# Re: [OPE-L] Sraffa and the question of gravitation

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Tue May 01 2007 - 17:25:48 EDT

```Ajit wrote
_____________________________
Paul, but why our straight forward argument is not
convincing? That is that if the rate of profits are
not equal then as you increase wages from zero and try
to go to the maximum, you find that you cannot reach
the maximum because some rate of profits turn negative
before other reach zero, which only reveals existence
of some constraint on the system.

Paul
I dont disagree with what you are saying as formal
mathematical point. The question is what interpretation
we are to give to the maths in the real world. I agree
that as wage rates rise with a widely dispersed set of profit
rates then  what you describe will happen.

Let us assume that the actual distribution of profit
rates is Guassian with a mean equal to the rate that
would occur if it were the Standard Rate for the
actual distribution of income. A rise in wages will
shift the mean to the left and if the variance of
the distribution remains the same then more of the left tail
of the bell curve shifts below zero. This implies
that a higher percentage of capitals are making a loss.
A fraction of these will go into bankruptcy which will
tend to pinch the curve in towards the mean.
The pinching on the left is obvious, but there will be
a corresponding pinching to the right, because the
losses made on the left hand side of the curve had been
compensated by extra profits on the right hand side. Once
the losses are reduced, so are the extra profits on the right.

So I basically agree with you on the effect of a rising wage
share.
But what I ask is why you suppose that the wage share
will rise?

The increase in bankruptcies that occur as the bell curve
shifts to the left will tend to weaken labour relative to
capital because of unemployment. One would then expect
that the wage / profit relationship would revert to
its previous level.

The dispersion of the rate of profit and the rate
of surplus value are linked, the lower the rate of
surplus value, the smaller is the coefficient of
variation of the rate of profit.
----------------------------------
Ajit
----
This, in my view was
behind Sraffa's basic argument when he argues that all
prices must change when rate of profits change given
the total output constant. This is also behind the
discovery of the Standard commodity. The question was:
why should prices change when distribution changes?
The answer was: to redress the deficit or surpluses
that would emerge in different sectors; it was seen as
an internal necessity of the system. Only from this
ground, he could ask: so if I remove this cause from
some sector then that commodity will have no reason to
change given the cause. And so the Standard commodity
was discovered.  I, of course, would welcome some
suggestions of developing some internal dynamics of
the system--more in the line of quantum mechanics, I
guess--which would also prove the above proposition.

If you have any idea, please send it to me off list.
Currently we are working out the dynamics of the
gravitation mechnism given CRS to see if it, in any
case, works. Cheers, ajit sinha

----------
Paul

There would be a real problem with attempting to
derive the dynamics from quantum theory in that
quantum theory does not allow you to break the
laws of thermodymamics. You can not reduce the
entropy of a closed system like the economy using
any mechanical model whether classical or quantum.
One needs a dissipative system like boolean logic if one is
to reduce the disorder of a system.

These observations are made at a very high level
of generality, as the idea of using a quantum
like mechanical model for anything other than
exchange relations had not occured to me.

>
> www.dcs.gla.ac.uk/~wpc
>
>
>
> -----Original Message-----
> From: OPE-L on behalf of ajit sinha
> Sent: Mon 4/30/2007 11:42 AM
> To: OPE-L@SUS.CSUCHICO.EDU
> Subject: Re: [OPE-L] Sraffa and the question of
> gravitation
>
> --- Paul Cockshott <wpc@DCS.GLA.AC.UK> wrote:
>
> > OK so you are implicityly assuming that R1=R2 =R3
> > this is not evident at this point of your
> > explanation
> >
> > Paul Cockshott
> __________________________
> I'm not implicitly assuming that. All I'm saying is
> that if you aggregate all the sectors of the economy
> and conceive it as one factory ( as Marx time and
> again tries to do), then the input side can be
> multiplied by (1+R) and equated to the output side,
> where R is the average profit for the whole economy.
> If R happens to be not equal to the Srandard rate of
> profit then R1 = R2 = R3 = ... will not be true. It
> will be true only when R is equal to the Standard
> rate. The next step in the argument is that
> inequality
> between R1, R2, R3, ... can exist only if there is
> some outside constraint on the system. Thus when in
> your empirical work you find R's not to be equal,
> one
> explanation for it could be that there is always
> some
> outside interference in the market--for example,
> tariff, tax, subsidies, etc. Furthermore, the real
> world, of course, is more complex and so any model
> designed to clarify a particular theoretical point
> should not be expected to "varify" the real world
> variables immediately. This, of course, was not part
> of the question but I'm just trying to clarify a
> point
> in advance. Cheers, ajit sinha
> >
> > www.dcs.gla.ac.uk/~wpc
> >
> >
> >
> > -----Original Message-----
> > From: OPE-L on behalf of ajit sinha
> > Sent: Sun 4/29/2007 9:52 PM
> > To: OPE-L@SUS.CSUCHICO.EDU
> > Subject: Re: [OPE-L] Sraffa and the question of
> > gravitation
> >
> > --- Paul Cockshott <wpc@DCS.GLA.AC.UK> wrote:
> >
> > > Ajit
> > > I have put a paper entitled, 'Sraffa and the
> > > question
> > > of equilibrium' written by myself and a
> colleague
> > of
> > > mine on the SHE web site. This paper directly
> > deals
> > > with an issue that has been, one way or the
> other,
> > > one
> > > of the major concerns of the discussions on this
> > > list.
> > > I would appreciate all critical or friendly
> > > or a seminar on this paper. I hope the content
> of
> > > the
> > > paper is provocative enough to bring out some of
> > the
> > > people who have been mostly silent on this list.
> > >
> > > Paul C
> > >
> > > Looks an interesting paper but could you
> > > please justify the step in going from your
> > equation
> > > iv
> > > to equations v , vi and vii
> > >
> > > I am not sure what rules of inference you are
> > using?
> > >
> > > Paul Cockshott
> > >
> > > www.dcs.gla.ac.uk/~wpc
> > _____________________________
> > Paul,
> >
> > If you add the three equations to get the equation
> > for
> > the system as a whole then you will get something
> > like:
> > [a(1+R1)+b(1+R2)+c(1+R3)]p1 + ... = X+Y+Z
> > The equation for the system as a whole could also
> be
> > written as:
> > (a+b+c)(1+R)p1 + ... = X+Y+Z
> > The condition of eqs. v-vii is simply saying that:
> > [a(1+R1)+b(1+R2)+c(1+R3)]p1 = (a+b+c)(1+R)p1 and
> > similarly for second column and the third column.
> > Remember, this condition will satisfy the equation
> > whatever the value of R happens to be. However, R1
> =
> > R2 = R3 = ... will be true only if R = the
> standard
> > rate of profit. Cheers, ajit sinha
> > >
> > >
> > >
> > >
> > >  The
> > > paper can be accessed from:
> > >
> > >
> >
>
http://www2.economics.unsw.edu.au/nps/servlet/portalservice?GI_ID=System.LoggedOutInheritableArea&maxWnd=_Heterodox_WorkingPapers> > >
> > >
> > > or from the SHE site:
> > >
> > > http://she.web.unsw.edu.au
> > >
> > > Cheers, ajit sinha
> > >
> > >
> > >
> > >
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>
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