[OPE-L:1520] Re: Testing LVT with I/O by Paul, Allin and G J Michaelson

Paul_Cockshott (wpc@cs.strath.ac.uk)
Tue, 19 Mar 1996 02:04:03 -0800

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Iwao Asks:
1. How did you handle depreciation of fixed capital at tesing proportion
-ality of value/price? If depreciation is counted as input, I think we
have to calculate labour content vector as follows under assumption of
simultaneous determination;
where A: ordinary input/output coefficient matrix
B: fixed capital(stock)/output coefficient matrix
D: diagnostic matrix of depreciation rate
v: labour content row vector
L: labour time
(employed income/hourly wage in the paper)
Was your method similar to the above?

Paul answers:
The UK i/o tables contain no information for capital
stock, we were thus unable to include the form of
calculation that you suggest. The flow of
would, we assume be included in the data for the
flow matrix. This means that our prices of production
in this paper are on a flow basis.

We have recalculated similar results for the US
but using the capital stock data there and I
shall post these on the web page shortly.
These seem to show that rate of profit in the
US is a declining function of the organic


2. How did you handle indirect tax/subvention at testing proportionality of
price/value? There must be several sectors among 100? sectors
where indirect tax is the most major factor of price determination.

If I recall correctly, we treated corporation tax
as part of the surplus. No provision was made
for other taxes like oil tax.


3. Why didn't you choice testing the proportionality of money expression of
net value added and labour hours? I think it easier to test the relationship
between price and value by this.

We do this in the paper 'Value price
as a real process', on the same web page.