"Everyone who plays this game does it by different rules. Many esteemed Marxist profit-watchers adjust the official stats in numerous ways, such as trying to eliminate “nonproductive” activity. While I understand the interest in jiggering the numbers, no known capitalist can see or feel the adjusted rate of profit. What they (and their shareholders) care about is the actual rate of profit, reported in cash money, relative to the amount of capital that had to be invested to gain the return."
This has been one of my longstanding questions about Marxian analysis (I only just recently got back to a more intensive study of Marx. I'm doing a cursory reading, okay listening, of capital volume one and then I'm going to read it physically and take notes. I'm about half way through listening so far). Based on the above Doug seems to be arguing that profit to enterprise is what really matters when analyzing trends in a capitalist economy. This leads to an obvious question in my mind. Let's assume for hypothetical example's sake that there is a relatively radical political party that has gained large electoral control in our hypothetical country which is in a devastating recession with high inflation (in short it's the 1970's). Could this party restore profitability to enterprise, shrink inflation and lower unemployment by shrinking other sectors such as unproductive labor and rent? It seems to me that this is a logical conclusion from anything I've read from Marxists and Marx. Yet I've almost never seen it discussed. Fred Moseley has also emphasized the importance of increases in unproductive labor to the 1970's: "there were two main causes of the decline of the rate of profit in the postwar US economy from the late 1940s to the mid- 1970s: an increase in the capital invested per worker, and an increase in the ratio of unproductive labor to productive labor. According to my estimates, these two trends contributed roughly equally to the total decline in the rate of profit during this period (see Moseley 1991, Chapter 4)." http://www.mtholyoke.edu/~fmoseley/working%20papers/PWCRISIS.pdf Now I'm not arguing for any particular reform position or that this means capitalism should be saved blah blah blah. Nor am i saying it would really be politically possible for such a platform to succeed anywhere. I'm more interested in knowing whether I've got a decent grasp of the argument or whether I'm missing major pieces that make what I'm suggesting technically impossible. On another note, I'm not so sure unproductive labor should be completely ignored when calculating the rate of profit. I think perhaps executive pay should factor in too. If the executives think they can dramatically increase their compensation through investment they will do so even if the firm as a whole sees a low profit rate or even sees negative quarters. -- -Nathan Tankus -----------------------------------------------------------------------------------------------------------------------------------------------
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