[OPE-L:3450] Re: equalisation of profit rates

["Duncan K. Foley" <foleyd@xxxxxxxxxxxxxxxxxx>]

Since capital can move from the other sectors to banking, wouldn't the
force of competition tend to equalize the rate of profit on banking capital
to the average rate of profit?

The mechanism might be a wider or narrower spread between bank's lending
and borrowing rates of interest.

Duncan


>I have a query about the rate of profit.
>
>Do list members think that the fixed capital of the banking sector
>should enter into the general rate of profit, and if so by what
>mechanism.
>
>The practical relevance of this is that when one wishes to
>look at time series for the organic composition of capital in a
>country one has to decide if the fixed capital of the banking
>sector ( its buildings and equipment ) should be included
>in the figure for total constant capital or not.
>
>I tend to think that it should not be included, as I can see
>no plausible mechanism by which it can influence the rate
>of profit of industrial capital.
>
>What practice do other members follow when constructing
>such time series.

Duncan K. Foley
Leo Model Professor
Department of Economics
Graduate Faculty
New School University
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