Re: [OPE] topics for summer discussion: theories of the crisis

From: Dave Zachariah <>
Date: Thu Jul 22 2010 - 06:19:21 EDT

Hi Jurriaan,

Thanks for your comment.

> [P]roduction capital is in reality only a smallish fraction of total
> capital assets in advanced capitalist societies, whether or not we
> consider only the physical capital used, or include also financial
> assets. Therefore, the Marxist preoccupation with the profitability of
> production capital ignores a large trade in non-productive assets and
> thereby a large chunk of economic life.

I agree, and that is why I think one must separate measures of
profitability on financial and non-financial assets. The preoccupation
with the rate of return on production assets is well grounded in a
materialist conception of capitalism my view; it is reinvestment of
profit in these assets that is the source of capitalism's expansive

If profitability of these assets are low in relative terms it affects
the trajectory of the system because it sets a limit to the rate of
expansion of the production capital stock; reduces the inclination to
reinvest in such assets; which in turn affects a whole range of
variables (growth rates of labour and productivity, output, demand, etc.).

> [T]he profit rate on production capital may decline in value terms,
> while in price terms the returns on capital don't, or not to the same
> degree. But in that case, what needs to be explained is what sustains
> this discrepancy, and indeed whether or how it can be sustained in the
> long term.
Yes, but the question is: if there is a systematic difference in the
trends between directly observed measures of monetary rate of profit and
some 'value' rate of profit then the information gained by the latter is
very limited indeed. It is the former that serve as signals in the
system not the latter.

But contrary to Hussons rendering of Kliman's 'value rate', one can
construct a dynamic steady-state rate of profit based on labour value
that systematically predicts the trend of the average monetary rate of

//Dave Z
ope mailing list
Received on Thu Jul 22 06:21:44 2010

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