Yes it is certainly compatible with what he writes in vol 1
of capital regarding relative surplus value. My feeling though
is that neither he nor subsequent marxist economists have
successfully integrated this with his investigations into prices
of production.
>This is generally left out of mathematical
>> models which use only a single method of production per
>> industry, with an associated single rate of profit.
>
Jurriaan
>In my limited experience, the trouble with mathematical models of
>economists in general is that they cater for only a few variables at the
>time, and rest on a lot of assumptions, which may be untenable in real
>life. They offer rigour and precision, but at the expense of the
>complexity of real economic life. So what sort of theorising are we
>talking about then ? Theorising which is connected in the wrong way with
>the empirical facts. I am not wishing to say mathematical modelling is
>useless, to the contrary, you need mathematics to build socialism, but
>there is also such a thing as the abuse of mathematical modelling.
>
I think there is a lot of that in economics. It is a question of abstraction
in constructing a formal model one choses to abstract from some
aspects of the real and include others in the model. This can lead
to the model being internally coherent and elegant, but it is only
a model and its relevance to reality has to be tested by comparing
the predictions of the model with what actually happens.
What tends to happen in economics is that people start representing
the model itself as reality and spend more time arguing about
its internal details than they do in checking whether it is a good
model for the real world.
Jurriaan
>Marx's analysis would lead you to expect that capitalists use all sorts of
>criteria to judge the "economic weather" in making investment decisions, up
>to and including social, political and psychological factors. In my limited
>experience, capitalists do often have hunches or estimates of an "average
>or normal return" in their line of business, although they may not be
>statistically exact and may be stated in different ways.
>
>To take an exceedingly simple example: if you borrow money at a certain
>rate of interest in order to make money with it, it is obvious that you
>have know something about your own (expected) profit rate. If you know your
>own profit rate, then you can know somebody else's. And if the amount of
>capital involved gets very large, then you are motivated to avoid big
>mistakes. Small mistakes maybe, but not big mistakes.
>
I dont think you are right in saying that if you know your own profit
rate you can know somebody else's. A firm can inspect the published
accounts of rivals but it will not be privy to the detailed costing of
their individual branches of production as these are held confidentially.
Nor will they know what the current aggregate profit figures of
rivals are - they only know them post hoc after annual accounts
are published.
But beyond that, if you are a manger deciding whether to invest
in new plant what is relevant is what the bank will charge you for
the capital, not what a rival is earning on their capital. Since the
rate of interest fluctuates frequently in response to international
currency movements and the like, the effect maybe to modulate the
time profile of investment in different in different industries.
Industries with a high organic composition of capital and a
low rate of profit will then only invest on those stages of the
business cycle when interest rates are low. Those with a
low organic composition of capital and a higher rate of profit
would be able to invest during a longer fraction of the business
cycle.
Jurriaan
>I would actually make this a bit stronger and argue that the actual growth
>process of the capitalist mode of production is not accompanied by ANY
>effective equalisation of the rate of profit. That is, the equalisation of
>the rate of profit is only the tendency over a period of time.
I feel that this word tendency is used loosely. What exactly do
you mean by a tendency, and how can you determine when a
tendency really exists?
>
>
Jurriaan speaking of Kalecki
>I haven't read a lot of this Polish economist, to be honest. A friend of
>mine thought he sounded kind of sexy, and an acquaintance of mine believed
>in his theory of "political business cycles". At that time I thought Marx's
>analysis was more subtle. But Marx never wrote comprehensively on business
>operations "at the surface of society", and as they appear to economic
>actors (as we have to try to do today). His key point was only that
>commodity fetishism and competition inverts the real process in the eyes of
>economic actors, and he wrote on what he thought to be the real process.
Kalecki's analysis is, in my opinion, also very subtle and also shows
that the real process in the economy is the inverse of what it appears
to the economic actors.
For example, it appears to the individual capitalist that their personal
consumption and investment expenditure are constrained by their
profits. Kalecki shows that for the class of capitalists taken as a whole
the inverse is true. It is their expenditure on investment and consumption
that determines their profits.
>>5. A factor tending to favour a markup on prime costs as a
>> regulator is that the bargaining position of trades unions
>> is strongest with industries earning above average markups
>> on labour costs. This may tend to limit the dispersion of
>> prime cost markups.
>>
Jurriaan
>That would be possible, but industries with above average markups on labour
>costs would also tend to have above average markups on other costs,
>wouldn't they ? (I didn't mean by my remarks in my previous post that
>capital-labour conflicts cannot influence price movements !)
>
They would have above average markups on other things as well,
but since labour costs make up the greatest part of prime costs
in the economy as a whole, the effect of capital labour conflicts
may be to constrain the markup on prime costs.