[OPE-L:7190] [OPE-L:708] Re: Re: Market Values and Market Prices

Gerald Levy (glevy@pratt.edu)
Fri, 19 Mar 1999 06:53:04 -0500 (EST)

Re John's [OPE-L:707]:

> I am unclear about what you are saying. My claim was that capitalists
> do not shift from one investment to another on the basis of a rate of
> profit. Are you saying that the rate of profit must be based upon a
> "flow."

No, I was simply stating that capitalists know that a certain percentage
of their capital, in the form of constant fixed capital, is "tied-up"
in the production process and this has an effect then on their investment
decisions. For example, if their RRI (or rate of profit) was declining,
would they shut-down their plants, sell-off all of their capital equipment
and inventory, and take all of their money capital and then invest it in
another firm or branch of production where a higher RRI (or rate of
profit) was anticipated? In most cases (particularly if it wasn't an
extreme drop in profitability that was expected to continue
indefinitely), capitalists in these circumstance would not. In other
words, the fact that a certain percentage of capital takes the form of
constant fixed capital affects the "mobility of capital" and can present
itself as "barriers to exit" to individual firms. Yet, isn't the mobility
of capital assumed in the transformation of values to prices of

In solidarity, Jerry