[OPE-L] The limits of fables

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Sun Mar 11 2007 - 18:51:54 EDT

Sraffa and Marx's vol3 rely on a fable which 
purports to explain what we now know to be a counter-factual
the hypothesised equal rate of profit.

The fable goes = given a difference in rate of profit
capitalists move from low to high earning branches of industry
re-equilibrating profit rates.

Fables are tricky here is an alternative fable which goes
in the opposite direction.

Suppose we have two industries

as described below

C      V     S    r
300    100   50   12.5%          A
900    100   50   5%             B

Suppose that prices are proportional to values. In the standard
interpretation this is a disequilibrium situation which should be
fixed by capital moving from B to A and shifting relative prices.

However, a firm with large fixed capital in B may also respond
by trying to cut their current running costs ( since the fixed
capital costs can not be readily changed ). Thus they may try
to further cut their labour costs moving to a new situation:

900    75   75   7.7%             B

which has tended to re-equilibrate profit rates by establishing
a higher rate of surplus value. But then what happens?

If there is a constraint on the dispersion of the rate of surplus
value as argued by F&M, this will be a temporary situation
and the result will be to move to

900    75   37   3.8%             B

In other words one could make up a story which is just as
plausible as the one used for the equalisation of profit
rates which argues that the feedback relations tend to
accentuate any initial dispersion of profit rates.

Since we know that there actually is a wider dispersion
of profit rates than of the profit/wage ratio - which
if any fable is true.

Paul Cockshott



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