>If you want more specificity, consider another two-good economy. >Sector A produces 10 units of A, using 9 units of A and 1 unit of >labor. Sector B produces 3 units of B, using up 2 units of A and >1 unit of labor. So there's a positive net product of B, 3 units, >and a negative net product of A, 10 - 9 - 2 = -1 unit. Now under >the interpretation in question, the per-unit value of A is 1 and >the per-unit value of B is also 1, so the total value of the net >product is 2. Imagine that workers' wages are *very* low, so that >surplus-labor, the total value of the net product minus the value >of wages, is very close to 2. If, however, the relative price of >A in terms of B is greater than 3, then profit -- measured >simultaneously -- will be negative. So we have surplus-labor but >negative profit.
Why would anyone carry out production of a good worth half as much as its inputs? What you appear to have proved here is that if workers are employed to destroy valuable items, then profit will be negative. I suppose that would be news to the analysts who covered boo.com or something, but probably not to anyone else. I'm probably being thick here, but I don't see how your assumption about the relative prices of A and B is a legitimate one here; unless the less stylised version of this argument has some compelling reason why production of B would take place under these relative prices, I'm not sure that this conclusion can be established dd ___________________________________________________ Email Disclaimer This communication is for the attention of the named recipient only and should not be passed on to any other person. Information relating to any company or security, is for information purposes only and should not be interpreted as a solicitation or offer to buy or sell any security. The information on which this communication is based has been obtained from sources we believe to be reliable, but we do not guarantee its accuracy or completeness. All expressions of opinion are subject to change without notice. All e-mail messages, and associated attachments, are subject to interception and monitoring for lawful business purposes. ___________________________________________________
