Re: Surplus Value or Profit

[Gunnar Tómasson <gunnar.tomasson@xxxxxxxxxxx>]

Re. the following:

> Surely Sraffa, in PCMC, demonstrated that profit could arise in a
> static/closed system: in Sraffa's demonstration, wages+profits =
> determinate, but neither could be determined endogenously on their own.

Comment:

The proposition that 'surplus value or profit' is a concept in search of an
explanation is predicated on the non-Sraffian notion that 'Production of
Commodities by Means of Factor Inputs' must PRECEDE 'Production of
Commodities by Means of Commodities' - if 'surplus value or profit' cannot
in principle arise in the context of PCMFI, then its appearance in the
context of Sraffa's PCMC must in principle be the product of 'final demand
inflation' as defined earlier.

> In the ultimate closed economy, the feudal barony, the serfs laboured and
> produced food, some of which they ate; the baron did not labour but
consumed
> a lot.  Was the baron making a profit or did he merely receive the factor
> cost of the land that he permitted the peasants to cultivate?

Comment:

Neither Böhm-Bawerk nor Schumpeter had "the feudal barony" in mind when
contemplating the analytical problem, on which the latter reported in 'The
Theory of Economic Development': "Böhm-Bawerk was indeed the first who
expressly said that the whole value of the product must in principle be
divided between labor and land, if the process of production is to proceed
with ideal perfection."

At issue is the 'source' or 'origin' of profit in monetized entrepreneurial
market economies.

> Who cares?

Sraffians did not 'care' - for obvious reasons.

In his Preface to the English edition of 'The Theory of Economic
Development', Schumpeter identified himself as one who DID care as follows:

"I have not been able to convince myself, for example, that such questions
as the source of interest [on production credit or entrepreneurial profit -
insert GT] are either unimportant or uninteresting.  They could be made so,
at all events, only by the fault of the author."

Among whom, apparently, Sraffa was one.

Gunnar


----- Original Message -----
From: "John M. Legge" <jlegge@xxxxxxxxxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>
Sent: Monday, November 19, 2001 11:23 PM
Subject: Re: Surplus Value or Profit


> Surely Sraffa, in PCMC, demonstrated that profit could arise in a
> static/closed system: in Sraffa's demonstration, wages+profits =
> determinate, but neither could be determined endogenously on their own.
>
> In the ultimate closed economy, the feudal barony, the serfs laboured and
> produced food, some of which they ate; the baron did not labour but
consumed
> a lot.  Was the baron making a profit or did he merely receive the factor
> cost of the land that he permitted the peasants to cultivate?
>
> Who cares?
>
> JML
>
> > -----Original Message-----
> > From: pkt-owner@xxxxxxxxxxxxxxxx [mailto:pkt-owner@xxxxxxxxxxxxxxxx]On
> > Behalf Of John Vertegaal
> > Sent: Tuesday, 20 November 2001 2:30 AM
> > To: POST KEYNESIAN THOUGHT
> > Cc: Gunnar T¢masson
> > Subject: Re: Surplus Value or Profit
> >
> >
> >
> > Gunnar T¢masson wrote:
> >
> > >The "exogenity of investment" is NO part of my argument.
> >
> > Then, where and how in chapters 4 and 6 does the system "open
> > up"?
> >
> >
> > >It is incoherent for Keynes to 'reason' AS IF 'Surplus Value
> > >or Profit' can arise within a Closed System - as noted in
> > >previous postings, this elementary point was clear to
> > >Böhm-Bawerk and Schumpeter alike.
> >
> > It may be clear to B-B, S and you, but by calling it
> > "elementary" you make it sound like it being axiomatic.
> > And I would suggest that it doesn't stand up to real world
> > scrutiny.
> >   Although "Surplus Value" is a very loaded term, depending
> > on a whole lot of definitions and I would tend to agree there
> > being no place for it in "real world" economics; profit as
> > simply meaning monetary returns in excess of disbursements
> > made, can most certainly arise within a closed system as I
> > will show (again) below.
> >
> > Entrepreneurs are endowed with the power to set prices over
> > costs.  They all, if they are to survive, pass incurred costs
> > on down to the retail level.  There, these passed-down costs
> > and profit embodied items are exchanged for factor incomes
> > and the circle is completed.  It makes no difference whether
> > these personal incomes at higher levels were acquired ex ante
> > in the form of costs, or ex post in the form of profit
> > (sharing).  To retail entrepreneurs, having to disburse the
> > equivalence of this income ex ante in the process of putting
> > their output up for sale, it only matters it does return from
> > whoever received it in the first place, or they'll be out of
> > business.  Retail level profit is similarly determined in a
> > drawn out fashion through the direct spending on retail
> > output, by those having received it or their proxies.
> >
> > This scenario makes perfect sense if the notion of debt is
> > attached to all economic assets and that the resolution of
> > this debt normally takes place with the withdrawal of retail
> > output, into economic exogeneity.  Meaning, as Adolph Lowe
> > realized, utility is exogenous to the economy.  And with
> > utility being exogenous, so will be the "final" decision
> > making process; hence, the economy's fundamental uncertainty
> > at any time.
> >
> > Coherent methodology? too abbreviated to be sensible? or what?
> >
> > John V
> >
> >
>
>