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Post-Sraffian Terminology

Summary:
Terms that include the word 'pattern' are my own creation, as inspired by my research program. The remainder are, as far as I am concerned, standard terminology, some of which you would be introduced to if you were taught price theory properly. (Most of what is in mainstream microeconomic textbooks is, at best, wrong.) The definitions are my own, although obvious inspired by my reading. Absolute rent: A price paid for a year's services for land under cultivation due to barriers to entry to agriculture that would be otherwise manifested in persistent higher rates of profits in farming. Basic commodity: A commodity that is productively consumed, either directly or indirectly, in the production of each commodity produced in an economy. Capital reversing: The association of a higher

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Terms that include the word 'pattern' are my own creation, as inspired by my research program. The remainder are, as far as I am concerned, standard terminology, some of which you would be introduced to if you were taught price theory properly. (Most of what is in mainstream microeconomic textbooks is, at best, wrong.) The definitions are my own, although obvious inspired by my reading.

  • Absolute rent: A price paid for a year's services for land under cultivation due to barriers to entry to agriculture that would be otherwise manifested in persistent higher rates of profits in farming.
  • Basic commodity: A commodity that is productively consumed, either directly or indirectly, in the production of each commodity produced in an economy.
  • Capital reversing: The association of a higher rate of profits around a switch point with a cost-minimizing technique with a more capital-intensive technique. Also known as a positive real Wicksell effect.
  • Circulating capital: Produced commodities that are completely consumed in producing other commodities. Contrast fixed capital.
  • Coefficient of production: The amount of a specified commodity that is required as an input to operate a given process at a unit level or the amount of a specified commodity that is produced in operating the given process at a unit level.
  • Differential rent of the first kind: See extensive rent.
  • Differential rent of the second kind: See intensive rent.
  • Extensive rent: A price paid for a year's services for land under cultivation due to the need to cultivate more than one type of land to satisfy requirements for use while prices of production prevail.
  • External intensive rent: A price paid for a year's services for land under cultivation due to the need to more than one process, in an industry that uses negligible inputs land, so as to satisfy requirements for use while prices of production prevail. See intensive rent.
  • Factor price frontier: See wage frontier.
  • Finished good: A produced commodity that is either a consumption good, circulating capital, or a newly produced machine.
  • Fixed capital: Produced commodities that are used in producing other commodities and last over more than one production period. A good used as fixed capital is often referred to simply as a 'machine'. Contrast circulating capital.
  • Forward substitution of labor: The association of a higher rate of profits, or lower wage, around a switch point with a cost-minimizing technique in which, in one industry, the labor per unit of gross output produced is larger. Contrast with reverse substitution of labor.
  • Four-technique pattern of switch points: Occurs when there is a switch point at which four wage curves intersect.
  • Intensive rent: A price paid for a year's services for land under cultivation due to the need to operate more than one process on that land to satisfy requirements for use while prices of production prevail.
  • Intermediate good: An old machine.
  • Joint production: The phenomenon in which some production process produces more than one commodity, such as wool and mutton. Fixed capital, in which a production process produces a finished good and a machine one year older than it was when used as an input is an example. Land, which is both an input to a production process and is an unchanged output, along with a finished good, provides another example.
  • Leontief input-output matrix: A matrix of coefficients of production in models of circulating capital, where each coefficient is the amount of a specified commodity needed in the production of a unit amount of another specified commodity. Leontief matrices are often supplemented by vectors of labor coefficients, matrices for land inputs, and so on.
  • Market prices: Prices existing in markets at a particular moment in time. Market prices are consistent with inequalities in the quantities supplied and demanded and with momentary variations in the rates of profits among industries. Contrast with prices of production.
  • Natural prices: See prices of production.
  • Normal prices: See prices of production.
  • Order of efficiency: See order of fertility.
  • Order of fertility: In models with extensive rent, the order in which lands of different types are taken into cultivation, at a given rate of profits or a given wage, as the quantities in requirements for use expand. Also known as the order of efficiency.
  • Order of rentability: In models with extensive rent, the order of lands of different types from high rent per acre to zero rent, at a given rate of profits or a given wage.
  • Pattern (of switch points) for the requirements for use: Occurs with an indeterminancy in prices and levels at which processes are operated in the cost-minimizing techniques at a given rate of profits. This indeterminancy arises in models of joint reproduction due to the need to satisfy requirements for use.
  • Pattern (of switch points) in the r-order of fertility: Occurs when a switch point associated with a change in the order of fertility of land not on the margin is at the same rate of profits as a switch point on the axis for the rate of profits.
  • Pattern (of switch points) in the w-order of rentability: Occurs when a switch point associated with a change in the order of fertility of land not on the margin is at the same wage as a switch point on the axis for the wage.
  • Pattern (of switch points) over the axis for the rate of profits: Occurs when there is a switch point at a wage of zero.
  • Pattern (of switch points) over the wage axis: Occurs when there is a switch point at a rate of profits of zero.
  • Prices of production: Given technology, the rate of profits or the wage, and requirements for use, prices of commodities consistent with the smooth reproduction of a capitalist economy. Contrast with market prices.
  • Process: A process of production is specified by the quantities of labor, of a specified type of land, and of specified commodities needed to produce a specified output. Under joint production, the output can consist of more than one commodity. A technique consists of a set of processes.
  • Rate of profits: The quotient of the difference between revenue and costs in a process and the costs paid in advances at the start of the production period. The rate of profits is the same for all operated processes when prices of production prevail if there are no barriers to entry or other causes of persistent differences among industries.
  • Recurrence of processes: Occurs when a process is in the cost-minimizing techniques, at two disjoint ranges of the rate of profits, while that process is not in the techniques cost-minimizing at the rates of profits between these two ranges. The recurrence of processes always arises when techniques recur, but the recurrence of processes can occur without the recurrence of techniques.
  • Recurrence of techniques: Occurs when one technique is cost-minimizing at two disjoint ranges of the rate of profits, while one or more other techniques are cost-minimizing at the rates of profits between these two ranges. The recurrence of techniques always arises when techniques reswitch, but the recurrence of techniques can occur without the reswitching of techniques.
  • Requirements for use: The level and composition of net output or of a consumption basket, specified as given in models of production.
  • Reswitching of techniques: Occurs when one technique is cost-minimizing at two disjoint ranges of the rate of profits, while another technique is cost-minimizing at the rates of profits between these two ranges.
  • Reswitching pattern (of switch points): Occurs when two wage curves are tangent at a switch point.
  • Reverse substitution of labor: The association of a higher rate of profits, or lower wage, around a switch point with a cost-minimizing technique in which, in one industry, the labor per unit of gross output produced is smaller. Contrast with forward substitution of labor.
  • Scale factor for the rates of profits: When markups among industries hold persistent and stable ratios among themselves, a scale factor that determines the rate of profits from relative markups. See the rate of profits.
  • Single production: See circulating capital and contrast with joint production.
  • Sraffa effect: The reswitching of techniques, capital reversing, the reverse substitution of labor, the recurrence of techniques, the recurrence of processes, and other effects discovered through the analysis of prices of production that are inconsistent with obsolete marginalist dogmas.
  • Sraffa matrix: A Leontief matrix for a viable technique when at least one commodity is basic and the maximum rate of profits for the submatrix of non-basic commodities exceeds the maximum rate of profits for the submatrix for basic commodities. See pp. 123-124 in Kurz and Salvadori (1995).
  • Structural economic dynamics: The variation in the relative sizes of industries and in prices of production as the result of technical progress, variation in market structure, variations in the rate of growth, and variation in the relative quantities of commodities in consumption baskets.
  • Switch point: A point at which two wage curves intersect. Often defined to apply only to switch points on the wage frontier.
  • Technique: A set of processes. In models of circulating capital, a technique contains one process for producing each commodity in the gross output of an economy.
  • Three-technique pattern of switch points: Occurs when there is a switch point at which three wage curves intersect.
  • Wage curve: For a given technique, the wage as a function of the rate of profits in a system of prices of production. Also known as a wage-rate of profits curve.
  • Wage frontier: In models of circulating capital, the outer envelope of wage curves. Also known as the wage-rate of profits frontier or, misleadingly, the factor-price frontier.
  • Wicksell effect, price: The variation in the numeraire value of capital goods with the rate of profits for a given technique.
  • Wicksell effect, real: The variation in the numeraire value of capital goods with the technique at a given rate of profits. Around a switch point with a negative real Wicksell effect, a higher wage or lower rate of profits is associated with a larger value of capital per person-year employed in a stationary state.

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