On Fri, 26 Oct 2001, Rakesh Bhandari wrote: > Fred writes in 6091: > > > 2. From the mid-70s to 1997, the rate of profit recovered, but only > > partially (only about half of its prior decline), so that the rate of > > profit in 1997 remained about 25% below its earlier postwar peak. The > > main reason for such a weak recovery of the rate of profit was the > > continued increase of the ratio of unproductive labor to productive labor, > > which partially offset a sharp increase in the rate of surplus-value and > > its positive effect on the rate of profit (the composition of capital > > increased only slightly during this period, due mainly to slower capital > > accumulation and lower costs of raw materials). > > Fred, are you (and Anwar) able to show that the increase in the rate of > exploitation was the main cause of the recovery in the US rate of profit that > was in fact achieved? Yes, the rate of s/v rose but did it rise sufficiently to > explain the recovery in the US profit rate. I ask because in your more recent > work one seems to find that declining interest costs as a result of the influx > of foreign capital may have been the main reason for an increase in the US > profit rate. Rakesh, declining interest rates did increase the rate of profit for the nonfinancial sector of the economy, but not for the economy as a whole. The estimates of the rate of profit I summarized in my reply to Jerry was for the economy as a whole, and therefore was not affected by the decline on interest rates in the 1990s. The modest increase in the rate of profit for the economy as a whole in the 1990s was due solely to an increase in the rate of surplus-value (which rose because real wages remained more or less flat, while productivity continued to increase). The other two determinants of the general rate of profit (the composition of capital and the ratio of unproductive to productive labor) both had negative effects on the rate of profit.
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