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

From: ajit sinha (sinha_a99@YAHOO.COM)
Date: Wed Sep 12 2007 - 05:20:34 EDT

--- Fred Moseley <fmoseley@MTHOLYOKE.EDU> wrote:

> Quoting ajit sinha <sinha_a99@YAHOO.COM>:
> > _____________________________
> > I really don't understand the nature of your
> problem.
> > As Ricardo clearly tells you what is a circulating
> > capital for one could be treated a relatively
> fixed
> > capital for other. The distinction between fixed
> and
> > circulating capital is a matter of convention.
> > Ultimately all these differences boil down to
> > differing time-structure of capital--and this is
> the
> > source of all the problem. Differences in organic
> > composition of capital of Marx must show up as
> > differences in time-structure of capital of
> Ricardo.
> Ajit, this is not my problem.  This is a problem in
> Sraffian theory.
> The problem, as I have explained in an earlier post,
> is that Sraffian
> theory (in which all capital is treated as
> circulating capital, because
> fixed capital is treated as a “joint product”), all
> industries must be
> assumed to have the same turnover period, if the
> rate of profit that is
> determined by the system of equations is to be
> equalized over the same
> period of time.  If, on the other hand, turnover
> periods were not equal
> across industries, then the rate of profit
> determined by the equations
> would be equalized for different turnover periods,
> which would mean
> that the annual rate of profit for different
> industries would not be
> equal, contrary to the prevailing tendency.
> For example, if a given capital in one turnover
> period has a rate of
> profit of 5%, and it turns over twice a year, then
> it will have an
> annual rate of profit of 10%.  If another capital in
> another industry
> also has a rate of profit of 5%, but turns over 10
> times in a year,
> then its annual rate of profit would be 50%.
> I hope this clarifies the problem.  Any suggested
> solutions?
> Fred
That definitely clarifies the problem, which is that,
as I had expected, the problem is with your
understanding of the problem rather than with Ricardo
or Sraffa. Rate of profits is given in terms of period
of time. Now a days banks compound your rate of
interest on almost daily basis, if your bank tells you
that the rate of interest on your deposit is 5%, then
would you expect that your daily rate of interest
should be (5x365)%? Why not just read Ricardo? He will
solve all your problem. Cheers, ajit sinha
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