[OPE-L:6092] Re: falling profits - 2

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Fri Oct 26 2001 - 13:21:58 EDT

Fred writes in 6091: 

> The cause of baldness is not loss of hair, because baldness IS BY
> DEFINITION loss of hair.  But your analogy does not work.  The crisis is
> not by definition falling profits.  The crisis is by definition falling
> output and rising unemployment, etc.  The question is what causes the
> falling output and rising unemployment: falling profits or something else?

but jerry's question is what causes the fall in or slow down in the growth of 
realized profits in absolute and/or relative terms. Based on a weakness in the 
inducement to invest that is not explained by a rise in the OCC and the U/P 
labor ratio, the (post) Keynesians (as you of course know) have a theory of why 
the potential surplus, i.e., profits, is not produced and realized and  the 
economy consequently settles down into an unemployment equilibrium of fallen 
output and higher unemployment.

> 2.  From the mid-70s to 1997, the rate of profit recovered, but only
> partially (only about half of its prior decline), so that the rate of
> profit in 1997 remained about 25% below its earlier postwar peak.  The
> main reason for such a weak recovery of the rate of profit was the
> continued increase of the ratio of unproductive labor to productive labor,
> which partially offset a sharp increase in the rate of surplus-value and
> its positive effect on the rate of profit (the composition of capital
> increased only slightly during this period, due mainly to slower capital
> accumulation and lower costs of raw materials). 

Fred, are you (and Anwar) able to show that the increase in the rate of 
exploitation was the main cause of the recovery in the US rate of profit that 
was in fact achieved? Yes, the rate of s/v rose but did it rise sufficiently to 
explain the recovery in the US profit rate.  I ask because in your more recent 
work one seems to find that declining interest costs as a result of the influx 
of foreign capital may have been the main reason for an increase in the US 
profit rate. 



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