Output Ratio

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The output ratio is a parameter governing how much of a given input must be present as a stock, in order to produce at a scale of one unit of output.

This concept is implicit in Marx's treatment of production, as a result of his analysis of turnover time. Readers used to Bortkiewcz's interpretation of Marx, or to the linear systems of Leontieff or {{Sraffa]],may have some difficulty with the concept, because in such systems, following Bortkiewicz, all capitals are turned over exactly in one year.

The simulation uses the output ratio to determine how much of each type of input a capitalist must purchase in order to produce at any given level.2 For example, in Marx's two-department Simple Reproduction schema, 2000 units of constant capital (machinery and raw materials) are consumed in order to produce 3000 units of consumption goods. Assuming a turnover time of 1 year, the output ratio would be 2000/3000 = 0.666666667, to 9 decimal places.

In the simple case of Marx's two-department Simple Reproduction scheme, turnover times is 1 and the output ratio is simply equal to the output coefficient. This is not however generally true.

In Marx's general treatment of capitalist reproduction, and in this simulation, the quantity of a stock that is required, in order to begin production, is not the same as the quantity of that stock which is turned over in order to produce one unit of output, because stocks with a longer turnover time will be consumed more slowly. So for example, if a steel factory with an output of ten million tons a year lasts for thirty years, then in each year, 1/30th of the factory's use value will be consumed, through wear and tear. But the capitalist can't start producing with one-thirtieth of a factory. The output ratio in this case is 1/10,000,000 but the output coefficient, as defined in a Sraffa system, would be 1/300,000,000.

See also stock-flow-accounting, turnover time