or ft) '
Ma*- Ift) (
THE PROFIT FUNCTION
1 11
to explain the interaction of distribution and a<Si£umula±ion
we need the profit function^which enables us to distinguish
between changes in the profit rate due to a change in utilisation
and changes in the profit rate taking place at constant utilisation .
The profit function is inspired by Kalecki, but in using it
I follow my own wa^s.
[the profit function plays a role similar to the production function
4 H 6 O i
iiTjclassical theory: It replaces it, in a sense.
Let us define
h direct labour iput in hours
h Q overhead labour in hours
w wage per hour
’ff price of output
T „ , , P profits K capital, both in
W wage and salary bill current prices £1 ____—_
We adopt now the theory that the wage and salary bill
depends on output and on capacity; it is assumed that the capacity
dH±BrmiHSs of the equipment determines the amount of overhead labour.
W = hw Y* + h Q w K*
P = IT Y* - W = Y*( IT -hw ) - h Q w K* ( 6 )
We may now express the profits as a ration of income,
or as a ratio of capacity income, or as a ratio of capital, i.e.
as a profit rate:
xxxxxx mIxx
xxxxxxxxxxxxxxlxxxxxxxffxxxxxxxx-x-xx-xx
Q / .
rr ^
P
TTr*
p
K
(l - ~r)^
7r *
ax ow ^ *
^f*' ^
pr
i
j