Re: [OPE-L] models with unequal turnover periods

From: Fred Moseley (fmoseley@MTHOLYOKE.EDU)
Date: Tue Sep 11 2007 - 21:29:01 EDT

Quoting Ian Hunt <ian.hunt@FLINDERS.EDU.AU>:

> Dear Fred,
> My paper explicitly refers to the turnover period of capital in
> industry i, so that implicit in that is the possibility that. It is
> not the same as Medio's. It is based in fact on Brody and I only
> follow Medio in taking prices to be prices per unit of value (Medio's
> theory is does not distinguish between fixed and circulating by
> making the assumption you mention).

Hi Ian,

Thanks for your clarification.

I will take another look at Brody (although unfortunately neither I nor
my library has a copy).  Maybe Brody is an improvement over Sraffa on
the issue of turnover times.  We shall see.

I wondered what the Sraffians think about Brody’s treatment of fixed
capital and turnover time, and I took a look at Kurz and Salvadori’s
Theory of Production. There is one reference to Brody in 500 pages, and
it is about heterogeneous labor, not turnover time.

I will try to return a consideration of Brody's treatment of fixed
capital and turnover times, when I get a copy of the book, and as time
permits.  In the meantime, would you please summarize for me your
system of equations that determines prices of production and the rate
of profit.  This is not clear to me from your article.  Thanks.


> The turnover of capital in industry i = the turnover of fixed capital
> in i plus the turnover of period of constant capital in i plus the
> turnover period of variable capital in industry i. These turnover
> periods are not assumed to be equal across industries in any of these
> cases. I get turnover periods by distinguishing between stocks and
> flows. The rate of profit, of course, is the annual rate of profit on
> my model but it can rise and fall because of changes in turnover
> periods. Thus one counteracting tendency to the tendency of the rate
> of profit to fall is that the turnover period of constant and
> variable capital in some industries declines, due eg to "just in
> time" inventories of parts. The applicability of "just in time', of
> course, varies between industries.
> I don't think that my model makes any assumption about when
> commodities are exchanged, although it does assume that the rate of
> profit on capital is a temporal rate. It does make some
> idealizations, of course: prices per unit of value are really
> averages of a range of prices per unit of a range of values, etc. The
> assumption that the price of inputs is the same as the price of
> outputs is based on the fact that purchases and sales of a product
> intermingle, so that the price of a commodity as an input and its
> price as an output will be determined on the same day for at least
> some firms.
> Turnover periods are different because different stocks of money
> capital are required to generate different sorts of flows: relating
> the distinction between stocks and flows to exchange is just
> confusing: in fact, for really small turnover periods (less than 1,
> say, if a year is taken as the reference point) you have to have
> stocks of capital replenished by sales that occur in shorter periods
> than a year (one of the bases of the separation between commercial
> and industrial capital is just that effect)
> Cheers,
> Ian
>> Quoting Ian Hunt <ian.hunt@FLINDERS.EDU.AU>:
>>> Dear Fred,
>>> The paper is titled 'An Obituary or a New Life for the Tendency of
>>> the Rate of Profit to Fall' and can be found in  Review of Radical
>>> Political Economics, 15:1, 1983, pp. 131-148. It has got a few typos
>>> in it (URPE did not in those days always return the text to authors
>>> for checking) but these are relatively easy to sort out - if you have
>>> any trouble let me know and I will tell you what they are supposed to
>>> be. I am trying to produce a decent scanned copy: if I do, then I
>>> will send that electronically, with typos fixed.
>>> By turnover period, I mean the sum of the turnover period of fixed
>>> capital plus the turnover period of constant capital plus the
>>> turnover period of variable capital, which can of course all differ
>>> and contain different variants. These differences are explicitly
>>> taken into account in the paper.
>> Hi Ian,
>> The differences in turnover periods between fixed (constant) and
>> circulating (constant and variable) capital are not what I am talking
>> about.  Rather, I am talking about the differences in turnover periods
>> of circulating capitals in DIFFERENT INDUSTRIES.  These differences are
>> not taken into account in your paper.  Your paper is based on Medio’s
>> model which explicitly assumes an equal turnover period in all
>> industries.  Medio wrote (p. 332):  “Consider an economy of n
>> industries, each of them producing a given amount of a single commodity
>> in a GIVEN INTERVAL OF TIME, let us say a YEAR.” (emphasis added)  This
>> is the assumption I am talking about.
>> And my point is that this is a necessary assumption in Sraffian theory
>> because, if there were unequal turnover periods, then the rate of
>> profit determined by the simultaneous equations would be equalized
>> across different turnover periods, which in turn would imply unequal
>> annual rates of profit, contrary to the prevailing tendency.  Plus,
>> simultaneous determination requires that all commodities are exchanged
>> at the same time, which in turn requires that they all must have the
>> same turnover period.
>> Comradely,
>> Fred
>> ----------------------------------------------------------------
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> --
> Associate Professor Ian Hunt,
> Dept  of Philosophy, School of Humanities,
> Director, Centre for Applied Philosophy,
> Flinders University of SA,
> Humanities Building,
> Bedford Park, SA, 5042,
> Ph: (08) 8201 2054 Fax: (08) 8201 2784

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