Re: zero average profit

From: Allin Cottrell (
Date: Sat May 31 2003 - 00:37:15 EDT

On Fri, 30 May 2003, Ian Wright wrote:

> When considering simple circulation at the beginning of Capital
> Vol 1., Marx explains, as I understand it, that if (a) the total
> money in a closed economy is fixed and (b) exchange is money
> conserving then (c) average profits are zero (and he therefore
> concludes that profits cannot arise from circulation). Essentially,
> any profit is cancelled by another's loss.
> Marx then discusses how the distinction between paid and unpaid
> labour-time accounts for surplus-value. But the introduction of
> capitalist exploitation doesn't change the above conditions (a)
> and (b). So in this situation, consequence (c) still follows and
> we'd expect average profits to be zero...

I think your puzzlement here might have to do with the difference
between (a) a condition of zero profit and (b) a condition in which
the capitalists' aggregate money holdings do not grow over time.

The "fixed money" situation is compatible with positive profit.
Here's a simple example.  Each period the capitalists lay out 50 on
labour power.  The workers produce goods to the value of 100.  50 of
this is necessities, purchased by the workers, and 50 is luxuries,
purchased by the capitalists.  Aggregate profit = capitalist
consumption = 50.  Total income = 100, period after period.

But if we want to introduce an ongoing M-C-M', with the capitalists
accumulating and income expanding, money has to flex.  If money
remains constant in value (and so does velocity of circulation), we'll
need a larger money stock.

Allin Cottrell.

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