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Differential Profit Rates and Convergence to the Natural State

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  • Ganguli, Partha

Abstract

In establishing convergence to the 'natural state,' this paper examines the allocation of capital by the 'captains of industry' who respond to profit rate differentials. Such allocations unleash the equilibration forces of competition. It is constructively shown that the problem of capital allocation engenders a self-referential system whereby the ex post profit rates depend on the dynamics of ex ante profit rates while the latter depend on the dynamics of ex post profit rates. The authors establish the existence of, and the convergence to, the 'natural state' in the light of this self-referential system. Copyright 1997 by Blackwell Publishers Ltd and The Victoria University of Manchester

Suggested Citation

  • Ganguli, Partha, 1997. "Differential Profit Rates and Convergence to the Natural State," The Manchester School of Economic & Social Studies, University of Manchester, vol. 65(5), pages 534-567, December.
    • Handle: RePEc:bla:manch2:v:65:y:1997:i:5:p:534-67
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    Cited by:

    1. Gangopadhyay, Partha, 2020. "A new & simple model of currency crisis: Bifurcations and the emergence of a bad equilibrium," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 538(C).
    2. Gangopadhyay Partha, 2008. "Irrationality, Non-equilibrium Conflict and Complex Dynamics," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 13(2), pages 1-15, January.
    3. Stefano Zambelli, 2018. "Production of commodities by means of commodities and non‐uniform rates of profits," Metroeconomica, Wiley Blackwell, vol. 69(4), pages 791-819, November.

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