ABSTRACT
In Section 1 we shall discuss the mathematical properties of the simple model proposed by Bidard and Erreygers (2001). We shall solve the model for a given real wage rate paid at the beginning of the uniform production period. In Section 2 we shall question the usefulness of the concept of a ‘real profit rate’ suggested by Bidard and Erreygers and their view that the choice of numéraire can have an impact on the mathematical properties of the system under consideration. In Sections 3 and 4 we assess some of the propositions put forward by Bidard and Erreygers. Section 3 deals with the fact that any economic model is bound to distort reality in some way and therefore can never be more than an attempt to ‘approximate’ important features of the latter. This is exemplified by means of the labour theory of value in classical economics, on the one hand, and by Ricardo’s assimilation of the case of exhaustible resources to that of scarce land and thus its subsumption under the theory of differential rent, on the other. In certain well-specified circumstances royalties are replaced by rents, while in other circumstances neither rents nor royalties play any role. In Section 4 we turn to the so-called Hotelling rule. It is stressed that in order for this rule to apply there must be no obstacles whatsoever to the uniformity of the rate of profit across conservation and production processes, and the available amounts of the resources must be bounded and known with certainty. Therefore Hotelling’s rule cannot be considered so generally applicable as Bidard and Erreygers seem to suggest.
