[OPE-L] Measuring the rate of profit

From: ope-admin@ricardo.ecn.wfu.edu
Date: Thu Mar 16 2006 - 06:30:32 EST


-------------------- Original Message ----------------------
Subject: Measuring the rate of profit
From:    "Vicenš MelÚndez" <vicenmel@sarenet.es>
Date:    Thu, March 16, 2006 3:40 am
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Dear Mr Levy,

I have read the thread of messages developped by Jurrian and you about LTFPR.

I you allow me, I would like to question three things.

Lack of instruments of measure of the rate of profit
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In my opinion not enough emphasis have been given to the capability to
measure profit.

Yes it is true that Jurrian has detailed the statistical and accounting
methodologies (which we have to thank because it is always very boring)
regarding money sums.
He has not a theoretical base for comparing the profits magnitude measured
in prices, provided by different institutions.  From time to time money
quantities seem to vanish and there remain only the basic things: where to
live, what to eat, and the capability to produce services how to
communicate, etc: the real wealth. So, money in relation to what, or at
what time of the cycle?

We know that production techniques condition everything from  prices to
the rate of profit and wages, even  the labour accounting and complicates
comparisons; nevertheless the relation price- quantity of labour embodied
could be essential, specially when prices can go up just due to monopoly
mark ups - without  oposition or competition -. What is really real and
corresponds to real goods in this money sum and what is only speculation?

The question then would be: are we producing more goods and are we able to
produce more services with the existing money capital or do we just have
more money capital?


Almost free goods due technological progress
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Another thing relates to the falling rate of profit: there is an effect -
contrary to certain extent, to that of accumulating capital  (increasing
OCC) in order to produce a lower per unit product, provided there is
enough demand - we can see nowadays: the almost no cost for some Internet
application e-mail, for instance. There is no way to make business
provided that the cost of giving the service is so low: similar to selling
air -which is good for society and bad or the business or for the economy
as we undestand it -.


Role of public facilities
--------------------------
A third point would be: public facilities. It is a way  to promote a
higher rate of profit because diminishes the unit prices of the rest of
the sectors: think in the lower cost for firms in Stockholm where there is
a municipal optical fiber network - I assume they have!  - and costs in
cities where each company has its own network. The same for household
facilities, i.e. having a computer to access the bank account or buying.

Yourd Sincerely,

Vicenc MelÚndez
Barcelona (Spain)
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