[OPE-L:6346] Rates of Profit?

Gerald Levy (glevy@pratt.edu)
Tue, 24 Mar 1998 07:24:43 -0500 (est)

Paul C wrote on Tue, 24 Mar:

> Farjoun and Machover suggested some 15 years ago that in fact the
> dispersions of profit rates in capitalist economies will be relatively
> wide. Work that Allin and I have done on the UK economy and the US
> economy tends to confirm this. If this is the case, then Marx's
> identification of the general rate with the average rate in his price
> of production theory, is currently unjustified. It is an open question
> as to whether the dispersion of profit rates was narrow at the time he
> wrote.

Another related "open question" is the conceptual and empirical
relationship between *monopolies* and the general and/or average rate
of profit.

In his 4/30/68 letter to Engels, Marx tells us that he excludes monopolies
in the formation of a general rate of profit and prices of production:
"Those branches of production which constitute natural *monoploies* are
exempted from this equalization process even if their rate of profit is
higher than the social rate. This is important later for the development
of *ground rent*" (emphasis in original).

Yet, if we were to *empirically* identify an "average rate of profit"
within an economy, the rates of profit for monopolies (and oligopolies)
would have to be included in the averaging. Right? If there is a wide
dispersion, then it might also make sense to speak of *different* average
rates of profit for *different* parts of the economy (e.g. regionally or
by the form of competition as in a "dual economy" approach).

There is also the question *why* there are wide dispersions of profit
rates. What did your empirical work with Allin suggest about this?

So we have in theory a general rate of profit in which monopolies are
explicitly excluded (and which may or may not have empirical relevance for
today's capitalist economies) and a statistic that could be called an
average rate of profit which means something different than Marx
intended. On the conceptual level, I think there needs to be
more work done on monopolies and competition (Marx evidently thought so as
well since at the time that he was writing the drafts for what became
VIII, he was planning "eventually" on writing a separate book on
competition). Then there are a set of empirical questions as well related
to an average rate of profit (e.g. how do the rates differ internationally
and what is the cause for the disparity?).

In solidarity, Jerry