>However when one looks at plots of the data, one finds that the insustries
with high organic >compositions of capital and which also fall close to the
average rate of profit( but still below >it) are in two categories - state
regulated monopolies like electricity supply and primary >production
industries like oil and natural gas. These latter would be expected to have
a >significant rent component in their profits.
>We find the a significant negative correlation between profit rate and
organic composition of >capital whether or not interest is included in the
profit figure.
For the US data, what years did you examine? Publicly regulated industries
went through massive de-regulation during the 1980s and into the 1990s.
This may have reduced their profitability. Also, if my memory is correct,
the real price of oil fell for some time after 1979, rose in the mid-1980s
and has trended downward since then. So, the least cost oil and gas
producers (e.g., Saudi Arabia) may very well have earned an above average
rate of profit while many US producers were actually going out of business.
When the price of oil dropped in the mid-1980s many smaller US producers
had to cap their wells.
What happens to your results if these two industries are omitted?
The problem for me with your results is that they seem radically
counter-intuitive. Why should the industries with the greatest organic
composition of capitals have the lowest profits? These are industries with
the largest firms, operating in the most concentrated industries, operating
on a global scale, and producing a diversity of products. Industries with
the lowest organic composition of capitals have none of these advantages.
Firms in low organic composition industries have only one advantage, rapid
exit due to low barriers to exit. So, what's the intuition behind your
results?
peace, patrick l mason