[OPE-L:6104] Re: Re: falling profits

["Fred B. Moseley" <fmoseley@xxxxxxxxxxxxx>]

> > From: antonio callari <a_callari@xxxxxxxxxxxxxxx>

> > 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).

Hi Antonio (good to hear from you),

This is a very good question.  I went back to check the data and
discovered that about half of the decline in nonfinancial sector net
profit that I discussed in my previous post was indeed due to increased
interest payments as a percentage of gross profit (net profit +
interest).  The ratio of net profit to gross profit declined from 0.77 in
1997 to 0.64 in the second quarter of 2001.

Gross profit still declined over this period, but declined less than net
profit (13% as opposed to 25%).  So it appears that about half of the very
sharp decline of net profit was due to a decline of gross profit and the
other half was due to a greater percentage of gross profit going to pay
interest.

This result surprises me, because interest rates did not increase that
much from 1997 to 2000 and have of course decreased in 2001.  So it would
be interesting to look into this result further.  Anybody have any further
explanations?

Comradely,
Fred