Re: [OPE] Reply to critics

Gerry:

well, as you know, there was no Dept. III in Marx's reproduction schemes.
-------------------
That is true but he introduces a general methodology that can readily be
Extended to include a third department producing only luxury goods in which case we have

I =C1+v1+s1
II =C2+v2 +s2
III =c3 +v3 + s3

Now consider the exchange between sectors In all cases we remove internal consumption the particular category
Of commodity produced in the departments
We have

c2+c3= v1 + s1
   The purchases of means of production by depts. II and III have to add up to the new value created in I

C2+s2 = v3 + v1
    The net output of the wage goods department has to be bought out of wages paid in the other depts.

S1 + s2 = c3 + v3
    The net luxury production in dept 3 has to be sold to capitalists of other depts.

Now consider your proposal that s3 can be spent on outputs of depts. I and II, this is not possible for two
Reasons
a) there is no spare wage goods or constant capital elements on which it can be spent, all of these have already been used up.
b) if capitalists in dept III cut their luxury expenditure and spend their surplus in other departments, their own revenues fall by an exactly equivalent amount, thus if they don't spend their profits internally, they cease to make the profits as there is no other market for their output.

Hence the surplus in dept III can only be unproductively consumed and never constitutes part of capital.

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Received on Wed Oct 20 07:05:18 2010