[OPE] webpage computing dynamic rate of profit

It has always struck me as rather odd, that economists try to measure and
compute trends without much of a clue about what they are really measuring.
As Engels puts it, "Ideology is a process accomplished by the so-called
thinker consciously, it is true, but with a false consciousness. The real
motive forces impelling him remain unknown to him; otherwise it simply would
not be an ideological process. Hence he imagines false or seeming motive
forces."

One of the first things I learnt at school about arithmetic is that you
cannot add up apples and pears, i.e. you have to be clear about what your
measurement units are and what you are comparing.

To my knowledge, the Penn "capital stocks" refer to fixed capital stocks
only. Possibly these are based on the OECD series
http://www.oecd.org/dataoecd/47/13/37542921.pdf . Most likely, the Penn
capital stocks include both means of production and non-productive fixed
assets.

As I explain in a wiki http://en.wikipedia.org/wiki/Capital_formation , the
concept of capital formation includes the "increase in stocks" (inventories)
item, but in fact "capital formation" is frequently confused with "gross
fixed capital formation".

Most economists in my experience do not understand what economic concepts
mean, although they assume that economics is an exact science, because
prices can be computed.

Whether or not circulating capital is included or excluded in the capital
stock probably does not affect the longrun trend very much (up or down). But
at least from a Marxian point of view, it is the private productive physical
capital stock, and the profit yield on this physical stock that is relevant.

So the trend in the variable will be influenced by:

- the price inflation rate and implicit deflators
- depreciation calculations
- whether non-productive activities are separated out
- whether the non-private, non-profit sector is separated out

Jurriaan

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Received on Thu May 21 06:18:20 2009