[OPE] webpage computing and the sperm rate of profit

David Z.,

Sorry I did not realize this, and yes I am certainly interested in the
article, particularly since libraries here are unlikely to have this book
very soon.

As I've said previously on OPE-L, average inventory levels (input stocks +
output stocks) can be up to about 30% of the total measured physical capital
stock, and since wage-payments can be recouped from ongoing sales, the
actual capital tied up in wage payments at any one time (the "stock" of
wages) are more likely circa 10-16% of the annual wage payments flow. In
addition of course there are other operating expenses including faux frais
of production. The true figures are often manipulated for tax-deductibility.

Maximally, inventory + wages could be about 30-40% of the physical capital
stock, it depends on the industry. The USA has traditionally a particularly
high inventory/fixed capital ratio in manufacturing, and a comparatively low
fixed capital/net output ratio in manufacturing.

However, it can be shown that whether or not inventory and wages are
included in the total physical capital stock does not affect the overall
longrun profitability trend, only the shorter term fluctuations.

Two important issues in the measurement of capital are the ownership of
physical capital assets, and the use of non-physical capital assets. If the
enterprise using a physical capital asset does not own it, it is still
included statistically in the capital stock for that industry, even although
the real capital outlay for the enterprise is only the rent of the capital
asset, a small fraction of its total value. Secondly, the enterprise has
capital tied up in financial assets, and not just physical assets, and can
receive non-production income from those assets not recorded as part of its
value-added.

The presumption in using value-added data for gross profit is, that this
will refer to the total gross profit considered to be generated from
physical output. But it is not even clear that this is the case, since a
large part of physical output consists of services, and the real gross
profit total is heavily adjusted to conform to the value-added concept, with
the consequence that a large chunk of net interest, net rent and net
property income is ignored.

It is not that a profit/fixed capital ratio is completely meaningless - it
may show whether the general profitability trend is up or down across 5 or
10 years - but that it tells us little about true business profitability. In
order to understand this, you shouldn't follow the Stiglitz Commission, but
you should follow me.

The substantive problem is, as I argue in my paper on GDP (not finished
yet), that a categorical system of national accounts, developed in the
context of the world war and finalized in the 1950s, is really unable to
make explicit the nature of many capital transactions in our time, because
the nature of business has changed significantly meantime. In order to fit
modern transactions to old categories, many additional rules and assumptions
have to be adopted, which effectively misrepresent the true nature of the
transactions covered. By the time that the consolidated account of a
multinational covers a turnover larger than that of a whole country, one
small definitional change can have an enormous financial and statistical
consequence.

It can be proved, I think, that the overall statistical effect of official
measurement methods is an underestimation of true gross profit volumes in
the system, and (often) an overestimation of the value of surveyed capital
stocks. Hence, the longrun historical tendency of the industrial profit rate
to decline will be exaggerated by all computations based on that data.

I would predict that, within two or so decades time, a new system of
national accounts will be devised, but whether it will be an improvement, I
cannot say. What Marx called "the furies of private interest" tend to get in
the way of scientifically valid information. Among other things, it depends
on budgets, and, almost all rich people engage in criminal activity of some
sort - they are unlikely to want this to be exposed scientifically in any
way.

Jurriaan

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Received on Sun May 17 06:05:08 2009