re: enron and the rate of profit
Empirical confirmation for this proposition comes from the revisions to productivity and labor income that came out last August. The accounting dodge that permitted companies to nottake a charge against revenues foremployee stock options effectively overstated their profitability and watered their equity shares. It might be useful to think of the defeat of labor, decreased regulation and fraud as a progression along a consistent trajectory. That trajectory has a lot to do with the class bias of accounting, which is first of all intensified in the cult of the bottom line. Chris Burford's comments about accounting are relevant here. I would also draw attention to an article some nine years ago in the Journal of Economic Issues by Donald Stabile on "Accountants and the Price System: the Problem of Social Costs". The founding myth of accounting is the boundary drawn between the firm and its social and environmental externalities. I would say that it is a productive myth so long as it is highly qualified by acknowledgements that it is only a convention.Collective bargaining, regulation and progressive taxation were waysof qualifying and containing theenterprise myth.The cult of the bottom line, however,convertswhat was a convention into an eternal Truth, which is where the fiction turns to fraud. Michael Perelman wrote I have been proposing the idea that the profit rate has been artificallyhigh for some time. I had mostly thought in terms of decreased regulationand the defeat of labor. Enron and the dot.com bubble makes me think morein terms of fraud. Any thoughts on this? Tom Walker
Re: enron and the rate of profit
Yesterday's FT (26/27.1.02) had an article which touched on this. It claims that the rules on reporting profits will be tightened up as a result of the Enron case, and that this will result in lower reported profits in the future. It also reports that Standard and Poors is pushing for the adoption of a new category of 'operating earnings', which would include charges for the cost of share options. It cites an estimate that including the cost of corporate earnings would reduce coportate profits by 17%. Trevor Evans Berlin - Original Message - From: Michael Perelman [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: 27 January 2002 05:30 Subject: [PEN-L:21954] enron and the rate of profit I have been proposing the idea that the profit rate has been artifically high for some time. I had mostly thought in terms of decreased regulation and the defeat of labor. Enron and the dot.com bubble makes me think more in terms of fraud. Any thoughts on this? -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
re: enron and the rate of profit
Michael Perelman writes:I have been proposing the idea that the profit rate has been artifically high for some time. I had mostly thought in terms of decreased regulation and the defeat of labor. Enron and the dot.com bubble makes me think more in terms of fraud. Any thoughts on this? it seems to me that it's quite possible that the measured rate of profit has been high due to accounting tricks and the like. But there are limits to how high the measured rate of profit can be relative to the very-hard-to-measure actual rate of profit. A lot of the fraud benefits one group of capitalists (Enron, dot.conners) at the expense of others, and so doesn't affect the aggregate average rate of profit, which reflects the state of class relations (determining the actual mass of profit, the numerator) and the amount of fixed capital that exists (the denominator). Of course, a lot of the fraud is against the working class and would raise the mass of profit. But (1) that doesn't mean it's not real profits and (2) there are limits here, too, since usual measures of compensation of employees involve _actual_ payments, not promises (pension funds, etc.) BTW, I don't understand how fictitious capital affects calculations of the rate of profit such as the one by the BEA that Fred and I are discussing. -- Jim
Re: enron and the rate of profit
Would you agree that those limits are at least a contributing factor to the bursting of bubbles and the unravelling of Enrons? Jim Devine wrote, it seems to me that it's quite possible that the measured rate of profithas been high due to accounting tricks and the like. But there arelimits to how high the measured rate of profit can be relative to thevery-hard-to-measure actual rate of profit.
enron and the rate of profit
I have been proposing the idea that the profit rate has been artifically high for some time. I had mostly thought in terms of decreased regulation and the defeat of labor. Enron and the dot.com bubble makes me think more in terms of fraud. Any thoughts on this? -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
