The premise of okishio is somewhat flawed from the get go. Suppose one firm create new efficient process, raising its rate of profit. Let’s say they make a shoe from 2 yards of linen 6 labor hours instead of 10. If the whole market remains in equilibrium with the same wages, the profit rates will rise for them. But that’s just the beginning! if their rates of profit higher than other shoemakers, they’ll go for the monopoly play, reducing prices to outcompete them in the market. Other shoemakers will also try to innovate to reduce labor expense or drive down wages. Either they will manage it and profit rate will equalize once again and close to what it was before. The reason for this closeness is that other capitalists will pour money in the most profitable venture available, until it’s also becomes similarly profitable. There is also a fact to consider that most overproduced products during this competition will drive the price into the ground.
Maybe I’m explaining badly:( you can read tssi by kliman, if you’re inclined to look at it closely. He’s critique is not the only one, but he gives also nice rundown of other critiques at the end of the book (and why they’re wrong from his POV).
If you don’t like reading, you can listen on a podcast “from alpha to omega” somewhere in the end of the reading series. They’re considerably anti-ml, which maybe annoying but not too bad. But they’re knowledgeable and sometimes funny. =)
The premise of okishio is somewhat flawed from the get go. Suppose one firm create new efficient process, raising its rate of profit. Let’s say they make a shoe
from 2 yards of linen6 labor hours instead of 10. If the whole market remains in equilibrium with the same wages, the profit rates will rise for them. But that’s just the beginning! if their rates of profit higher than other shoemakers, they’ll go for the monopoly play, reducing prices to outcompete them in the market. Other shoemakers will also try to innovate to reduce labor expense or drive down wages. Either they will manage it and profit rate will equalize once again and close to what it was before. The reason for this closeness is that other capitalists will pour money in the most profitable venture available, until it’s also becomes similarly profitable. There is also a fact to consider that most overproduced products during this competition will drive the price into the ground.Maybe I’m explaining badly:( you can read tssi by kliman, if you’re inclined to look at it closely. He’s critique is not the only one, but he gives also nice rundown of other critiques at the end of the book (and why they’re wrong from his POV).
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If you don’t like reading, you can listen on a podcast “from alpha to omega” somewhere in the end of the reading series. They’re considerably anti-ml, which maybe annoying but not too bad. But they’re knowledgeable and sometimes funny. =)
deleted by creator