# "new" solution

guest account guesta at econ.utah.edu
Tue Nov 1 17:38:35 MST 1994

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Instead of citing references that few will bother to look up, why don't we
present the "new" solution?

(No double counting (one assumption of this solution) i.e., all flax is used
up in the production of linen (the total value of flax 4 will be the 4 c used
to produce linen)

Values
Total    Profit rate
c  v  s  Value      S/C+V
flax     0  2  2    4         100%
linen    4  1  1    6          20%

If goods traded at their values capitalists would move away from linen to
produce flax --> supply of flax rises --> price of flax fall. . . conversely,
supply of linen falls --> price of linen rise. As prices change, the
realization of surplus value is redistributed until both departments
equilibrate with the same profit rate.

Prices
Total    Profit
c  v  s  Price     rate
flax     0  2  1    3        50%
linen    3  1  1    6        50%

Because all of the total value of the flax is used in the production of
linen, the only net product is that of linen.
The net product of values (6) is equal to the net product of prices (6)

6 = 6   --> the "new" solution

guesta

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