[OPE-L:6471] Re: Re: Two Rates of Profit?

Fred B. Moseley (fmoseley@mtholyoke.edu)
Fri, 17 Apr 1998 18:59:31 -0400 (EDT)

Responding to Chris' post of a week ago (below):

It seems to me from Chris' last two posts that we are really in agreement
about Marx's treatment of the average rate of profit. Chris seems to be
saying that the average rate of profit was not intended by Marx as an
alternative method of determination, but merely an arithmetic calculation.
If so, then I would agree. I have argued all along that for Marx the
average rate of profit is not a fundamentally different method of
determination, but only a way of breaking down the social totals into
individual industries ("aliquot parts") to show the dependence of the
general or average rate of profit on the distribution of capital.

Do we agree?


On Thu, 9 Apr 1998, C. J. Arthur wrote:

> Date: Thu, 9 Apr 1998 13:47:40 +0100
> From: "C. J. Arthur" <cjarthur@pavilion.co.uk>
> Reply-To: ope-l@galaxy.csuchico.edu
> To: ope-l@galaxy.csuchico.edu
> Subject: Re: [OPE-L] Re: Two Rates of Profit?
> Continuing the discussion with Fred:
> >1. Chris seems to agree with me about the general rate of
> >profit - that it is determined by social totals and is determined
> >independently of competition and prices of production.
> >Competition only equalizes the individual rates of profit to this
> >independently determined general rate of profit.
> Correct
> >2. I don't understand what Chris is arguing about the average
> >rate of profit. I don't understand Chris' distinction between
> >
> >I have argued that, for Marx, the average rate of profit is also
> >determined
> *by us*
> >independently of competition and prices of
> >production, as a weighted average of individual rates of profit
> >according to the assumption that individual prices equal their
> >values (i.e. individual capitals are considered as "aliquot parts"
> >of the total social capital). Again, competition ONLY EQUALIZES
> >the individual rates of profit to this INDEPENDENTLY
> >DETERMINED average rate of profit.
> independently calculable
> >The average rate of profit is just
> >another way of looking at the general rate of profit in order to
> >emphasize that the general or average rate of profit depends on the
> >distribution of capital across industries.
> >
> >Chris seems to agree with this to some extent, but then argues
> >that this average rate of profit is a "mere theoretical"
> >determination or even a "mere arithmetic" result, which does
> >not have an actual existence. The actual existence of this
> >average rate of profit is brought about by competition and
> >comes into existence together with prices of production.
> >
> >But, Chris, when this actual average rate of profit comes into
> >existence, how is its LEVEL determined? That is the crucial
> >question. Is it not the "theoretically determined" average rate
> >of profit?
> it is equal to it
> >This is not a "mere theoretical" determination, but is
> >instead the determination of the average rate of profit in the
> >real world. For Marx (as I understand him), competition does
> >not determine the level of the average rate of profit, but only
> >equalizes the individual rates of profit to the independently
> >determined level. There is no difference between the general
> >rate of profit and the average rate of profit in this regard.
> >
> >So, Chris, if you want to argue that competition somehow
> >determines the LEVEL of the average rate of profit, please
> >explain how.
> By capitals, under the pressure of competition adjusting their prices until
> there is no advatage/disadvantage in entering/exiting a sector.
> Immediately it seems price signals are prior and the eqaul rate of profit a
> result - but that is because in competition 'everything appears upside
> down'. How to go beyond 'the illusions of competition'? There are two ways,
> one philosophically much more satisfactory is summarised in point 1 above.
> But if one wanted to stick with an atomistic ontology one could still argue
> that surplus value is created at particular sites and is redistributed
> through the equalisation process. In this perspective we can calculate the
> aggregate sv and prdict the ARP to which the real equalisation process
> tends. But this aggregate has no real existence *as* an aggregate but
> remains a set of particular sums. What is meant by 'determination? I still
> think there is a difference between mathematically determine i.e. calculate
> and predict - and the real process of determination whereby this result is
> acheived in the world. But even on this latter view there is something
> 'prior' to competition which contrains it i.e. the amount to be reallocated
> is fixed
> Comradely
> Chris A