>> After reading this essay, instead of answering a question, I have to ask
>> one.


> That's right - you dodge the question of what is a logically consistent
> theory in which the dogmatic conclusions of neoclassical economists
> follows from their assumptions.


No, you're dodging the question of whether or not your model can be
supported by the empirical facts.



>> Are your equilibrium real interest rates of 100% and 150% supported by
>> the empirical facts, Robert? It is obvious that your model is not robust to
                                      ^^^^^^^
>> this assumption because that is what results in the process with higher
>> material inputs and less labor being the more expensive of the two
>> processes.


> You misspelled "erroneous".
> 
> Paul Samuelson addressed your misconception long ago. If this bothers
> you, translate my "year" to "decade". Workers can be paid more often
> in models like this, and examples can still be created with the
> illustrated property.


Your model is not robust to the assumption of the length of the time
period. You are assigning the higher cost to the process with higher
material inputs and less labor because you are assuming that the employer
must pay for the materials in advance and pay for the labor afterwards.
That assumption may be reasonable for a period of one year but not for a
decade. Production cycles for most products are shorter than that. Even if
we did assume a decade-long production cycle, you would still end up with
real interest rates that are unrealistically high.


>> Try this exercise again with more realistic real rates of about 3%. Then
>> see what your demand curve for labor is.


> Shall I try it again with a million goods being produced?


Non sequitur.