I wrote:
>I don't think the profit rate was high in 1998 because of rapid payback,
>but because wages were low relative to productivity (high rate of
>surplus-value) and because the output/capital ratio was high. If we're
>talking about the after-tax rate, then the tax system has helped boost
>profit rates.
Compare 1988 (a profit peak year) and 1998 (a year after the profit peak,
according to current statistics). According to the US Department of
Commerce (Survey of Current Business, June 1999), comparing these years,
for domestic nonfinancial corporations:
-- the profit rate (or rate of return) rose from 8.7 to 9.6 percent (more
than a 10 percent increase). Profit rates are up steeply (though they
haven't returned to the standards of the 1960s, which some see as the
exception, not the rule). It peaked in 1997 at 9.9 percent.
-- the profit rate based on current production rose from 6.2 to 8.3 percent
(a 32 percent increase, but down from 8.5 percent in 1997). The fact that
this change is larger than the previous one reflects the fall in interest
income as a percent of the net stock of reproducible tangible wealth from
2.5 to 1.3 percent. The "productive" capitalists have been winning relative
to the rentiers since about 1990.
-- the after-tax profit rate based on current production rose from 4.0 to
6.0 percent, a 50 percent increase. The fact that this change is larger
than the previous one reflects a fall in the effective tax rate on
nonfinancial corporations. (It's been falling since the 1980s.)
-- the share of property income in domestic income rose from 18.4 to 18.5
percent. This is not much, but reflects the lag of wages behind labor
productivity. As Doug points out, the property income share peaked in 1996
at 19.5 percent.
-- the share of profits from current production rose from 13.0 to 15.9
percent, whereas the share of net interest fell from 5.4 to 2.5 percent.
-- the output-capital ratio implied by these numbers rose from 0.47 to
0.52, which is a pretty significant change by historical standards. Some
might think that a lot of this may reflect rising utilization of capacity
(faster turnover of commodities), but the Federal Reserve's capacity
utilization rates fell between these two years.
The statistics for 1998 will likely be revised when they show up in the
SURVEY OF CURRENT BUSINESS this June.
Jim Devine [EMAIL PROTECTED] & http://liberalarts.lmu.edu/~jdevine
