The analysis put forward so far is of a flow character.
What about stock effects. Suppose that the armaments
industry requires a very high capital stock in the form
of nuclear reactors, gas diffusion plants etc.
This is not part of the basic sector. It does however,
if privately owned, earn profits on capital. I would
suspect that very high levels of investment in such
capital would depress the average rate of profit.
----------
> From: Ajit Sinha <ecas@cc.newcastle.edu.au>
> To: Multiple recipients of list <ope-l@anthrax.ecst.csuchico.edu>
> Subject: [OPE-L:5372] Re:Luxuries in the New Solution
> Date: 18 August 1997 07:04
>
> At 20:58 14/08/97 -0700, you Rieu wrote:
> >Yes, his example itself is correct.
> >In fact, this is one of the two cases in the simultaneist system.
> >1)wage=0 case 2)full automation case(i.e. l=0)
> >To think in the Sraffian way will clarify point.
> >>From the simultaneist system, p=(pA+wl)(1+r), the general rate of
profit(r)
> >is determined by only the structure of matrix A(i.e. max. eigen value).
> ______________
>
> In your formulation above, wage goods are treated as basics, and so it
will
> affect the rate of profit. Thus, it would be incorrect to say that only
> matrix A would determine the rate of profit (r). w is a determinant of r
as
> well.
>
> In my opinion, the basic question one needs to ask on this issue is, why
> should a change in production condition of a 'luxury good' (i.e.
non-basic)
> have any impact on the long term prices of capital and wage goods?
Cheers,
> ajit sinha
>
>
>