From: valle (valle@SERVIDOR.UNAM.MX)
Date: Sat Jan 31 2004 - 22:52:58 EST
----- I think this post to pen-l is interesting for ope-l, From: "Jurriaan Bendien" <bendien@TOMAATNET.NL> To: <PEN-L@SUS.CSUCHICO.EDU> Sent: Saturday, January 31, 2004 3:03 PM Subject: [PEN-L] The formation of Marx's general rate of profit: the trend towards international production prices > The new International Financial Reporting Standards provide an interesting > illustration of the formation of an international general rate of profit > based on international production prices. The USA, EU and Japan (which > together represent over half of the value of world GDP) are now negotiating > new accounting rules for the distribution of surplus-value which would end > the big differences in the rules between countries. > > The current situation which features different systems actually costs > business a lot of money - for example, it makes it more difficult for > investors and corporations to make international profitability comparisons > between enterprises in the same sector. In addition, the taxman wants better > information on financial deals and property income of corporations. If > taxation is a third or so of gross profits, obviously this plays an > important role in new accounting rules. There are a few problems which still > have to be ironed out, but there is forward momentum. > > While the pseudo-Marxists reject Marx's theory of production price, the > reality is that corporate executives constantly have to confront it, because > they constantly have to bridge that critical interval in time between costs > incurred and sales realised (the process of the turnover of capital, > something which, as we know, requires an increasing volume of credit), but > the point is, in this mysterious process, an increasing amount of money just > happens to change hands that has nothing directly to do with production, but > with property income and financial deals involving fringe benefits, loans, > options, shares, bonds, derivatives, future contracts, hedging schemes, > imputed goodwill capital, and all sorts of things. > > In neoclassical economics, the significance of this interval (i.e. real > production by the working class) disappears, through the magnificent > division of economics into micro-economics, macro-economics and management > theory, so that the social relations of production do not exist; all we have > is enterprise economics, management philosophy and then a share-out of the > national income used to estimate the social product according to the > Keynesian income-product identities. The International Accounting Standards > Board however agrees mainly with Marx, who had a single system of categories > without the micro-macro split, as against those "Marxists" who are still > terribly worried about the inability to obtain price-value and rp/S > identities in a system of simultaneous equations (which misinterprets Marx's > own intention anyhow). > > The IASB want fuller disclosure of financial income as distinct from > production income, and a valuation of corporate assets which fairly reflects > their current value in the market. This puts more pressure on executives in > certain respects, in that the organisation must be built more and more > around the critical profit volume and profit rate figures. It's the return > to the share-holder, i.e. realised surplus-value, that is increasingly the > fulcrum of corporate strategy. More output must be sold that is produced by > workers working at greater intensity and long hours at a lower unit labour > cost. > > Thus, IFRS requires greater disclosure of transactions at "fair value", > defined as current market value or replacement cost rather than acquisition > costs, recognising that an increasing component of corporate profit income > is actually due to trading in investment property and financial assets > (capital gains of sorts) where changes in value occur which are not > attributable to actual production values, and entries treated as "costs" are > really "revenue". > > Some of the main changes include: more detailed disclosure in accounting for > financial instruments and investments at current market value, preference > shares, derivatives (options, interest rate swaps, forward contracts), > currency hedging, and convertible loans (split between debt and equity); > more rigorous accounting for pension costs; share, bond and share option > schemes are treated as a cost to be charged in all cases; in consolidations, > merger accounting is no longer allowed; goodwill and intellectual asset > accounting (impairment charges against profits only, no amortisation using > indefinite asset lives); more explicit accounting for investment properties > at cost less depreciation; capitalisation of developments costs (no option > to expense immediately); and changes in deferred tax (provisions on > revaluations, no discounting). > > Europe intends to make IFRS compulsory in 2005. The USA is modifying its own > rules, to make them consistent with IFRS, although, in many respects, IFRS > seems to be actually inspired more by the US model. The Japanese government > however at the moment seems not to want to proceed further than giving the > Japanese enterprises a choice to use the new international reporting > standard instead of the existing one. Keisuke Takeguuchi of the Daiwa > Institute of Research said that a situation could now emerge where, in > Japan, two different bookkeeping standards could exist side by side, the > IFRS and the local standard. Keidanren thinks however that Japan has already > done enough to improve the system, and that existing accounting rules are > comparatively better. Not entirely surprising, given the peculiarities of > economic difficulties in Japan. > > Specifically, Japanese employers don't like the requirement to report > financial balances at current market value, and the stricter rules for > pension obligations in the new system. Yet Japanese enterprises which would > adhere to local rules, run the risk of being excluded from overseas > financial markets. After a trial in 2004, the EU for example intends to > accept only the IFRS standard for the 7000 listed corporations as from 2005. > Enterprises which don't conform will most likely not get access to the > European obligations and stockmarkets. The IFRS is consistent with the tax > base harmonisation strategy across the EU, a necessary step on the way to > its equalisation of the rate of taxation, a project which is currently > boggling many German public servants. > > Jurriaan >
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