[OPE-L:7540] Sraffa/von neumann and falling rate of profit

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Sat Aug 24 2002 - 19:11:58 EDT

the FROP which seemingly could be derived on on von Neumann lines 
would have what Brenner has called a Malthusian character since it 
would seem that total labor productivity--that is, the productivity 
of indirect and direct labor combined--would have to be falling for 
the ratio of physical surplus to the physical stock of capital to 

But I don't want to pursue this point.

I don't think it's von Neumann who is important here but Dmitriev of 
whose model of total automation Spencer Pack gives a simple example.

28	56	0	0
16	0	48	0
12	0	0	8
56	56	48	8

What we have in the first column is inputs of computers (28,16,12, 56 
total) needed to make 56 computers, 48 units of gold, and 8 units of 

That is, 28 computers => 56 computers
          16 computers => 48 units of gold
          12 computers => 8 units of wheat
          56 computers => 56 computers, 48 units of gold, 8 units of wheat

The economy is in simple reproduction because it produces only 56 new 
computers, and 56 computers are needed to produce computers, gold and 
wheat at the same scale again.

There is no direct labor in this economy; there is not even indirect 
labor as computers, gold and wheat are themselves the products of 
commodities--the literal production of commodities by commodities.

According to Pack this economy can be solved for relative prices and 
a uniform profit and absolute prices as well if we assume by 
definition that the price of one unit of gold equals $1.

(1 + r)  (28pc) = 56 pc
(1 + r)  (16pc) = 48
(1 + r)  (12pc) = 8pw

r is the profit rate while pc and pw are the unit prices of computers 
and wheat.

 From the first equation we know the profit rate has to be 100%; price 
of one computer is $1.50 and price of one unit of wheat is $4.50.

So contrary to the LTV, there can be a positive rate of profit and 
relative prices in a totally automated economy.

But this assumes the method of determination which Moseley (monetary 
macro), Shaikh (fixed point iteration) and TSS have all criticized in 
their respective ways. For each of these three respectives there 
would in fact be no profit in a fully automated economy.

With this post, I only mean to invite a debate about this thought 
experiment of a fully automated economy.

Yours, Rakesh

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