[OPE-L:2444] RE: Profit rate and profit share

From: Alejandro Valle Baeza (valle@servidor.unam.mx)
Date: Mon Feb 28 2000 - 12:53:21 EST

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Julian, here two quotes I ofered to you:

1. About practical using rate of profit instead any other measure of

"The profit resulting from any business considered abstractly, is no
real measure of the merits of that particular business. An operation
making $100,000.00 per year may be a very profitable business justifying
expansion and the use of all the additional capital that it can
profitably employ. On the other hand, a business making $10,000,000 a
year may he a very unprofitable one, not only not justifying further
expansion but even justifying liquidation unless more profitable returns
can be obtained. lt is not, therefore, a matter of the amount of profit
but of the relation of that profit to the real worth of invested capital
within the business. Unless that principle is fully recognized in any
plan that may be adopted, illogical and unsound results and statistics
are unavoidable. "
Sloan, Alfred P. (1972). My Years With General Motors, Inc. Garden City,
NY.: Anchor Books Double Day & Co. pp. 53.Extract of the report
presented to the Executive Committee on December 6, 1919.
"There are other measures for the running of a business; for example,
profit on sales, and penetration of the market , but they do not
supersede return on investment." idem pp. 160.

2. About orthodox theory backwardness:

"Some four decades ago; when Joan Robinson decide to take a look at the
orthodox neoclassical theory of profit she couln't find any. When I
first began to study the study less than a decade ago, I found to my
surprise, that the situation had changed but little."Obrinsky, M.
(1983). Profit Theory and Capitalism. Philadelphia: University of
Pennsylvania Press. pp.xi.

Saludos cordiales

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