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

From: Ian Hunt (ian.hunt@FLINDERS.EDU.AU)
Date: Sun Sep 30 2007 - 21:59:16 EDT

Dear Fred,
With annual reporting, capitalists are certainly 
interested in the annual rate of profit. But 
would this not be the"weekly" rate of profit 
compounded? If thts i, would not the difference 
be merely one of presentation?

>Quoting Ian Hunt <ian.hunt@FLINDERS.EDU.AU>:
>>Dear Fred,
>>One initial lead on semi-finished products is Steedman "Marx After
>>Sraffa":  182-3. Steedman refers us for further detail to Morishima
>>"Marx's Economics", CUP, 1973,
>Hi Ian,
>Sorry for my delay in responding.  I have had no time for opel this
>week.  Thanks very much for these references.  I took a quick look at
>Steedman, and he does exactly as you say:
>1.  The Sraffian system of equations is redefined to be in terms of a
>unit “short period” (a “week” he calls it), and all real-world turnover
>periods are expressed as “integer multiples” of this “week”.  In
>Steedman’s words:
>“It was assumed, arbitrarily, at the beginning of the this chapter [and
>indeed in the whole book up to this point] that each productive process
>takes one ‘YEAR’ to complete, but such a STRONG ASSUMPTION is NOT
>REALLY NECESSARY.  Suppose instead – and FAR MORE PLAUSIBLY [!]- that
>each process takes an INTERGER MULTIPLE of some SHORT PERIOD, called a
>‘WEEK’…  All inputs to and outputs from a ‘productive activity’ are now
>defined to be those involved *IN ONE WEEK’S OPERATION* …”  (p. 182;
>brackets and capitalized emphasis added)
>2.  Under this assumption, not only are “partially used machines” (and
>other forms of fixed capital) assumed to be “joint products” (i.e.
>fully consumed each “week”), but also “partially finished products” are
>also assumed to be “joint products” (i.e. as distinct commodities with
>prices of production each “week”).
>“Correspondingly, the number of products involved will be increased,
>PERHAPS GREATLY [!], since any ‘SEMI-FINISHED’ PRODUCT, in the normal
>sense, will now appear as one of the specific products of a particular
>WEEK-LONG PROCESS and must be regarded as a DISTINCT COMMODITY.  Each
>product, whether a finished product, a semi-finished product, or a
>partially used piece of fixed capital equipment, is thus treated as a
>distinct ‘COMMODITY’ and has ITS OWN PRICE OF PRODUCTION.”  (ibid.)
>3.  Next, the Sraffian system of equations is rewritten, and the rate
>of profit that is determined by these equations is the “RATE OF PROFIT
>“Once the above CONVENTIONS have been adopted, one may simply write
>       pB  =  ma = (1+r)pA
>where is it now understood that r is the RATE OF PROFIT PER ‘WEEK’,
>that B, a, and A refer to *all* the WEEK-LONG PRODUCTION ACTIVITIES,
>and that p, B and A contain entries for *every* ‘COMMODITY’ as now
>defined.  (ibid; a superscript m on p in the above has been omitted).
>4.  Thus we can see that the rate of profit that is determined by this
>redefined system of equations is a “week rate of profit”, not the
>annual rate of profit.  The “week rate of profit” is determined
>simultaneously with hypothetical “week prices of production” at the end
>of each “week” (hypothetical because “partially finished products” and
>“partially used machines” are not actually exchanged at the end of each
>week).  This theory implies that the rate of profit that is equalized
>by capitalist competition is this “week rate of profit”.
>It seems to me that Steedman’s “far more plausible” assumption is not
>very plausible at all.
>By contrast, the rate of profit that is determined in Marx’s theory is
>the annual rate of profit, which is determined by the ratio of the
>total surplus-value produced in the economy as a whole in a year to the
>total capital invested in that year.  Marx’s theory assumes that the
>rate of profit that is equalized by capitalist competition is this
>annual rate of profit.
>It seems to me that this is a “far more plausible” assumption.
>This message was sent using IMP, the Internet Messaging Program.

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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