[OPE-L:6357] Re: (Monopoly) Rates of Profit?

Paul Cockshott (wpc@faraday.org)
Wed, 25 Mar 1998 09:42:48 +0000

Gerald Levy wrote:

> Paul C wrote on Tue, 24 Mar:
> 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.
> Well .. let's see how simple it is to explain this at the "level of value
> production".
> You suggest that the "user" pays the additional cost. I.e. the user pays a
> market price above [individual] value which reflects a monopoly rent.
> Let's break this down. There are several types of "users" including:
> a) business firms.
> b) capitalists and other non-working class members as individual
> consumers.
> b) workers as consumers.
> Now, what is the effect of the monopoly rent?
> A. For a), does the redistribution of profit to Microsoft lead to a
> decline in the profit rates for all other firms?
> How does Microsoft's rent factor affect the profit rate for Microsoft's
> competitors?

To the extent that Microsoft can sell products to other firms above their
valuethen these firms profits fall at Microsofts expense. This may be why the
US justice dept is willing to pursue them.

> B. Does Microsoft's monopoly rent mean that there is a redistribution of
> income derived from surplus value and profit away from other
> capitalists to Microsoft and Bill Gates because capitalists *as
> individual consumers* are paying higher prices for computers and
> related equipment? E.g. what is the impact of monopoly rent on the
> standard of living of those capitalists who purchase "luxury" goods for
> individual (unproductive) consumption?

I suppose that the standard of living of the Rich may be marginallyreduced by
having to pay their license fee for Microsoft Office.

> C. If workers *as consumers* pay this rent, doesn't this mean that the
> real wage and standard of living of workers is thereby lowered?

It should not be assumed that workers as consumers buy legitimatecopies of
software. There is in Glasgow a substantial cottage industry
centered on the Barrows market at which any software can be had
for its marginal cost of reproduction.

It also depends what you mean lowered with restpect to.On one view,
the real wage is not lowered, since the alternative, in the absence
of the monopoly, would be to have software packages that were
incompatible between different machines. The inconvenience represented
by this would also be a reduction in the real wage. Standardisation
represents a material gain in real terms.

The other view is to say that if Microsoft were forced, say by legislation
to sell its product cheaper then workers as consumers would be better
off in real terms.

> Thus,
> can capitalists lower real wages for workers if they mark-up consumer
> goods for workers at a market price in excess of value? Isn't the end
> result similar to a wage reduction and decrease in the value of
> labour-power?

. If software sells above its value,
then other commodities are forced to sell below their value.
One would have to assume that software made up a disproportionate
amount of the purchases of workers.

The more serious case is obviously the production of grain under
conditions of high ground rents at times when real wages are low and
food purchases make up a large part of wages. In this case however,
the grain sells at its marginal value and the rent is obtained by the
difference between marginal and average value. This does represent
a real reduction in wages. The circumstances under which the
theory of rent was developed by Ricardo, were just these. At this
point, political agitation against the landlord class, to allow for example
the free import of grain could become the central issue of national
politics. Bright and Cobden had working class as well as middle
class support for their agitation.