In <199603261702.MAA00843@pipe1.nyc.pipeline.com>, John R. Ernst wrote:
>I wonder why you include the capitals invested in the commercial
>and financial sectors in your denominator. In the FRP discussions,
>neither of these sectors exist. What happens to the
>taxes these firms pay is also unclear. Are not taxes part of
>surplus value?
>
It is perhaps a moot point as to whether the capital in the
financial sector should be included. I am unable to make up
my mind for certain on that, since it is not always clear how
the capital invested there can participate in the formation
of a general rate of profit. I sometimes include it and
sometimes exclude it.
Commercial capital has to be
included, since it is part of the circuit of industrial capital.
I agree that onne should take profits prior to corporation
tax as the relevant figure, rather than post tax.
>On the use of "book value" in your definition, for me, questions
>arise.
>
>1. Would not $1000 assigned to the stock of circulating capital
> soon to be used be no different than the $1000 machine "on the
> books"? Yet, if the machine is to be used for 10 years and
> the stock of circulating capital to be consumed next year,
> would not the rate of profit differ, assuming that either
> investment produces, say, $100 in profit? Just asking.
>
I see no difference. The $1000 soon to be used up will have
to be replaced by another $1000 worth of stocks if production
is to continue - give or take some stocking/destocking during
the trade cycle.
>2. Within those books, do capitalists include a figure for
> "good will"? If so, do you eliminate it?
>
In the national accounts these are excluded. The problem tends
to be to obtain good figures for circulating capital.
>Let me close with still another question:
>
> As we know, your definition allows one to proceed in an
> empirical fashion. You say that your rate of profit is
> not an equilibrium rate of profit. Of the three possible
> definitions mentioned to which of them does it come closest?
> If none, how do we find your definition in CAPITAL? Here,
> I am simply trying to figure out how you moved from the
> abstract discussion in CAPITAL to the more concrete level
> that allows you to measure the rate of profit empirically.
I would say that it is about the same as the general rate of
profit understood as an average over all capitals in all the
phases of their circuits.
How did I move on to the concrete? I did it in the 70's when
I was concerned to arrive at a conjunctural analysis of the
situation in Britain in order to derive a sound political strategy.
As soon as you try to understand the concrete reality one has
to try and make judgements as to how to rework the categories
that appear in the national income accounts into materialist terms.
One thing that I can say, is that an economics degree provided
me with no prior training for empirical research. It taught me
nothing about the sources for, nor the handling and processing of
empirical data. But what should I have expected with a-priorists like
Steadman teaching it.