Re: [OPE-L] Marx on the general rate of profit/rate of interest: a translation error

From: Paul Cockshott (wpc@DCS.GLA.AC.UK)
Date: Tue Oct 30 2007 - 16:34:12 EDT

The question Jurrian, is how a system governed by conservation laws can
see a reduction in its entropy, which is what an equalisation of the rate
of profit would entail.

My feeling is that such a reduction in entropy is not possible in a closed

Paul Cockshott

-----Original Message-----
From: OPE-L on behalf of Jurriaan Bendien
Sent: Tue 10/30/2007 7:23 AM
Subject: [OPE-L] Marx on the general rate of profit/rate of interest: a translation error
It appears to me that Paul C. conflates the causal tendency towards a levelling out of the value rate of profit with the empirical convergence of observed profit rates. It is logically possible to devise a model, based on Marx's own concepts, in which investors in industry are indeed motivated to achieve at least the ruling minimum profitability conditions, without this necessarily resulting in an actual convergence of observed profit rates.

Since profit rates can be specified or defined in all sorts of ways, a whole range of different measures and estimates would need to be collated to clinch the argument, with appropriate distinctions between the value rate of profit and the rate of profit in price terms, and between observed profit rates and stochastic extrapolations.

My own impression is that all the important concepts involved in the debate, and their linkages, have been poorly specified in the Marxist literature, possibly because it is quite a complicated story. The focus is usually on Cap. 3 chapters 9 and 10, all the rest Marx has to say about it in his book is blissfully forgotten. The mathematical reasoning may be impeccable, but if in truth we don't really know what we are counting we are not much further ahead.

It is not so easy to believe that large portfolio managers would invest at 4% net if they know very well that currently the ruling minimum rate for an acceptable return in the market is 10% net, unless there was some calculation of unacceptable risk, or if people are being duped with false information. If they invested at 4% for "strategic" reasons now, presumably the objective would be to realise at least 10% further down the track. They would not last very long in the business, if they consistently realised 4% for their clients when everyone else was getting at least 10%, pretty face or not.


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