So are we reading the same book John? There are much more on
absolute rent further in the chapter.
___________
John writes:
> Consider the following system with 2 commodities and
> two processes.
>
> (1) 100 iron + 25 Corn ----> 130 Iron
> (2) 20 iron + 20 Corn ----> 60 Corn
>
> Granted we could find the relative prices ala Sraffa if we assume
> that both (1) and (2) have the same rate of return on their
> investments.
> But if (2) earns some absolute rent, what are we to do? If
> 1 corn = 1 iron, we would have
>
> (1) 100 iron + 25 iron ----> 130 iron
> (2) 20 corn + 20 corn ----> 60 corn
>
> (1) has a rate of return of (130-125)/125 or 4 %. (2)
> has a rate of return of (60-40)/40 or 50%. To be sure,
> our assumption that 1 corn exchanges for 1 iron is
> arbitrary. Yet given absolute rent entirely
> possible. Corn may fetch a bit less iron and we could
> still have the corn sector earning absolute rent albeit
> a bit less than that in our example.
>
>
> If you find a way around this problem using Sraffian tools,
> I'd be interested.
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No body can find a way around a mumbo jumbo, John! In your
production relations above, land does not appear anywhere in the
means of production but still you are determining rent on land out
of your imagination! Even though the problem of the system we are
discussing is to determine prices, you simply assume arbitrary
prices from your imagination! I simply do not understand what kind
of mathematics TSS people do. It simply is not mathematics. it
should be given some other name. You got to do better than this
John, if you want to develop a critique of Sraffa. Sraffa usually
thought through the issues way ahead of most of the people, and
that's why he has withstood real high powered attacks. He was not a
mathematical economist himself, he was basically a conceptual
economist. This shows in his mathematics. As Kurz and Salvadori in
their book *Theory of Production* have shown, Sraffa working from
his conceptual understanding of the problem of Standard commodity
independently worked out the famous Parron-Forbineous theorem. Let
me tell you an interesting story. When Samuelson's student Lavhari
came up with his refutation of Sraffa's reswitching theorem in
*QJE*, it was Geoff Harcourt at Cambridge who was first to read
that paper. He went running to Sraffa to tell him that there is a
chap from MIT who says that your reswitching theorem is wrong in
the case of the aggregate economy. Sraffa responded, "he is wrong
and you show him that." To which Harcourt responded, "Me? I can't
do linear algebra." To which Sraffa responded, "neither can I."
Therefore, Pasinetti was recruted to show Lavhari that he was
wrong, which Pasinetti did without much problem.
______________
<snip>
> John wrote
> Comment:
> But points in time do not exist. Indeed, if they did the apple
> would never fall since at every point in time it is stationary.
______________
But snap shots do exist, don't they? That's what I'm talking about.
Snap shots.
___
> <snip>
John:
> Comment: OK. Price of production is not a statistical concept
> for
> you. But what are to make of the computed "gravitational point"
> or your price of production? Do market prices gravitate to the
> price of production?
_______________
Ricardo's theory of wages is highly controvercial. But on the face
of it, Ricardo defines "natural price of labour" to be the
subsistence wage that would prevail at the stationary state. Since
he thought that the current economy was far from stationary state,
he visualized a falling real wages over long period of time towards
the gravitational point, which is the "natural" price of labour as
defined by him. Thus the gravitational point couldn't be thought
off as the *average* price of labor here. It is wrong to think that
gravitational point is somekind of average, in statistical sense,
in classical economics, including Marx. Cheers, ajit sinha
>
>
>
>
> John
>