From: Ian Wright (wrighti@ACM.ORG)
Date: Thu Jun 08 2006 - 18:52:15 EDT
Paul You are unfortunately still mixing up a price with a quantity. The price of money-capital, like any other price, has nothing to do with time, but the quantity of money-capital supplied and the profit income received of course does. > Note that this does not imply that a capitalist can supply > money-capital for a nanosecond and receive its price. > -------------- > Paul > > At this point you are surely conceding that what you call > the price of money capital has dimension t^-1 > ------------------ No. Here I am talking about a quantity of money-capital not the price of it. > -------------------------- > Continuing with the dimensional analysis: in Sraffa's model quantities > are measured in units of commodity-type. So quantities of the > money-capital commodity are measured in money units. If we wish to be > explicit about the length of time represented by the production period > then the dimensions are money units per unit of time. > --------------- > Paul > No this is not right. The production rates are in units of tons > of corn per year. The prices are in oz of gold per ton of corn. > The revenue flow from sales is tons of corn /year x oz gold / ton corn > and hence oz gold per year. Replace gold with "money units" and you are re-stating my paragraph. It is not clear to me which part of my paragraph you thought was not right. Also, there isn't a money-commodity, such as a gold sector, in the circular flow. Introducing one would be an interesting exercise. > If we consider a two year production period, the prices do > not change, but it we consider a two year period the profit > will double - this is because the profit is a rate per year, > thus what you call the 'price of money' is not a price at all. The profit income doubles. The rate of profit, ie. the price, stays the same. You need to distinguish between the rate of profit and the receipt of profit income from quantities of money-capital supplied, a price from a quantity. I provided a simple dimensional analysis. If there was a problem, you should have been able to point to it. > It is important to distinguish the flow rate of profit from the > stock rate of profit. Not in Sraffian single production, in which there are no stocks that exist across production periods. This is an extraneous matter given the model type we are discussing. > The point is that each capitalist is both a buyer and a seller. > If one capitalist buys inputs another sells them, on average > they are all buying and selling at the same time. The rate will > be stochastic, the deviations in cash balances from the mean > will be subject to noise with a Poisson spectrum. I'm sorry but I have to say that this is mumbo-jumbo in the context of the original point. > Marx has no theory of the rate of interest. Andrew's contribution has helped me to understand that you may think that my critique of Sraffa somehow introduces an "un-Marxist" theory of the "rate of interest", particularly when I state that the price of money-capital is the rate of profit. I do not have such a theory. An equality says nothing about cause. This is a set of simultaneous equations after all. But I do point out that Sraffa's work is consistent with Marx's idea that the rate of surplus-value is a key distributional variable; in other words, the rate of profit is ultimately determined in the hidden abode of production. > The point is that Sraffa does not have money capital, he only > has commodity capital. Sraffa implicitly has money-capital. If you find the circular flow representation unfamiliar then it is perfectly ok to stick with Sraffa's surplus representation. All my statements refer to both representations simultaneously. This is due to the mapping. > If you introduce money capital you have > to augment the Sraffian accounts which deal only with labour > inputs and inputs of means of production, with an additional > column on each side of the equation. On one side it represents > the stock of coin held by firms in order to start out production, It does not represent a stock. I think you misunderstand the specification of the circular flow. The stock of money is undetermined in the circular flow matrix. The money-capital coefficients are units of money per unit of commodity-type, i.e. a flow. > on the other side it represents the stock of coins that the firms > have after production has continued. In your simple case this > will be the same in each case, but if we allow an industry producing > the numeraire and assume that this is gold or silver, the stock > of gold will go up each cycle. Who mentioned a gold sector? In the model I have been discussing paper money that is conserved in exchange: the total stock is constant. Best wishes, -Ian.
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