On Fri, 25 Jan 2002, Doug Henwood wrote:
> Michael Perelman wrote: > > >Doesn't fraud also accompany a falling rate of profit? I have thought about > >this relationship quite a bit, but I have seen relatively little written about > >it. > > > >As profit rates fall, companies resort to more and more risky behavior to > >compensate for the fall into rate of profit. In the process, they resort to > >first flaky and then fraudulent behavior. > > In the US, the profit rate rose from the early 80s until around 1997. > Funny accounting also increased over the period - in bull markets, > people don't want to hear bad news, and they want profits to grow > rapidly forever. The bursting of a speculative bubble brings calls > for tighter accounting. Doug, this may be misleading. The rate of profit certainly did not increase continuously from 1980 to 1977, and then decline. Rather, the rate of profit fluctuated up and then down in the 1980s, so that the rate of profit in 1992 (7.0%) was only slightly higher than it was in 1980 (6.2%). Similar fluctuations (with somewhat larger amplitudes) occurred in the 1990s, first an increase to 1997 and then a sharp decline to 7.1% in 2001). So that the rate of profit today remains only slightly above what it was in the trough of the early 1980s. My conclusion from these estimates, as I have said many times before, is that the fundamental problem in the US economy of insufficient profitability has not yet been solved and continues to causes recessions and stagnation. Best, Fred
