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: Wed Oct 31 2007 - 16:36:05 EDT

You have to realise that there will not be a single rate of profit
within a sector. The rate of profit within sectors will itself be
normally distributed. A sector where the mean rate is low, has two
1) Either a significant fraction falls into the loss making state, in
which case the sector will contract.
2) The sectoral coefficient of variation of the profit rate may be
narrower than the economy wide dispersion which may be enough to keep
only a small proportion of the firms loss making. This second
alternative seems less likely unless one can produce specific reasons
for it.

Note that I am not disputing that an almost equal rate of return can be
achieved on equities -- this is what 'shareholder value' achieves, but
the means by which this occurs is the writing up or down of the
valuation of the companies share capital. This rate of return on
equities is quite distinct from the rate of return discussed by Marx and
the Classicals.

You are right in saying that random fluctuations around prices of
production are just as likely as random fluctuations around values. If
the random fluctuations of market around prices of production are just
as great as the random fluctuations of market prices around values, then
prices of production have no additional explanatory power as compared to
values, and by Occams razor, we should prefer the simpler theory - that
labour values determine prices.

The only justification for the additional complexity of price of
production theory would be if it significantly improves our predictive
ability with respect to real prices. If it does not, then it is not even
an epi-cycle, it becomes in Gould's terms a Spandrel.

-----Original Message-----
From: OPE-L [mailto:OPE-L@SUS.CSUCHICO.EDU] On Behalf Of Rakesh Bhandari
Sent: 30 October 2007 22:50
Subject: Re: [OPE-L] Marx on the general rate of profit/rate of
interest: a translation error

I must say that I am not following your explanation of what is
even in this day age of unleashed capital flows and shareholder value
tendency towards an equal profit rate.
I don't get the point about firm death either. Wouldn't there be some
tendency for all firms which within a branch are not achieving average
profitability to die? Why would that disrupt the tendency to the equal
profit rate?
I am distracted, and I am asking you to start the argument from scratch.
apologize. I know for years you have said that Marx had no need to
transform (just as for years Gil assailed Marx's assumption of price
equivalence, these two points have been defining criticisms for OPE-L,
I want to understand what you are saying because I just don't get the
logic of these defining criticisms). So if possible I would just like a
post which explains why. Random fluctuations around value are no less
likely than random fluctuations around price of production?
Sorry to take the discussion back so far.

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