Talk:Okishio's theorem

Okishio's theorem as a "Mathematical theorem"
Stating Okishio's theorem as a "Mathematical theorem" is rather odd since although it is mathematical in nature, it only deals with economics and is not a theorem under the field of pure Mathematics. The original phrasing of the first sentence was "Okishio's theorem is a mathematical theorem formulated by Japanese economist Nobuo Okishio." Epicity95 (talk) 12:56, 22 August 2012 (UTC)

coefficients of production
Can someone add an article about "production coefficient"? I reached this article when i was wondering what "production coefficient" is. And also explain "factor intensity" too. It seems that they are the same stuff. Jackzhp 23:54, 21 March 2007 (UTC)
 * Alan XAX Freeman told Production function seems to be the right article. coefficients might be the case when the function is linear. Jackzhp 12:36, 14 May 2007 (UTC)

suggested edit RFC
I'd like to suggest the following edit

Instead of "Okishio's theorem states that, if a firm raises its rate of profit by introducing a new technique of production, in which less labour is needed on one side, but more means of production on the other side, that this also for the economy as a whole leads to a higher rate of profit, if this new technique of production has spread through the whole branch - under the assumption, that real wages or the commodity basket workers get for their labour power has not been enlarged but remained constant."

Put "Okishio's theorem states, in essence, that cost-saving innovation necessarily raises the general rate of profit in the economy. More precisely, it states that the general rate of profit in the economy as a whole will be higher if a new technique of production is introduced in which, at the prices prevailing at the time that the change is introduced, the unit cost of output in one industry is less than the pre-change unit cost. Okishio (1962) establishes this theorem under the assumption that the real wage - the price of the commodity basket which workers consume - remains constant."

I think this corresponds more accurately to the formulation in Okishio (1962) itself which distinguishes the 'cost criterion' from the 'productivity criterion' (p26). Also the formulation proposed adds some links to other articles.

Regards

Alan XAX Freeman 23:56, 22 May 2007 (UTC)


 * I'm pretty sure it is Okishio (1961). Also, although the suggested change isn't bad IMO, there are terms that would need to be unpacked later on.  Lots of folks don't know what "cost-saving innovation" means (e.g., it isn't clear to them that this doesn't preclude a rise in total cost due to new investment in a more productive technology), or "general rate of profit" or "unit cost."  The word "establishes" makes it sound like the theorem is correct, but that's been challenged.  Also, in addition to the real wage assumption, there's the unstated assumption that the per-unit price of inputs equal the per-unit prices of outputs both before and after the technical change.


 * This is not a criticism, really. It is almost impossible to state the thing in plain English.  Believe me, I know.  I've tried.  Maybe try to give an intuitive feel for the theorem, as in the 1st sentence, and then give a less compact, perhaps step-by-step explanation?


 * andrew-the-k 07:08, 24 May 2007 (UTC)

Under marxist responses isnt this incorrect or am I misunderstanding what its saying and have an incorrect interpretation? Does this need changed?
"If the productivity of labour increases (through more efficient capital or technique) and wages and working hours are constant, that this creates a countervailing tendency to his falling tendency in the rate of profit. If the added increment in production is not shared equitably and is sequestered as surplus, the ratio of surplus to wages (s/v) increases. Assuming free markets, any new increased rate of return by a particular capital will ripple through other sectors as mobile capital adjusts to new circumstances. This is entirely consistent with Marx's theory of value."

If its taken that labor is the root and measure of all value in accordance with marxist economics. It does not become more valuable if the productive efficiency increases, other commodities become less valuable in relation to it. Hence if you have an amount of labor mobilized in an industry and suddenly have a leap in productive efficiency decreasing the investment cost per commodity then you dont increase the value of labor simply because the commodity sells at the same natural price in the short-term market. You, on the contrary actually decrease the value of the commodity. Since you've cut the investment cost that's simply another way of saying you've cut the SNLT required for commodity production which is simply another way of saying you've cut the ME of the SNLT crystallized within the commodity which is simply another way of saying you've cut the natural price of the commodity. If the amount of labor mobilized in an industry remains the same then the value added in that industry remains the same. Just because the amount of your commodities moving on the market is now greater and your investment per commodity is lower doesn't mean your rate of profit is higher. This is because the natural price of your commodity is now less to the same percentage degree the investment per labor for the commodity commodity is less (+ the investment per machinery and resources) so your rate of profit is also the same (discounting the constant capital investment which could lower it).

Presume that the natural price remained the same and you sold commodities at the same price as before you adopted the technique or technology in the short-term market then you would be making a greater surplus value per labor investment but this doesn't mean the labor is more valuable. An increase in the rate of surplus value with a constant amount of labor time invested into production means an inevitable transformation in the MELT of labor time. Which means that real wages are inevitably decreasing. Which also means that the consumer basket is contracting. But this doesn't occur because you are only a firm and not the whole economy so the MELT of other industries and firms remains the same. You are only a singular firm and just because you are getting a higher rate of surplus value doesn't mean your appropriating more of the surplus of your own laborers, the surplus on the contrary comes from the whole economy wide average rate of profit ascending among all firms whereby you are now appropriating the surplus of other firms in the economy and reaping super-profits. In boring accountant terms you are cutting into their profits.

Naturally they don't like that and so they increase their productive efficiency doing whatever you did and decrease the SNLT pushing down the market prices of commodities and restoring the original rate of surplus value across the industry. But it also results in overproduction from investment surpluses where the scale of investment is disproportionate to the new rate of profit and necessary size of production. Then that triggers a massive set of crippling contractions of production throughout the whole economy as capitalism tries to readjust to this all and results in massive withdrawal of investments from department II(consumption goods) which sparks another massive withdrawal of investments from department I(investment goods -the means of production) which makes a massive pool of surplus labor looking for work.50.135.124.85 (talk) 12:12, 25 September 2015 (UTC)