From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Wed Oct 31 2007 - 16:36:05 EDT
You have to realise that there will not be a single rate of profit within a sector. The rate of profit within sectors will itself be normally distributed. A sector where the mean rate is low, has two possibilities: 1) Either a significant fraction falls into the loss making state, in which case the sector will contract. 2) The sectoral coefficient of variation of the profit rate may be narrower than the economy wide dispersion which may be enough to keep only a small proportion of the firms loss making. This second alternative seems less likely unless one can produce specific reasons for it. Note that I am not disputing that an almost equal rate of return can be achieved on equities -- this is what 'shareholder value' achieves, but the means by which this occurs is the writing up or down of the valuation of the companies share capital. This rate of return on equities is quite distinct from the rate of return discussed by Marx and the Classicals. You are right in saying that random fluctuations around prices of production are just as likely as random fluctuations around values. If the random fluctuations of market around prices of production are just as great as the random fluctuations of market prices around values, then prices of production have no additional explanatory power as compared to values, and by Occams razor, we should prefer the simpler theory - that labour values determine prices. The only justification for the additional complexity of price of production theory would be if it significantly improves our predictive ability with respect to real prices. If it does not, then it is not even an epi-cycle, it becomes in Gould's terms a Spandrel. -----Original Message----- From: OPE-L [mailto:OPE-L@SUS.CSUCHICO.EDU] On Behalf Of Rakesh Bhandari Sent: 30 October 2007 22:50 To: OPE-L@SUS.CSUCHICO.EDU Subject: Re: [OPE-L] Marx on the general rate of profit/rate of interest: a translation error Paul, I must say that I am not following your explanation of what is frustrating even in this day age of unleashed capital flows and shareholder value the tendency towards an equal profit rate. I don't get the point about firm death either. Wouldn't there be some tendency for all firms which within a branch are not achieving average profitability to die? Why would that disrupt the tendency to the equal profit rate? I am distracted, and I am asking you to start the argument from scratch. I apologize. I know for years you have said that Marx had no need to transform (just as for years Gil assailed Marx's assumption of price value equivalence, these two points have been defining criticisms for OPE-L, so I want to understand what you are saying because I just don't get the logic of these defining criticisms). So if possible I would just like a post which explains why. Random fluctuations around value are no less likely than random fluctuations around price of production? Sorry to take the discussion back so far. Rakesh
This archive was generated by hypermail 2.1.5 : Fri Nov 02 2007 - 00:00:19 EDT