Re: [OPE] webpage computing dynamic rate of profit

From: Dave Zachariah <>
Date: Fri May 15 2009 - 17:44:30 EDT

Jurriaan Bendien wrote:
> I cannot evaluate this research, because I lack information about what
> exactly was done. In scientific research, what we require are careful,
> exact, comprehensible and complete descriptions of methods, concepts,
> data and sources used. Unfortunately with these input-output Marxists,
> they often do not provide this, so it is anybody's guess where they
> get their numbers from, or what those numbers really mean.

Well, in my view Anwar Shaikh, Ahmet Tonak and Edward Wolff have been
quite clear about their methods and data sources. The data used on the
webpage is from the Extended Penn World Tables compiled by Adalmir
Marquetti and used in the work of Duncan Foley.

> To relate profitability to population growth rates seems a very odd
> idea, because there is no obvious historical correlation.
It may appear odd but follows quite naturally by applying a labour
theory of value to the mean profit rate: the amount of labour affects
the ratio of labour to capital.

> (1) capital stock data are of dubious quality given the large number
> of assumptions necessary
Yes. However, the model we use is quite general and can --- and should
--- be applied to more accurate data sources. The derivation will be put
on the webpage I believe.

> (2) real gross profit volumes diverge from their value-added measures

I tried to use net profit rates.

> (3) the assumption that the profit-wage ratio proportion and the
> surplus labour/necessary labour proportion or S/V must be similar or
> identical is unproven.

This is not a necessary assumption. In fact, the equilibrium rate is not
independent of the distribution of income between labour and capital.
Moreover, the framework is a stochastic one in which profit rates are
modeled as random variables.

> (4) Measuring profitability as a profit flow against a fixed capital
> stock tells us little about actual profitability, which isn't
> calculated this way.
There are different ways to measure return on invested capital. This is
one of many measures but commonly used by Shaikh, Brenner, Foley, Michl,
Dumenil and Levy, Mohun, et al.

> (6) the empiricist assumption is that official categories are more or
> less the same as Marx's categories, but they aren't.
On the issue of profitability I'm not interested in "Marx's categories"
but what relates to a firm's measure of profitability, especially
relating to payments of interest.

//Dave Z

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Received on Fri May 15 17:46:28 2009

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