# Re: [OPE-L] workers' consumption and capitalists' consumption

From: ajit sinha (sinha_a99@YAHOO.COM)
Date: Tue Jun 06 2006 - 06:40:27 EDT

```--- Ian Wright <wrighti@ACM.ORG> wrote:

> Hi Allin
>
> > "Where is the labour-time that was expended in
> previous rounds
> > on the production of capitalist consumption goods
> in Sraffian
> > labour-value accounting?"
> >
> > It's in the labour-value of those consumption
> goods.
>
> Not in Sraffian labour-value accounting. This is a
> key point.
>
> The Sraffian labour value of any bundle of
> commodities, be it consumed
> by capitalists or not, does not count the indirect
> labour that went
> into the production of the capitalist consumption
> goods of previous
> rounds.
________________
Ian, now I'm almost convinced that you are making a
conceptual error. Take for example Sraffa's two-sector
subsistence example:
280 qr. wheat + 12 t. iron --> 400 qr. wheat
120 qr. wheat +  8 t. iron -->  20 t. iron
This is self-replacing subsistence economy. Here you
have no problem with the price solution of 1/10. Now,
let's make it a surplus economy by making one sector
more productive such as
280 qr. wheat + 12 t. iron --> 400 qr. wheat
120 qr. wheat +  8 t. iron -->  30 t. iron
So the system has 10t. of iron as surplus and let us
assume that the capitalists consume the 10 t. of iron,
so it is a system of simple reproduction. Now, how do
you solve for prices in this system? Sraffa says that
you write the system as:
[280P(w) + 12P(i)](1+r) = 400P(w)
[120P(w) +  8P(i)](1+r) =  30P(i)
This solves for r and P(w)/P(i)
But you want to put the 10t. of iron back on the left
hand side of the equation so that it becomes like the
first subsistence equations. However, the question is
how do you allocate the 10t. of iron to the two
sectors? You agree that it has be to allocated in
terms of the profits received by the capitalists in
the two sectors and the rate of profits on the value
of capital investment must be equal. But then there is
no way of finding how to allocate the 10t. of iron to
the two sector capitalists unless you solve Sraffa's
equations. But once you have done that the 10t. of
iron must be treated as 'surplus' and cannot any
longer be treated as cost. That's why Sraffa said that
once surplus emerges in the subsistence system, the
I have suggested in my previous mail, I think your
system must be short of one equation. Cheers, ajit
sinha

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