Re: [OPE-L] basics vs. non-basics

From: Ian Wright (iwright@GMAIL.COM)
Date: Tue Sep 20 2005 - 15:14:15 EDT

> In reply to Ian.
> Sraffa says that in principle the wage should be split
> into a portion necessary for the reproduction of labour
> power, and a portion that constitutes part of the surplus
> that can be struggled over. I think this is certainly correct.
> If one took that view of it, the basic sector would include
> those products whose production was necessary to the
> reproduction of the working population.

You can maintain this interpretation, but only at the expense of working
with Sraffa's incomplete equation to determine prices. There are economic
realities in which this equation either cannot determine prices, or cannot
maintain the assumption of a uniform rate of profit for all sectors. This
happens when the maximum eigenvalue of the i/o matrix A does not lie on the
principal diagonal of the submatrix that refers to basic commodities.

I am unconvinced that things would be materially changed
> by expressing things as continuous flows rather than
> as annual rounds of production. One would still get
> R as a variable expressing now the maximal instantaneous
> rate of expansion of the economy as a time derivative
> rather than expressing the expansion as an annual
> rate.

I agree we can swap between continuous flow and round interpretations quite
easily, without changing the math.

But the more important point is that the R is uniquely determined in a
circular-flow and is in general different to the R* corresponding to the
basic sector, because R is constrained by the maximum rate of expansion of
the non-basic sector.

If you look only at the basic sector, and compute the R*, it may well be
wrong and not describe the maximal rate of expansion in the economy as a

 I don't see why Phil is opposed to the notion of a material
> surplus?
>  I'm not opposed to the obvious fact that economies are viable, that is
material things are produced, and at any particular instant appear as a
surplus or net stock. But I am opposed to the temporal interpretation of the
Sraffian simultaneous equations, in which this surplus is produced at the
end of the production period, and is then distributed as income to workers
and capitalists. I think if we stick with this interpretation then we have
price indeterminacy. In reality, there isn't a time when a 'net surplus'
exists, because consumption and production occur in parallel, not serially,
unlike the "after the harvest" interpretation, which is a clearly a very old
physiocratic concept.


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