[OPE-L:5522] Re: Luxury Goods and the Rate of Profit

Duncan K. Foley (dkf2@columbia.edu)
Wed, 24 Sep 1997 09:56:05 -0700 (PDT)

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In reply to Paolo's OPE-L:5434:

Paolo remarks:

>A very short remark on the 'New Solution' :
>I find very difficult to understand the big noise that has been made about
>the 'New Solution'. Gerard Dumenil and Dominique Levy in their most recent
>book ("La dynamique du Capital", PUF 1996, Paris) downgrade it from the
>status of 'solution' to that of an 'interpretation'. It is better to leave
>this semantic decision to posterity. What is sure is that the New Solution
>is nothing but the Sraffa system with nominal wage and a given numeraire.
>Nothing more nothing less. As such it is not able pass the critique
>developed many years ago by Sungur Savran: since the system must be able to
>reproduce itself, since you have a nominal wage how do you know that with
>this wage the workers will be able to get the commodities (the real wage)
>they need ie that the system will meet the existing standard of labour
>power reproduction?

I'm not sure that the "big noise" (if it ever existed) is justified, but I
don't think Paolo's characterization of the NI is accurate, as I've been
trying to explain in other posts. In particular the NI does not take a
position on equalization of profit rates through competition or on the
determinants of the nominal or real wage.


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