re: enron and the rate of profit

[Tom Walker]

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 not take a charge against revenues for employee 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 ways of qualifying and containing the enterprise myth. The cult of the bottom line, however, converts what 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 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?       Tom Walker