spam protection around http://mail.yahoo.com
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