No abstract

Few would question the centrality in classical economic theory of the idea that the mobility of capital (and labour) between industries tends both to bring about a uniformity of rates of profit and to drive the market prices of commodities towards the corresponding natural prices. In the first section of this paper the presentations of this idea given by Smith, Ricardo and Marx are briefly reviewed, particular attention being paid to the way in which they associated a positive (negative) deviation of a commodity's market price from its natural price, with a positive (negative) deviation of the corresponding industry's profit rate from the natural rate. That there should be such a positive correlation of price deviations and profit rate deviations is not immediately obvious, since an industry's means of production will themselves be purchased a t market, rather than natural, prices. Could it not happen, then, that an industry whose product's market price lies above its natural price, purchases a,s produced inputs commodities whose merket prices lie "even more above" their natural prices, with the result that that industry has a profit rate below the natural rate? I n the second section of this paper, it is demonstrated that it could indeed happen. In order to simplify the discussion and to focus on one issue a t a time, however, that ddmonstration is given not in the context of tt competitive process but in the context of an unchanging economy in which each industry earns a different rate of profit. Having shown that price deviations and profit rate deviations need not be in the same direction, one is naturally led to consider whether the competitive *Manuscript received 21.1.83; final version received 14.2.84.tI should like to thank R. Arena,

Jevons's Theory of Capitaland Interest* * refer here to the wage expressed as a bundle of commodities, its value, at the "natural" prices of the commodities, being the "natural" wage, (cf.Ricardo's Principles. Chap. V, passim).

No abstract

No abstract