From: Diego Guerrero (diego.guerrero@CPS.UCM.ES)
Date: Thu Nov 30 2006 - 17:34:00 EST
Re: [OPE-L] SV: [OPE-L] what is irrational in the functionHi Rakesh, Do you know if Spencer Pack thinks that the following is a model of total automation? 28 bottles of wine => 56 bottles of wine 16 bottles of wine => 48 units of gold 12 bottles of wine => 8 units of wheat 56 bottles of wine => 56 bottles of wine, 48 units of gold, 8 units of wheat Cheers, Diego ----- Original Message ----- From: Rakesh Bhandari To: OPE-L@SUS.CSUCHICO.EDU Sent: Thursday, November 30, 2006 6:09 PM Subject: Re: [OPE-L] SV: [OPE-L] what is irrational in the functioning ofcapitalism? Ajit and others may be interested in this post I sent four years ago to OPE-L http://ricardo.ecn.wfu.edu/~cottrell/OPE/archive/0208/0056.html A model of total automation; Spencer Pack gives a simple example. 28 56 0 0 16 0 48 0 12 0 0 8 56 56 48 8 What we have in the first column is inputs of computers (28,16,12, 56 total) needed to make 56 computers, 48 units of gold, and 8 units of wheat. That is, 28 computers => 56 computers 16 computers => 48 units of gold 12 computers => 8 units of wheat 56 computers => 56 computers, 48 units of gold, 8 units of wheat The economy is in simple reproduction because it produces only 56 new computers, and 56 computers are needed to produce computers, gold and wheat at the same scale again. There is no direct labor in this economy; there is not even indirect labor as computers, gold and wheat are themselves the products of commodities--the literal production of commodities by commodities. According to Pack this economy can be solved for relative prices and a uniform profit and absolute prices as well if we assume by definition that the price of one unit of gold equals $1. (1 + r) (28pc) = 56 pc (1 + r) (16pc) = 48 (1 + r) (12pc) = 8pw r is the profit rate while pc and pw are the unit prices of computers and wheat. From the first equation we know the profit rate has to be 100%; price of one computer is $1.50 and price of one unit of wheat is $4.50. So contrary to the LTV, there can be a positive rate of profit and relative prices in a totally automated economy.
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