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

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Fri Sep 14 2007 - 04:31:34 EDT

Fred surely this is just an artefact of the fact that Sraffa uses
difference equations rather than the full formalism of differential
calculus. For his theoretical concerns -- primarily the critique of
neoclassical theory difference equations were quite adequate. If one
wants to go further, reformulating it all in differential terms is not
difficult, in which case turnover time vanishes as a distinct concept,
instead you have stocks of means of production, flows of replacement of
these stocks. The theoretically tricky bit would be the valuation of the
stocks which would have to be expressed as an integral function.

-----Original Message-----
From: OPE-L [mailto:OPE-L@SUS.CSUCHICO.EDU] On Behalf Of Fred Moseley
Sent: 12 September 2007 02:24
Subject: Re: [OPE-L] equilibrium and simultaneous vs. sequential

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?


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