This is a response to John's (3193) on his TSS interpretation and the value
of money.
I have argued in recent posts that, however interesting the results of a
"historical cost" rate of profit in the case of a constant value of money,
this theory is of little use in understanding contemporary capitalism
(characterized by a declining value of money) becuse the conclusion
regarding the trend in the historical cost rate of profit changes into its
opposite - it rises rather than falls. John's "breakdown" will not occur.
John's has responded that, after developing his "historical cost" theory
based on a constant value of money:
We could then move to a discussion in which the value of money varies.
Here, the case you mention most -- a fall in the value of money -- would
take priority. Yet, given my high hopes and whatever, we would enter that
discussion with some idea of crisis theory. To be sure, it would not be
one in which the rate of profit as you measure it is the cause but rather
one in which the rate of profit falls due to other problems in the
accumulation process. What might they be? Perhaps, lack of effective
demand. Or, stagnation as monopolies dominate the economy. Or, to be a bit
closer to Marx's notion in CAPITAL, we may relate the periodicity of crisis
to the turnover of fixed capital as productivity increases.
Hence, John agrees that with a declining value of money, the "historical
cost" rate of profit will not fall and that a theory of crisis in
contemporary capitalism will not be based on a falling rate of profit, but
would perhaps be based instead on a lack of effective demand or stagnation
caused by monopoly (Sweezy's "too much surplus"?) or on the turnover of
fixed capital.
I wonder what Andrew and Alan have to say about this?
Comradely,
Fred