In reply to Paul C's [OPE-L:3558]:
>
>Now, Duncan says further:
>
>I think the standard accounting practice effectively keeps track of the
>degree to which wages are paid in advance or in arrears, although I'm not
>sure of this. Surely in production processes that have long production
>times there must be some payment of wages during the production period, so
>that the "wage fund" is not negligible.
>
>In the rate of profit calculations, it seems that the appropriate
>denominator would be the capital invested including the inventories of
>goods in process, which will automatically account for the wages advanced
>to the degree that they are advanced. (The financing of inventories,
>including inventories of goods in process is quite an important issue in
>many industries, so I don't think these inventories are negligible.
>
>Paul C:
>I agree that they are not negligible, and I would always include them in
>the capital stock. The problem is that if one includes say one months wages
>as well, then one has double counting.
Duncan:
This seems right to me, though I haven't done a lot directly with the data.
Duncan K. Foley
Department of Economics
Barnard College
New York, NY 10027
(212)-854-3790
fax: (212)-854-8947
e-mail: dkf2@columbia.edu