[OPE-L:1599] profit and fictitious capital

Michael Perelman (michael@ecst.csuchico.edu)
Wed, 27 Mar 1996 21:58:56 -0800

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Our discussions on profit are taking a fruitful turn. Let us keep
a few simple points in mind. We keep talking about profit rates, but
individual capitalists do not see a profit rate as such. They see an array
of expected profit rates. These expectations are conditioned by the
experience of others firms.

Even after they are in business for a while, they do not have a precise
estimate of their profits. Their accountant's books are backward
looking; while the relevant profits are their future returns.

After a period of disappointment, they may have to revalue their
capital. Even here, their actions are inexact.

I tend to extend Marx's use of the term to include the overvaluation of
capital needing to be written down as part of ficititious capital.

Chai-on's point is correct. We do not have a real theory about the
relationship between the general rate of profit and the profit of individual
capitals. It would make an interesting, and even valuable, study.

Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 916-898-5321
E-Mail michael@ecst.csuchico.edu