[OPE-L:6347] Re: Rates of Profit?

Paul Cockshott (wpc@faraday.org)
Tue, 24 Mar 1998 13:57:03 +0000

Gerald Levy 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).

I have for years treated monopolies as simply an extension of the phenomena of
rent. Certain industries can sell their product well above its marginal value
and thus earn monopoly profit. It should be noted that the phenomenon of
monopoly profit can be explained simply at the level of value production. It
does not need a concept of an average rate of profit.Microsoft can sell
programs at way above their value because the costs to the user of having a
non-standard operating system set the only limit on its price, and
intellectual property law enforces an artificial restriction on people just
copying the software.

When looking at rates of profit at the Input Output Table level, it is
possible to exclude industries with obvious 'rent' components in their price -
oil and agriculture being examples. Allin and I have done this for some of our

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

This is to beg the question. Why should it not be wide, given that market
economies are chaotic?