[OPE-L:2101] [PAUL C] Re: Kliman-McGlone interpretation of the transformation

glevy@acnet.pratt.edu (glevy@acnet.pratt.edu)
Tue, 7 May 1996 02:45:52 -0700

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>The idea that profit is 'what would be need to continue production
>on the same scale' is a wholly Dmitriev/Tugan/Bortkiewicz invention.

Surely you would concede that when preparing their profit accounts firms
do attempt to take into account the extent to which their profits may
be due to stock appreciation?

You confuse things by introducing banks as the source of capital. A bank
loan is denominated in money not value, thus the position of a borrower
vis-a-vis a bank is affected by changes in the value of money. In a time
of inflation this is favourable to the borrower and with respect to
paying off bank loans, profit defined as:

[(income from sales of output)
less (the outlay made to produce this output)]
/(initial outlay)

will do nicely. But with respect to the capitalists ability to
command labour and resources in the future, this is false accounting.
To present the matter clearly one should abstract from the additional
complication of bank loans and assume that the capitalist is operating
with his own capital, otherwise one is introducing redistribution
effects between the bank and the firm into ones calculation.
Paul Cockshott