From: Ian Wright (ian_paul_wright@HOTMAIL.COM)
Date: Sun Jun 01 2003 - 19:15:36 EDT
Hello Fred, Michael & Allin, Thank you all for taking time to reply to my question. I'm imagining a highly simplified economy in which there is a fixed amount of paper money, which is the only form of money, and no hoarding. My question is about monetary profits, rather than what those profits represent in value terms. The existence of surplus-value production, or primitive accumulation, are statements about value transfers in the economy. They do not alter the fact that total monetary transfers must sum to zero. Allin wrote: >But if we want to introduce an ongoing M-C-M', with the capitalists >accumulating and income expanding, money has to flex. If money >remains constant in value (and so does velocity of circulation), we'll >need a larger money stock. Yes I agree, and for me at least, I find this a subtle point. I am trying to understand however what can be deduced if money does not flex. This implies that the value of money must change if new surplus-value production or primitive accumulation occurs. But I wish to ignore the value of money. Allin wrote: >Here's a simple example. Each period the capitalists lay out 50 on >labour power. The workers produce goods to the value of 100. 50 of >this is necessities, purchased by the workers, and 50 is luxuries, >purchased by the capitalists. Aggregate profit = capitalist >consumption = 50. Total income = 100, period after period. When I first asked the question I was not clearly distinguishing between absolute profits and profit rates, which I will now try to do. In this example let's assume that the total money in the economy is M=100. The net transfer of money between workers and capitalists is 0. The situation reproduces period after period. The capitalist class does not increase its money holdings, and its total absolute profit is 0, and its total profit rate is 1 (i.e., they're not making a profit). Allin wrote: >The "fixed money" situation is compatible with positive profit. In your example, in which there is no net money transfer between workers and capitalists, only invididual capitals can have non-zero absolute profit, and profit rates in excess of 1. This is due to internal transfers of money between members of the capitalist class when they purchase luxuries. (This may have been what you meant). The example is very helpful, so let me now try and relate it back to my original question. Either: (a) The profit rate, r, for the capitalist class equals r=1 and the system reproduces (as in the example), or (b) The profit rate for the capitalist class is not equal to 1, in which case there is net flow of money to capitalists (r>1) or a net flow to workers (r<1). The system must return to a state of r=1 (with a new monetary value of labour power and produced goods), or break down when all M is owned by one class. It seems to me that, given the assumptions, profit rates must tend to 1 or oscillate around 1 if the system is to reproduce, i.e. a situation of no profits on average (zero average absolute profits). But there may still be a flaw as I could be confusing: >... the difference >between (a) a condition of zero profit and (b) a condition in which >the capitalists' aggregate money holdings do not grow over time. as I didn't understand this. I would also like to relate back to Marx's original argument, and may try to do so later. -Ian. P.S. For clarity, I'm defining absolute profits as m'-m, and relative profits as m'/m. _________________________________________________________________ The new MSN 8: smart spam protection and 2 months FREE* http://join.msn.com/?page=features/junkmail
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