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

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Sun Sep 16 2007 - 05:55:21 EDT

Yes but this is just a simplifying assumption on his part. The procedure to adjust for variable turnover times is not rocket science.

Paul Cockshott

-----Original Message-----
From: OPE-L on behalf of Fred Moseley
Sent: Sun 9/16/2007 1:10 AM
Subject: Re: [OPE-L] equilibrium and simultaneous vs. sequential determination
Quoting Paul Cockshott <wpc@DCS.GLA.AC.UK>:

> Sraffa would never have made the assumption that both A and B return
> a profit of $50

But if these two industries were part of a general system of equations
in which the rate of profit was determined, then it would have to be
assumed that these two industries have the same rate of profit, even
though they have unequal turnover times, because only one rate of
profit is determined for all industries.

The only other option would be to assume that all turnover periods are
the same, which is what Sraffa did (and the Sraffians do).  Since the
rate of profit is the same for all industries, and the rate of profit
is equalized over the equal periods of time, all industries must be
assumed to have equal turnover times.


> Hi Ajit,
> What you continue to say about Ricardo and compound interest does not
> answer my question about Sraffa's theory.
> Assume that $200 is invested in industry A and industry B.  The $200 in
> industry A is recovered in 12 months, plus a profit of $50, so that the
> rate of profit for its turnover period is 25%, which is also the annual
> rate of profit.
> Assume that the $200 invested in industry B is recovered in 6 months,
> also with a profit of $50.  So the rate of profit for its turnover
> period is also 25%, but its annual rate of profit is 50% because it
> turns over twice.
> Please explain how compound interest solves this problem, i.e. how it
> equalizes the annual rate of profit in these two industries with
> unequal turnover periods.

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