[OPE-L:6400] Re: Re: Two Rates of Profit

Ajit Sinha (ecas@cc.newcastle.edu.au)
Thu, 02 Apr 1998 18:35:31 +1000

>John now comments:
>
>1. I'm not sure what your problem is with the concept of "absolute rent."
>Granted it is not in Sraffa, but can it exist for sustained periods of
>time? I think so.
_______

Could you please explain.
_____
John:
>2. I agree that you cannot separate the agriculture sector from that
>of manufacturing in any simple way. My way of reading Marx's exclusion
>of natural monopolies from the transformation process differs from
>yours. Marx begins by presenting us with 5 capitals of varying
>compositions. We do know that none of them is a natural monopoly.
>But what stops Marx from including the products produced by natural
>monopolies as part of the C and v of the 5 capitals?
_________

Since your reading of Marx differ's from mine on this question, what is
your answer to your own question?
______
To be sure,
>this would introduce more problems into the transformation quagmire
>but the basis for excluding from an interpretation of Marx is, at
>best, unclear.
__________

It was marx who decided to keep rent out of his transformation procedure,
and I think for good reason. If you think it can be introduced then I would
like to know how?
_____
>
>
>Ajit continued:
>
>Anyway, I simply don't understand your statement above beginning from
>"However..." Since Marx is not considering any other portion of surplus
>value except industrial profit when discussing the falling rate of profit,
>it is obvious that the falling rate of profit must be about the industrial
>rate of profit. You seem to be suggesting the opposite. Moreover, as i have
>explained above, in Marx's scheme the industrial rate of profit is the
>ruling rate of profit for the whole economy. Thus if there is a tendency
>for it to fall, then the rate of profit for the whole economy must fall as
>well.
>
>
>John now comments:
>I simply think the problem is worth investigating. Granted that Marx
>is generally seen as maintaining that there is a tendency for the
>industrial rate of profit to fall. Yet, he leaves open the possibilty
>that the sector which garners agricultural rent may play a role. I
>think it would be wrong to assume that this represents some sort of
>return to Ricardo since for Marx productivity is increasing in all
>sectors. For Marx, it is a question of relative rates of growth.
__________

Again I fail to understand you. Are you saying that Marx thought that
absolute rent had something to do with the falling rate of profit? If so,
how? And if so, why did he discuss the falling rate of profit before even
broaching the question of absolute rent?
_______
>
>
>
>John had written:
>
>>1. I assume that your S/(C+V) includes what Marx calls "natural
>>monopolies." If so, how could this rate of profit equal the
>>average rate of profit?
>___________
>
>Ajit continued:
>
>As I explained above, in Marx's scheme the S/(C+V) contains only the
>industrial sector, so there is no natural monopolies here. In my opinion
>there is no problem in taking the S/(C+V) for the whole economy as well.
>But this would result in putting Marx's theory of absolute rent in
>jeopardy, but then I think it is in jeopardy anyway.
>____________
>
>John comments:
>
>I'm still unclear about your dismissal of absolute rent. Perhaps,
>dismissal is too strong a word but I'd like to know why you think
>the concept or theory is "in jeopardy."
_________

As i mentioned in my first post, I have not worked on marx's theory of
ground rent and my problems with it are 'impressionistic'. That does not
mean that I have no knowledge of what is going on there. As i have already
pointed out the way he derives the absolute ground rent is unacceptable.
Can it be corrected and established more regorously? I don't know. I could
answer this question only after I have studied it, the way i have studied
the problem with his theory of value.
______
>
>
>John had written:
>
>>2. I think Dumenil and Levy's book raises an interesting question --
>> Why would the rate of profit tend to equalize? They are well
>> aware that capitalists invest according to anticipated rates of
>> returns to investment and not rates of profit.
>_____________
>
>Ajit wrote:
>
>And the differences in rates of profits between sectors have nothing to do
>with "anticipated rates of return"?
>
>John comments:
>
>They don't? Here, the question is what motivates capitalist to move in
>and out of the various sectors. Is it the anticipated rate of profit or
>the anticipated rate of return? If it is the later and we observe more
>or less equal profit rates in the various sectors, it would seem natural
>to ask, "Why?"
_________

John, it is getting harder and harder to understand what you are saying. I
asked a question whether your "anticipated rates of return" have any
relation with the differences in rates of profit. Now, you could either say
yes or you could say no; but your "they dont?" with a question mark does
not make any sense to me. Are you saying, yes they do? In that case you
just confirmed my position. If you are saying they don't then I would like
to know how is your anticipated rates of return determined?
_______
>
>(snip)
>
>John had written:
>
>>
>>The intractability may not stem from my thinking but from the problem
>>posed.
>>
>>1. I accept what you say about the stationary state and will check out
>>Schefold's book. However, the key issue here is the goal of the
>>analysis. Are we trying to determine a set of prices only in cases
>>where there is no technical change? Or, are we trying to describe the
>>"economic law of motion of modern society"? If it is a set of
>>prices we seek to derive, then one could abstract from technical change
>>and, with a few more assumptions, carry out the derivation. To
>>say that Marx did this is a stretch. In other words, I do not
>>know where in his transformation procedure he claims there is no
>>technical change.
>____________
>
>Ajit wrote:
>
>
>For any given time for which you are deriving prices, a set of technology
>can be taken as given. It simply does not require a notion of technical
>change. I think that you do need a theory of prices to understand the basic
>structure of capitalist economy. I also think that it is not possible to
>develop a 'dynamic' theory of prices since the measure of prices cannot be
>kept stable in this context. As far as Marx's transformation problem is
>concerned, his c's, v's, and s's represent a given technology. The
>transformation of values to prices of production is conducted on the given
>technology. The question of technological change does not even arise here.
>
>John now comments:
>1. I will, of course, agree that you can take "a set of technology as given"
>as you are