Are you disaggregating the extremely high profits that derive from corporate interest earnings or financial-asset capital gains, as US firms hollowed out from the early 1980s and took higher earnings shares from their financial/treasury operations? They would have paralleled the interest-payments deduction? (I think Chris Niggle did a study on this during the 1980s but presumably Bob Pollin or Tom Schlesinger -- or Doug -- have updated the argument?)
----- Original Message ----- From: "Fred B. Moseley" <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]> Sent: Wednesday, January 30, 2002 12:49 AM Subject: [PEN-L:22073] Re: Re: the profit rate & recession > > On Mon, 28 Jan 2002, Doug Henwood wrote: > > > Devine, James wrote: > > > > >the data that Fred Moseley and I are discussing is from the BEA and is > > >available at: > > >http://www.bea.doc.gov/bea/ARTICLES/2001/09september/0901ror.pdf or > > >http://www.bea.doc.gov/bea/ARTICLES/2001/09september/ror.xls. > > > > > >These data are not disaggregated by industry. > > > > Ah, but their definition of profits adds interest back in. That's a > > useful measure for some purposes, but money spent servicing debt > > isn't available for investment or dividends. > > > The rate of profit defined gross of interest is a broader measure of the > return to capital for the capitalist class as a whole. The rate of profit > defined net of interest is also affected by the division of the gross > profit into non-financial profit and interest. > > Doug is right that, from the point of view of individual non-financial > capitals, the money they pay in interest cannot be invested BY THEM. > However, from the point of view of the capitalist class as a whole, > the interest collected by financial capitalists can (and usually will) be > loaned out and invested by someone else in one way or another. > > Doug is also right that the net rate of profit has increased slightly more > than the gross rate of profit since 1982. This is because lower rates of > interest in the 1990s have reduced interest payments and raised the net > rate of profit relative to the gross rate of profit (i.e. nonfinancial > capital received a larger share of the gross profit). > > However, from 1965 to 1982, the net rate of profit DECLINED MORE than the > gross rate of profit, for the opposite reason (increasing interest rates > and nonfinancial capital received a smaller share of the gross profit). > So that, for the whole period from 1965 to 2001, the net rate of > profit declined more than the gross rate of profit. According to my > calculations (from the estimates in the SCB article by Larkin and Morris), > the gross rate of profit in 2000 was 36% below the 1965 peak and the net > rate of profit was 45% below the 1965 peak. And if reasonable estimates > for 2001 are added, the declines for the whole period are 46% for the > gross rate of profit and 59% for the net rate of profit. > > Thus, by either measure, there was a very significant decline in the rate > of profit from 1965 to 1982, and a much smaller increase since then, so > that the rate of profit today is about 50% below its 1965 peak. As I have > said, the fundamental problem of insufficient profitability has not yet > been solved. It has been masked by accounting tricks, including fraud (as > Michael P. suggests), but it has not yet been solved. > > Fred > >