Positive Profits without Exploitation: A Note on the Generalized Fundamental Marxian Theorem

Abstract

PROFESSOR MORISHIMA [1, pp. 621-622] has interpreted his own Generalized Fundamental Marxian Theorem (GFMT) as an extension to the joint production case of the theorem stating that, for systems without joint production, a positive rate of exploitation is a necessary and sufficient condition for a positive rate of profit [2, pp. 63-68]. In fact the GFMT only establishes that a positive warranted rate of profit requires a positive rate of exploitation as defined by Morishima; it does not establish that the same holds for a positive equilibrium rate of profit. An example will now be presented which shows that in fact, under the same assumptions as for the GFMT, a zero rate of exploitation is not incompatible with a positive equilibrium rate of profit. Consider an economy where there is only one (constant returns to scale) technique, consisting of a single process, which jointly produces two goods, z and y, utilizing good z and labor L as inputs, in the following proportions: 2z®1L->4z81y