**From:** Fred Moseley (*fmoseley@MTHOLYOKE.EDU*)

**Date:** Sat Oct 06 2007 - 10:42:36 EDT

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A brief summary of the Sraffian theory of the “weekly” rate of profit: 1. First there are n equations for n industries, with no fixed capital and equal turnover periods in all industries. 2. Then in order to take fixed capital into account, there are m additional equations for each industry, where m is the average lifetime of the different types of capital goods. So now there are (n x m) equations. This assumes that there is only one type of fixed capital good in each industry. If there is more than one type of fixed capital good in each industry, then they all must be treated together as a “plant”, and all must be assumed to have the same lifetime. This procedure means that only the price of the “plant” can be determined; the price of each type of capital good within the "plant" cannot be determined. Plus this also assumes that the “age distribution” of each type of fixed capital good is “uniform”, i.e. the quantity of each age of each type of fixed capital good must be the same, and this quantity must be a multiple of the lifetime of this type of fixed capital good. Otherwise there cannot be exact reproduction of the physical quantities every period, as the theory assumes. 3. Then in order to take into account unequal turnover periods of circulating capital across industries, all the equations must be redefined in terms of the shortest turnover period in the economy as a whole (e.g. a “week”). If t is the average number of “weeks” in the actual turnover periods in each industry, then we would have (n x m x t) equations, with all the above unrealistic assumptions. Fixed capital goods are also now assumed to turn over each “week” rather than each year, so the number of “partially used machines” treated as “joint products” is multiplied accordingly. 4. It seems ludicrous to me that the rate of profit in the real capitalist economy could be determined on a “weekly” basis by this whole complex of physical relations, many of which are fictitious, and that this “weekly” rate of profit is the rate of profit that is equalized by capitalism competition. The number of equations may equal to the number of unknowns, but this does not mean that this is the way the rate of profit is determined in the real capitalist economy. It seems much more reasonable to me that the rate of profit is determined by the aggregate ratio of the total annual surplus-value to the total advanced capital, with the total surplus-value determined by the total surplus labor and the total advanced capital taken as given (as the M in M-C … M’). What do others think? Comradely, Fred ---------------------------------------------------------------- This message was sent using IMP, the Internet Messaging Program.

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