Re: [OPE-L] equilibrium and simultaneous vs. sequential determination

From: Ian Wright (wrighti@ACM.ORG)
Date: Sun Sep 09 2007 - 13:49:17 EDT

> Have I misunderstood? When you say "the price of every commodity,
> including labour, exactly equals the price of the inputs used-up to
> produce it (input prices equal output prices)" do you actually mean that
> profits (sales less wage and non-wage costs) are zero?

No. We can interpret the rate of profit r in the price of production
formula as the price of money-capital advanced. In this sense, all
output prices equal the cost of all the inputs to production.

> I guess you are treating capitalist consumption as an input to
> production. I cannot understand why you do this.

No I don't do this. Capitalist consumption is an input to capitalist
households. I do however treat money-capital as an input to
production, which is implicit in the price of production formula.

> Are you also saying that the value added by workers is equal to the
> value of workers' consumption?

The standard labour-value added by workers exceeds the labour-value of
workers' csonumption (hence the symmetry breaking). The nonstandard
labour-value added by workers, in self-replacing equilibrium, equals
the nonstandard labour-value of workers' consumption (hence is
symmetry preserving). That's because the nonstandard approach reduces
the commodity money-capital to its labour cost, whereas the standard
approach does not.

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