**From:** *rakeshb@STANFORD.EDU*

**Date:** Wed Apr 09 2003 - 16:08:21 EDT

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Hi David (if you're still on this list), As someone influenced by Grossmann, I got a chuckle out of your extending one of Freeman's/TSS's schemes beyond five or so periods in order to show that the rate of profit cannot fall as a result of viable technical change or that over the long term the money and value rates of profit will track the (rising) material rate of profit. Of course you will remember that Grossmann extended Bauer's reproduction scheme in order a limit to capital in the shortage of the mass of surplus value as a result of a falling rate of profit. You have turned "the tables"--so the speak--by using Grossmann's own trick! My question is simple: since the original TSS scheme which you extend makes use of the dubious v=0 assumption (challenged by Jerry), what would happen if we assume that capital actually pays for more workers each period in order to work the growing quantity of means of production. I don't know whether this means v would grow absolutely each period since the money wage per worker could be falling each period even with a constant real wage as the unit values of wage goods falls. But it seems reasonable to assume that the absolute amount of v grows each period with the growth in the workforce though of course that absolute growth in v would be limited by the fact that the rate of exploitation should be growing as well. It (the absolute amount of v) could even grow if we stipulate a fixed real wage. That depends on the absolute growth in the workforce. At any rate, it does seem to me that the whole attempt to determine the possible trajectories of the rate of profit becomes meaningless once we assume that v=0 or that workers live on air. It seems to me that your counter-argument then suffers from accepting just that assumption built into the TSS model, an assumption which Jerry very astutely called into question long ago. Now of course you may be able to show that the rate of profit will not fall if we assume a constant real wage. I know that Freeman and Kliman are interested to show that there are two concepts of value--a simultaneous and inter-temporal one. Their simple example may show just this. Yours, Rakesh ----- End forwarded message -----

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