> >As I recall, in V3 of CAPITAL, Marx uses two terms to
> >describe the rate of profit -- general and average.
> >Is this a translation problem or is his use of the
> >two different adjectives intentional?
> >
> >
> >John
>
> Chris Arthur replies:
> Herewith an extract of a paper I am working on:
> The apparent identity of 'average' and 'general' rates of profit occurs in
> the very title of chapter 9, and I think Marx never at any point makes a
> distinction between them and treats these terms as synonyms. This is a
> pity. For they are not. Furthermore they could usefully be so defined as to
> refer to distinctly different concepts as follows:
> a) the notion of a 'general rate' implies that we have here something
> determined by other generalities.
> b) the notion of an 'average rate' implies an average of prior
> differences; hence a redistribution (of something created in particular
> sites) as a result of the interrelations of individual capitals, that is to
> say, as a result of competition. (An average can of course also be worked
> out in advance theoretically but this is of no consequence; in reality it
> is a question of the conditions of competition and whether they really tend
> to form a uniform profit rate across the capitals concerned.)
We have to be careful here to decide whether we are engaged in a
'history of economic' thought exercise here, or an outline of political
economy. For the latter exercise, the exact usage of terms by Marx
is less relevant than an investigation of how rates of profit are actually
distributed in capitalist economies.
Any set of scalar statistics has an average, thus there is necessarily an
average
rate of profit. The theoretically interesting question is the degree of
dispersion
of the distribution about its mean. If the dispersion is very narrow, then
certain
mathmatical procedures which involve substituting for a distribution its mean,
such as those involved in 'price of production' theory are, if not strictly
correct,
a reasonable approximation. If, on the other hand, the dispersion is wide,
then these procedures are invalid.
Farjoun and Machover suggested some 15 years ago that in fact the dispersions
of profit rates in capitalist economies will be relatively wide. Work that
Allin
and I have done on the UK economy and the US economy tends to confirm this.
If this is the case, then Marx's identification of the general rate with the
average
rate in his price of production theory, is currently unjustified. It is an open
question
as to whether the dispersion of profit rates was narrow at the time he wrote.