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

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Wed Sep 28 2005 - 17:55:35 EDT


        At the Maximum rate of profits in the Sraffian system, workers
"live on air".

Yes. Sraffa assumes that all the wage is considered variable and a share
of the "surplus". He rejects the option that the part of the real wage
necessary for subsistence is already represented in the technical
coefficients matrix, and considered means of production. Although that
can be done, as Paul has suggested.


He does not 'reject the option', but sets it aside for simplicity of
argument having first accepted

that on grounds of realism one should include the real wage necessary
for subsistence

in the technical coefficient matrix.


You have to bear in mind that the key point of Sraffa's book is to
formulate a critique

of neoclassical equilibrium theory. Read its title.


I regard the attempt by Steedman and others to interpret Sraffa as a
positive alternative theory

of prices as being mistaken, because to do so relies upon the key
assumption of

an equal rate of profit which we know to be false in reality. Whilst it
was valid

to make that assumption in an internal  critique of equilibrium theory,
it is not

valid as an assumption about the real world.


However, that does not mean that the ideas of the basic sector and the

standard system are without merit.


It is an open question whether the actual mean rate of profit will be

in the basic sector. I suspect that it will, but one would have to back
this up by

a)       empirical studies using i/o tables

b)       simulation studies that allowed for dispersions of the profit
rate between industries in a realistic way

Beyond this I think the idea of the basic sector has obvious
applications to the theory of the socialist planned economy, and to the
theory of productive and unproductive labour. On the former, I suspect
that the economic model that Sraffa presents may in fact represent the
impact on Cambridge economists of the 30s on seeing the first GOSPLAN
planning tables. I gather from some references by Keynes that these were
going the rounds.

The structure of Sraffa's model is that of a planned economy, and the
notions of the basic sector and its rate of profit are obviously related
to similar results by von Neumann and Koopman. See also the work of
Samuelson and 

Weizacker, where they explicitly use a similar model to theorise
socialist allocation.

I think it interesting that the sectors of the US economy whose price
structure corresponded most

closely to that predicted in the Sraffian model were the regulated

This archive was generated by hypermail 2.1.5 : Thu Sep 29 2005 - 00:00:03 EDT