[OPE-L:5521] RE: Luxury goods and profit rate

Duncan K. Foley (dkf2@columbia.edu)
Wed, 24 Sep 1997 09:55:56 -0700 (PDT)

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In reply to Ajit's OPE-L:5395 and Paul's OPE-L:5396:

Ajit wrote:

>>Duncan comments:
>>I'm curious as to exactly how one can measure these labor times "in
>>principle, by observation". What method would you use to calculate the rate
>>of exploitation for a real economy, say the UK in 1997?
>Well, in principle, one can always observe the total number of direct labor
>spent in an economy, say UK in 1997. Of couse, one will have to convert the
>skilled labors into unskilled labor hours. Let's assume that we agree on
>conversion factors. We could also estimate the total amounts of various
>goods and services consumed by the working class as a whole. We can
>definitely observe the technology with which these goods and services and
>their raw materials are produced.

I guess this is something of a weak link in my view. If you mean that
input/output tables represent the technology used, then I would argue that
input/output methodology is in fact a highly indirect way of inferring the
technology used, since it is a transformation of the market price
transactions in the market. That's not to say that there's no information
in the input/output tables, but it seems to me putting the cart in front of
the horse to argue that input/output tables are closer to the "real"
economy than the market price data on which they are based.

Cheers, Duncan

Duncan K. Foley
Department of Economics
Barnard College
New York, NY 10027
fax: (212)-854-8947
e-mail: dkf2@columbia.edu