[OPE-L:3542] Re: Re: Re: Re:returns to scale

From: Ajit Sinha (ajitsinha@lbsnaa.ernet.in)
Date: Tue Jun 27 2000 - 01:00:36 EDT

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Paul Cockshott wrote:

> In the standard (strong) statement of the transformation problem the
> rates of profit are assumed to be identical in all branches. One can
> modify it to a (weak) transformation problem in which one merely assumes
> that whilst profit rates may be a random variable they are uncorrelated
> with organic compositions.
> The problem arises when there is a systematic correlation between
> organic compositions and rates of profit. In particular, if there is a
> negative correlation between them, then the problem of transforming
> values into prices of production becomes less pertinent, since the whole
> transformation problem arises from the assumption that profit rates
> being either a degenerate distribution or being at least uncorrelated
> with organic composition.
> Consider the implication of values rather than production prices being
> the centers of gravity of market prices. The implication of this would be
> that industries with high organic composition would have low rates of
> profit. This is rejected by Ricardo in Chap iv of his principles, and the
> Marx carries over this rejection without questioning it. But if it turns
> out to be the case that industries with high organic compositions do
> have low rates of profit, then Ricardo's objection to commodities
> exchanging in proportion to labour contents falls.


Paul, but what kind of argument you can come up with to justify the rate of profits
being corelated with the organic composition of capitals? Why can't we think of
rate of profits being determined by social conventions? Cheers, ajit sinha

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