Michael Perelman wrote: > The problem that Ajit ignores is that most capital goods do not have a *price*. For >example, a > specialized piece of capital goods may be specific to my firm. It might have a very >low value for any > other firm or have to be sold for scrap. If an accident destroyed this machine, I >would buy a new one. _______________ Michael, your firm must have a market value today. How do you arrive at the market value of your firm? You must, or rather the market must impute some value to your vintage capital goods. Whatever the value imputed by the market of your particular specialized capital good is the price at with it should be valued for determining the rate of profit in your firm today. If it happens to have no market value then its contribution to the denominator is zero. The fundamental point I made was that the calculation of generalized rate of profits has nothing to do with inflation or deflation. And i fail to see what inflation or deflation have to do with your particular example, where the good seem to have no market price to begin with. Cheers, ajit sinha > > > What is its price? The cost of a new machine? Its price on the second hand market, >which is as yet > undetermined? Prices are hard enough to calculate. What is its value? > > Ajit Sinha wrote: > > > I find it hard to believe. If a capital good has no value in the market today, >then of course it > > should be valued at zero dollars. However, all firms do have some market value, >which must be arrived > > at by some estimation of the value of old capital goods today. Cheers, ajit sinha > > > > > > > > > > > Ajit Sinha wrote: > > > > > > > We take the price of the computer today to value the capital stock. What is the > > > > problem with that? Cheers, ajit sinha > > > > > > -- > > > Michael Perelman > > > Economics Department > > > California State University > > > Chico, CA 95929 > > > > > > Tel. 530-898-5321 > > > E-Mail [EMAIL PROTECTED] > > -- > > Michael Perelman > Economics Department > California State University > [EMAIL PROTECTED] > Chico, CA 95929 > 530-898-5321 > fax 530-898-5901
