[OPE-L:6175] formula for the rate of profit

From: Gerald_A_Levy (Gerald_A_Levy@email.msn.com)
Date: Tue Nov 13 2001 - 15:34:10 EST


What, if anything, is wrong with the following formula for the rate
of profit?  (Note: the following formula is for the profit rate in 
contemporary capitalism and does not purport to be a
rendition of Marx's formula)

           
           Pz    ed    --  Pm    m    --  w
  r  =   __________________________
                         
           Pc   (1/cu)    (cg in use)
                  

   where:

   r     = profit rate
   Pz  = price of output
   e    = amount of gross output produced per unit of work done
   d    = work done per hour 
   Pm = price of materials used and wear and tear on machines
   m   = amount of materials used and wear and tear on
                 machines per hour of labor
   Pc  = price of  [constant] capital goods
   cu   = capacity utilization ratio or the percentage of owned
                 [constant] capital goods actually in use
   cg in use = amount of [constant] capital goods in use per labor
                 hour

Extra credit: answer the above question *plus* identify the author(s)
    of the above formula.

In solidarity, Jerry



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