# RE: [OPE] webpage computing dynamic rate of profit

From: Paul Cockshott <wpc@dcs.gla.ac.uk>
Date: Thu May 21 2009 - 10:33:34 EDT

________________________________________
From: ope-bounces@lists.csuchico.edu [ope-bounces@lists.csuchico.edu] On Behalf Of Peter Fleissner [fleissner@arrakis.es]
Sent: Thursday, May 21, 2009 2:18 PM
To: 'Outline on Political Economy mailing list'
Subject: AW: [OPE] webpage computing dynamic rate of profit

Sorry for being late in reacting to the discussion.

I tried out following solution for the rate of profit r.
I think Marx defined it by

r = m/(c + v) for one turnover period.

I am not sure if he took c as stock (defined for one point in time,
cf...fixed capital) or as flow (for a period of time, cc...circulating
capital), maybe sometimes the one way, sometimes the other.

If one tries to refer to an annual rate of profit ra, with the turnover time
T one could express it approximately as

ra = m/(cf + T.cc + T.v)

In this way one can keep the dimensions clean, ra is of the dimension [1
over Time] like it is correct for any interest rates, one does not mix pears
and apples any more, and everything can be empirically defined on annual
figures of SNA (of course one has to define the appropriate price system or
value system first), and it is comparable between different units or
branches of production.

What do you think?
Saludos collaborativos
Peter
--------------------------------------------

I have tried that method, for some work we did on relating organic composition
to profit rate. I tried assuming that the turnover time of variable capital is a month.

However the problem is that turnover of variable and constant capital really means that
the value created is embodied in outputstocks, or may be held as input stocks.
One has to decide if turnover period is the best way of estimating this or if one
should estimate the following stocks

input stocks
output stocks
stocks of work in progress

If one could get reasonable figures for these, one would not have to do the translation
between the flow of wages and raw materials via turnover time to get a stock.

Dr Peter Fleissner
o.Univ.Prof.i.R. Univ.Doz Dipl.Ing.
ab 1. Februar 2009:
Jakschgasse 12/3
A-1140 Wien, Austria
Tel: +43 1 5041190
Mobile: + 43 (0) 676 9308906
http://members.chello.at/gre/fleissner/default.htm

-----Ursprüngliche Nachricht-----
Von: ope-bounces@lists.csuchico.edu [mailto:ope-bounces@lists.csuchico.edu]
Im Auftrag von Jurriaan Bendien
Gesendet: Donnerstag, 21. Mai 2009 12:14
An: Outline on Political Economy mailing list
Betreff: [OPE] webpage computing dynamic rate of profit

It has always struck me as rather odd, that economists try to measure and
compute trends without much of a clue about what they are really measuring.
As Engels puts it, "Ideology is a process accomplished by the so-called
thinker consciously, it is true, but with a false consciousness. The real
motive forces impelling him remain unknown to him; otherwise it simply would

not be an ideological process. Hence he imagines false or seeming motive
forces."

One of the first things I learnt at school about arithmetic is that you
cannot add up apples and pears, i.e. you have to be clear about what your
measurement units are and what you are comparing.

To my knowledge, the Penn "capital stocks" refer to fixed capital stocks
only. Possibly these are based on the OECD series
http://www.oecd.org/dataoecd/47/13/37542921.pdf . Most likely, the Penn
capital stocks include both means of production and non-productive fixed
assets.

As I explain in a wiki http://en.wikipedia.org/wiki/Capital_formation , the
concept of capital formation includes the "increase in stocks" (inventories)

item, but in fact "capital formation" is frequently confused with "gross
fixed capital formation".

Most economists in my experience do not understand what economic concepts
mean, although they assume that economics is an exact science, because
prices can be computed.

Whether or not circulating capital is included or excluded in the capital
stock probably does not affect the longrun trend very much (up or down). But

at least from a Marxian point of view, it is the private productive physical

capital stock, and the profit yield on this physical stock that is relevant.

So the trend in the variable will be influenced by:

- the price inflation rate and implicit deflators
- depreciation calculations
- whether non-productive activities are separated out
- whether the non-private, non-profit sector is separated out

Jurriaan

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Received on Thu May 21 10:39:31 2009

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