Fw: [PEN-L] The formation of Marx's general rate of profit: the trend towards international production prices

From: valle (valle@SERVIDOR.UNAM.MX)
Date: Sat Jan 31 2004 - 22:52:58 EST

----- I think this post to pen-l is interesting for ope-l,

From: "Jurriaan Bendien" <bendien@TOMAATNET.NL>
Sent: Saturday, January 31, 2004 3:03 PM
Subject: [PEN-L] The formation of Marx's general rate of profit: the trend
towards international production prices

> The new International Financial Reporting Standards provide an interesting
> illustration of the formation of an international general rate of profit
> based on international production prices. The USA, EU and Japan (which
> together represent over half of the value of world GDP) are now
> new accounting rules for the distribution of surplus-value which would end
> the big differences in the rules between countries.
> The current situation which features different systems actually costs
> business a lot of money - for example, it makes it more difficult for
> investors and corporations to make international profitability comparisons
> between enterprises in the same sector. In addition, the taxman wants
> information on financial deals and property income of corporations. If
> taxation is a third or so of gross profits, obviously this plays an
> important role in new accounting rules. There are a few problems which
> have to be ironed out, but there is forward momentum.
> While the pseudo-Marxists reject Marx's theory of production price, the
> reality is that corporate executives constantly have to confront it,
> they constantly have to bridge that critical interval in time between
> incurred and sales realised (the process of the turnover of capital,
> something which, as we know, requires an increasing volume of credit), but
> the point is, in this mysterious process, an increasing amount of money
> happens to change hands that has nothing directly to do with production,
> with property income and financial deals involving fringe benefits, loans,
> options, shares, bonds, derivatives, future contracts, hedging schemes,
> imputed goodwill capital, and all sorts of things.
> In neoclassical economics, the significance of this interval (i.e. real
> production by the working class) disappears, through the magnificent
> division of economics into micro-economics, macro-economics and management
> theory, so that the social relations of production do not exist; all we
> is enterprise economics, management philosophy and then a share-out of the
> national income used to estimate the social product according to the
> Keynesian income-product identities. The International Accounting
> Board however agrees mainly with Marx, who had a single system of
> without the micro-macro split, as against those "Marxists" who are still
> terribly worried about the inability to obtain price-value and rp/S
> identities in a system of simultaneous equations (which misinterprets
> own intention anyhow).
> The IASB want fuller disclosure of financial income as distinct from
> production income, and a valuation of corporate assets which fairly
> their current value in the market. This puts more pressure on executives
> certain respects, in that the organisation must be built more and more
> around the critical profit volume and profit rate figures. It's the return
> to the share-holder, i.e. realised surplus-value, that is increasingly the
> fulcrum of corporate strategy. More output must be sold that is produced
> workers working at greater intensity and long hours at a lower unit labour
> cost.
> Thus, IFRS requires greater disclosure of transactions at "fair value",
> defined as current market value or replacement cost rather than
> costs, recognising that an increasing component of corporate profit income
> is actually due to trading in investment property and financial assets
> (capital gains of sorts) where changes in value occur which are not
> attributable to actual production values, and entries treated as "costs"
> really "revenue".
> Some of the main changes include: more detailed disclosure in accounting
> financial instruments and investments at current market value, preference
> shares, derivatives (options, interest rate swaps, forward contracts),
> currency hedging, and convertible loans (split between debt and equity);
> more rigorous accounting for pension costs;  share, bond and share option
> schemes are treated as a cost to be charged in all cases; in
> merger accounting is no longer allowed; goodwill and intellectual asset
> accounting (impairment charges against profits only, no amortisation using
> indefinite asset lives); more explicit accounting for investment
> at cost less depreciation; capitalisation of developments costs (no option
> to expense immediately); and changes in deferred tax (provisions on
> revaluations, no discounting).
> Europe intends to make IFRS compulsory in 2005. The USA is modifying its
> rules, to make them consistent with IFRS, although, in many respects, IFRS
> seems to be actually inspired more by the US model. The Japanese
> however at the moment seems not to want to proceed further than giving the
> Japanese enterprises a choice to use the new international reporting
> standard instead of the existing one. Keisuke Takeguuchi of the Daiwa
> Institute of Research said that a situation could now emerge where, in
> Japan, two different bookkeeping standards could exist side by side, the
> IFRS and the local standard. Keidanren thinks however that Japan has
> done enough to improve the system, and that existing accounting rules are
> comparatively better. Not entirely surprising, given the peculiarities of
> economic difficulties in Japan.
> Specifically, Japanese employers don't like the requirement to report
> financial balances at current market value, and the stricter rules for
> pension obligations in the new system. Yet Japanese enterprises which
> adhere to local rules, run the risk of being excluded from overseas
> financial markets. After a trial in 2004, the EU for example intends to
> accept only the IFRS standard for the 7000 listed corporations as from
> Enterprises which don't conform will most likely not get access to the
> European obligations and stockmarkets. The IFRS is consistent with the tax
> base harmonisation strategy across the EU, a necessary step on the way to
> its equalisation of the rate of taxation, a project which is currently
> boggling many German public servants.
> Jurriaan

This archive was generated by hypermail 2.1.5 : Mon Feb 02 2004 - 00:00:02 EST