MIDTERMM
elinaa
Presentation01-SurplusProducingEconomies1.pptxSurplus Producing Economies
Surplus Producing Economies
Some preliminaries
The economic imperative
Social reproduction
Tools, technology, and instrumental institutions
Ceremonial beliefs, ideology, and values
Economic viability
Stable political economic institutions – legitimacy
Does not require democracy
Feasible technology and resource base
At minimum, output grows at same rate as population
Surplus Producing Economies
Gross Product = Necessary Product + Surplus Product
Q = NP + SP or Y = NY + SY
Necessary Product = Socially Necessary Consumption + Depreciation
NP = Cn + Dp or NY = Cn + Dp
Surplus Product = Surplus Consumption + Net Investment
SP = Cs + In or SY = Cs + In
Note: C = Cn + Cs , and Ig = Dp + In
Surplus Producing Economies
Economic growth requires that a portion of the surplus be used for investment in new productive capacity.
What fraction of SP goes to Cs and what proportion goes to In ?
Depends on the institutional structure, the kind of political economy, of society
Capitalism differs from previous systems in that In tends to be higher.
Market competition among capitalists imposes need to invest.
But note that, under capitalism, production is dictated by profits, not need.
Surplus Producing Economies
Means of production
Land – non-reproducible goods (nature)
Diminishing Returns
Capital – reproducible goods
Tools, buildings,
Technology - knowledge
Surplus Producing Economies
Labor
Direct
Indirect or overhead
Productive
Unproductive
