[OPE-L:4444] Re: produced and realized profit

Paul Cockshot (wpc@cs.strath.ac.uk)
Wed, 19 Mar 1997 08:25:30 -0800 (PST)

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> If we abstract from the role of the state, where does the funding for
> credit by banking capital come from? Presumably, that credit depends in
> large part on the money-capital that banks can loan to firms which, in
> turn, depends largely on prior realized profits.
Paul C:
No it does not. The money capital is created within the banking system.
Banks can extend overdrafts to companies, and any expenditure using these
oberdraft facilities is merely a transfer between bank accounts,a book
keeping operation that requires no accumulation of 'real' value to fund it.

> > I think it is wrong to say that taxation necessarily reduces the
> > 'money capital' in the hands of capitalists.
> Is it wrong to say that to the extent that taxation on profits represents
> a redistribution of surplus value, it reduces the after-tax profitability
> of firms?
That is only true if you ignore what happens to expenditure. Tax rises
corresponding expenditure rises would certainly have that effect. But with
balanced budgets one can no longer assume it to be true.