[OPE-L:6096] Re: falling profits

["Gerald_A_Levy" <Gerald_A_Levy@xxxxxxxxxxxxx>]

> Date: Fri, 26 Oct 2001 15:38:26 -0400
> From: antonio callari <a_callari@xxxxxxxxxxxxxxx>
> Subject: Re: [OPE-L:6090] falling profits

> Dear Fred, or anyone else who might know:
>
> Is there a way of knowing (or speculating about) "Why" this fall in
profits
> occurred?
> I am wondering, specifically, whether this fall in profit is part of a
fall
> in surplus-value in general, or the result of an increased flow of
> surplus-value to non-profit forms and/or to the FIRE sector (including
> profit to financial institutions).
>
> I am thinking that the answer to this question might be useful for how we
> think about the causes and the possible ways out-of/into the crisis.
>
> Thanks
>
> Antonio
>
>  >On Thu, 25 Oct 2001, Paul Zarembka wrote:
> >
> >> Falling profits CAUSE U.S. crisis or are SYMPTOMS of crisis?
> >
> >Profits started falling in 1997 and investment started falling in 2000
and
> >the recession started in 2001.  This suggests to me that falling profits
> >was the cause of falling investment and thus of the recession.  To be
> >sure, profits will decline further as an effect of the recession.  So
> >falling profits is both cause and effect of the recession.  But the prior
> >significant decline in profits suggests that falling profits is a
> >cause.  I would say the most important cause.
> >
> >
> >> Whose CRISIS?  If the 1930s was a CRISIS, is using the big word today
> >> suggesting we are in 1929?  Was using the word in 1973 suggesting then
> >> that we then were in 1929?  Was it correct to have so described?  In
sum,
> >> I am questioning when to use CRISIS (certainly not when it subjectively
> >> moves us).
> >
> >I am not saying that today is like 1929.  But I am saying that I think we
> >are closer to 1929 today than at any other time in the postwar period -
> >closer than in the recessions of 1974-75 and 1980-82.  What is different
> >and much worse this time is the very high debt levels of businesses (and
> >of households).  It is the combination of low profit and high debt that
> >makes the current situation similar to 1929.  I am not predicting that
> >things will get that bad.  But I am saying that the chances that things
> >could get that bad are higher today than they anytime since the Great
> >Depression.
> >
> >
> >> BEA made a revision.  Why should we jump on THIS revision?
> >
> >The BEA's revision was not based on a change of definitions or of
> >estimating procedures, which sometimes happens, and which would be more
> >suspicious.  Rather, the significant downward revision of profits from
> >1998 to 2001 was the result simply of taking into account more data.  It
> >would certainly be interesting to know more about why the revision was so
> >large this time, and I hope to pursue this question.  But it is generally
> >thought that such revisions based on more data are better than the old
> >estimates.
> >
> >
> >Paul, thanks for your comments.
> >
> >Comradely,
> >Fred
>
>
> Antonio Callari
> E-MAIL:         A_CALLARI@xxxxxxxxxxxxxx
> POST MAIL:      Department of Economics
>                 Franklin and Marshall College
>                 Lancaster PA 17604-3003
> PHONE:          717/291-3947
> FAX:            717/291-4369