Re: [OPE-L] The Moseley paradox and stock/flow definitions

From: Jerry Levy (jerry_levy@VERIZON.NET)
Date: Sun Jan 13 2008 - 10:20:22 EST

Hi Jurriaan:

Your reply to Paul C answered some questions I was going to ask.  Thanks.

> 2 - we could include U in the denominator, rather than the
> nominator, as a capital cost; in that case, every increase in U
> will indeed lower R.

One has to account (literally) for (at lesst) two different types  of U:

1] U internal to a firm and part of a circuit of capital;

2] U external to a firm in the sense that it represents labour
employed by the state.

1] Could be included in the denominator for the formula for individual rates of profit.  2] could be taken to be a transfer 
of s from  capitalists to the state thru taxation - and hence, indeed, a deduction from the numerator in the formula for individual r's.

Insofar as the benefits (e.g. subsidies) from the state to capital that you mentioned in a previous post are concerned, this could be seen as a redistribution of s among capitalists by the state and hence would lower the relative tax burden of one group of capitalists while increasing the relative tax burden of other capitalists (and non-capitalist taxpayers). This, by itself, wouldn't alter the magnitude of aggregate s but would alter its distribution.

We should also distinguish between _nominal_ individual rates of profit and _after-tax_ individual rates of profit just as personal income is distinguished from disposable income in national income accounting statistics.  Just as disposable income is a more relevant statistic for explaining changes in the propensity to consume so to changes in after-tax rates of profit are more relevant for explaining changes in investment behaviour.

In solidarity, Jerry

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