Thanks very much for a useful post. It also gave me a chance to revisit your '97 RRPE article which gives valuable perspective (I mistakenly recalled it only analyzed data to the end of the '80s) and see that you find that the fundementals have not changed much since then. If it is any help to the list I have tried to summarize how (in my view) you, Dumenil & Levy, and Wolff compare on the assessment of the current rate of profit.
[Excuse the simplistic abbreviations of complex issues and arguments. I also realize the large limitations here, and that authors are using mutually incompatible data and categories to tell their 'story' (and that these choices greatly influence the outcome). But, to the extent possible on a mail list, it is a comparison of those 'stories' that I am trying to promote for discussion among us. I also hope to help mobilizing an awareness and desire for greater research of these issues.]
1) Similarities
I think everyone agrees that at least since around the early '80s there has been a limited up tick in the profit rate (and you usefully warn us again that the up tick is very limited). In fact, despite the disparate approaches, Wolff, Dumenil & Levy, and yourself all broadly concur - profit rates are back to about where they were in the early '70s. I also think everyone agrees that at least a big part of this increase is due to a shift in shares from labour to capital (increase in the rate of surplus value). That leaves the next question: are there also any OTHER factors that have contributed to this weak rise in the profit rate? Is something additional going on 'under the hood'? If so, this could have important consequences both for the description we give and the strategy decisions of a movement.
2) Differences
A. Wolff answers no - there is a shift from labour to capital and there are no other big factors. But, as you have pointed out in comments on Wolff's previous work, he has been an exponent of wage-profit squeezes (a bit like the late David Gordon) and never found much significance to the composition of capital (if I recall right, this was in your AER comment on Wolff, and in the Introduction to the book you co-edited with him, but also perhaps a logical extension of your comments on Weisskopf's work in the '80s? Very good work BTW.).
B. Dumenil and Levy (using data to 2000) answer, partly yes. Again, we are only talking of a limited rise in the rate of profit - but they do refer to a "period of recovery" with profit levels comparable to 1970 for the business sector overall and mid '70s for most select categories (although this is still only 60% of the post-war golden age average RoP). In addition to the shift in shares from labour to capital they DO find some of the increase in RoP due to the composition of capital (p.455 for a summary). D & L trace this to an increase in the productivity of capital in the 'non-capital intensive corporate sector' that then shows up in the non-corporate business sector as a reduction in the relative price of capital (pp.456-7, the conclusions, and the appendix devoted to this question). In the past, D&L have tended to find that the composition of capital is significant and in long wave patterns, so this new work goes along the same lines.
C. Moseley (see post below) also answers partly yes, something
more than the shift in shares from labour to capital is going on:
- that there is an overarching drag on profits, i.e. the ongoing
rise in non-productive. While this rise in non-productive labor
has slowed, it continues and so long as it does so, long
term prospects for profits are grim.
- that there is only a small change in the composition of capital.
- that the current weak up tick is largely due to the change in
shares favoring capital (and brace for more of the same).Hope this helps. Paul
Fred Moseley writes: ........
So I would say that the US economy is still not "out of the woods" so far as the rate of profit is concerned. Therefore, in terms of the "strategic importance of our assessment of the medium-term direction of the US economy" that you mention, I think workers will continue to face strong persistent attempts to restore the rate of profit - by wage cuts, pension cuts, speed-up, moving to low-wage areas around the world, etc.. In other words, the attacks on the living and working standards of US workers in recent decades is not over and will continue. I think that is the nature of the challenge that we face.
According to Marx's theory, one of the main reasons for the prior decline of the rate of profit was a very significant increase in the ratio of unproductive labor to productive labor (in addition to an increase in the composition of capital). Furthermore, according to Marx's theory, the main reason why the rate of profit has only partially recovered is that the ratio of unproductive to productive labor has continued to increase since the 1970s, and thus partially offset the very large increase in the rate of surplus-value and a small decline in the composition of capital.
I would be happy to try to answer any further questions, if you wish.
Fred
