**From:** ajit sinha (*sinha_a99@YAHOO.COM*)

**Date:** Sat Sep 22 2007 - 10:26:47 EDT

**Next message:**Fred Moseley: "Re: [OPE-L] equilibrium and simultaneous vs. sequential determination"**Previous message:**Paul Cockshott: "Re: [OPE-L] Queries about Karl Marx vs Adolph Wagner on value, exchange value and price formation"**In reply to:**Fred Moseley: "Re: [OPE-L] equilibrium and simultaneous vs. sequential determination"**Next in thread:**Fred Moseley: "Re: [OPE-L] equilibrium and simultaneous vs. sequential determination"**Reply:**Fred Moseley: "Re: [OPE-L] equilibrium and simultaneous vs. sequential determination"**Messages sorted by:**[ date ] [ thread ] [ subject ] [ author ] [ attachment ]

--- Fred Moseley <fmoseley@MTHOLYOKE.EDU> wrote: > Quoting ajit sinha <sinha_a99@YAHOO.COM>: > > > --- Fred Moseley <fmoseley@MTHOLYOKE.EDU> wrote: > > >> 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 > > 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. > > Thanks, > Fred __________________ Well, I tell you put 2 and 2 together and you tell me, well you keep telling me to put 2 and 2 together but don't tell me how much do they make. In the earlier mail I explained to you that you don't understand that *rate of profit* has time dimension. The word "rate" should give one the clue that this must be in relation to time. But it seems you have not grasped this idea yet. In your above example, you have an industry which has a rate of profit equal to 25% per year and another sector has a rate of profit more than (and not equal to) 50% per year. Now, you must know that Sraffa takes rate of profits to be equal for all the sectors. So, now you should see that your example has nothing to do with differences in turn over periods but it is rather giving different rates of profits to different sectors. Now, classical economists including Marx assumed that there was something called a gravitation mechanism ("a law of value") in the market that ensured that the rate of profits are equalized for all the sectors. Sraffians think that Sraffa also relied on the classical argument in assuming equal rate of profits. I think that equalization of the rate of profits is a logical result of any complex system of basic goods as long as the system is not interfered with from outside (such as some kind of price control etc.). But in any case, how is it a criticism of the Sraffian system that it does not solve the price equations with arbitrary rate of profits for different sectors? The confusion is in your head not in Sraffa's theory. I'm sorry to be responding so late--I was taking vacation in Créte (Greece) for a week, which was great! Cheers, ajit sinha ____________________________________________________________________________________ Luggage? GPS? Comic books? Check out fitting gifts for grads at Yahoo! Search http://search.yahoo.com/search?fr=oni_on_mail&p=graduation+gifts&cs=bz

**Next message:**Fred Moseley: "Re: [OPE-L] equilibrium and simultaneous vs. sequential determination"**Previous message:**Paul Cockshott: "Re: [OPE-L] Queries about Karl Marx vs Adolph Wagner on value, exchange value and price formation"**In reply to:**Fred Moseley: "Re: [OPE-L] equilibrium and simultaneous vs. sequential determination"**Next in thread:**Fred Moseley: "Re: [OPE-L] equilibrium and simultaneous vs. sequential determination"**Reply:**Fred Moseley: "Re: [OPE-L] equilibrium and simultaneous vs. sequential determination"**Messages sorted by:**[ date ] [ thread ] [ subject ] [ author ] [ attachment ]

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