[OPE-L:5274] Re: RRI and The Rate of Profit

john ernst (ernst@pipeline.com)
Mon, 16 Jun 1997 21:28:17 -0700 (PDT)

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Other RRI and rate of profit matters.

1. Marx seems to view the rate of profit as the motive for capitalist
investment. If so, he is simply wrong. Capitalists would try to
achieve maximum profits by maximizing the RRI, not the rate of
profit. Thus, we should ask which of the two measures of profitablity
is involved in the "law of the tendency of the rate of profit to
fall." Or is it both?

2. In his transformation procedure, Marx attempts to show how
the produced surplus value is "shared" by various capital which
earn equal rates of profit. Most assume that this means that
rates of profit tend to equalize. Would they? Or would the
RRI's of the various capitals tend to do so?

3. It is unclear how depreciation charges should be taken into
account when doing empirical work. If capitalists are using
an RRI to compute profitability, its unclear what role of either
simple use of straight line depreciation or use of discard
schedule should play in such studies.