# ABSTRACT OF PAPER

Title: Value of Capital

Author: *Yagi Takashi*

In the Cambridge Capital Controversies, the discussion on the value of capital is connected to the discussion on the shapes of the wage curves (or surplus equation). In the single production system only with produced means of production (with no fixed capital), the wage curve will become linear and if the Standard net product is chosen as a standard. The value of produced means of production of the standard system will become constant even if the rate of profit changes. It is given as the inverse of the maximum rate of profit, which can be obtained by using the eigenvalue of the input coefficient matrix. In the case of single production system, the standard system will become a simple and useful analytical tool. On the contrary, in the case of the system with fixed capital, we will face with the difficulty of measurement of capital. In this paper, we will introduce a new surplus equation to deal with the system with fixed capital by using the Sraffa’s standard system. In order to obtain our new surplus equation, we assume that the value of fixed capital at the end of the previous production period is given. But the present value of capital (the aggregate value of produced means of production and the fixed capital) will depend on the level of wage rate in our model. The wage share and the profit share can be obtained in a very simple way as the case of single production system. If we denote the wage share measured in terms of the standard income by Ï‰, the profit share measured in terms of the standard income by Ï€, the rate of profit by r and the maximum rate of profit by R, then we can obtain the equation Ï‰=1-r/R and Ï€=r/R. The result is the same as the case of single production with produced means of production (with no fixed capital). Though the value of capital (including fixed capital) is not the inverse of the maximum rate of profit as in the case of single production, it can be obtained in a very simple way because the surplus equation (the wage curve) of or system with fixed capital becomes linear. Our new analytical tool will throw a new light on some problems of the Cambridge capital controversies.

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