[OPE] Estimating profit rate attractors

From: Jurriaan Bendien <adsl675281@telfort.nl>
Date: Sat May 02 2009 - 07:08:46 EDT

I worked on a similar problem once. In the first instance, you should try to
find out how the depreciation charges are estimated and what is included in

Normally, economic depreciation computed for national accounts differs from
actual depreciation charges. Economic depreciation (consumption of fixed
capital) may also include insurance charges and capital repairs charges, in
other words bits which have nothing to do with depreciation. If the
government provides tax incentives or penalties, the actual depreciation
charged may be higher or lower than economic depreciation, and when economic
depreciation charges are calculated for national accounts, they may be
either higher or lower than the actual. The next step is to consider what
policy changes have occurred as regards depreciation during the interval
spanned by the data series. Did depreciation schedules change significantly
at certain points?

Personally I decided to exclude depreciation from profit totals, but include
certain items in profit which were excluded by the national accounts. The
reason is (although Marxists in my experience usually don't understand this)
that the macro profit definitions are influenced by the concept of value
added. In other words, the profit component of output or revenue cited in
national accounts is not the real profit.

The final step in the analysis is to compare results for different measures
including and excluding depreciation charges calculated in different ways -
does it make a real difference to the trend?

In Marx's theory, depreciation is a replacement of the loss in value of a
capital asset, and therefore cannot be considered part of surplus value. But
in modern capital funding depreciation typically does contain an element of
profit. It is just almost impossible to identify the profit component in
depreciation and therefore I am inclined to go for net profit rather than
gross profit in that sense.


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