Re: [OPE-L] Measuring the rate of profit

[Jerry Levy <Gerald_A_Levy@xxxxxxx>]

Hi Vicenç

>>>  The question then would be: are we producing more goods and
>>> are we able to produce more services with the existing money
>>> capital or do we just have more money capital?
>>That is why you have to look at statistics for real GDP rather than
>> just nominal GDP, right?
> Then you think that deflating GDP you have a proper knowledge
of the real output and that it is comparable with previous periods.

No, I just think that you can make a statistical adjustment to see
how GDP has changed independently of changes in the average price
level (inflation or deflation).  This isn't that hard to do statistically
(contracts with cost-of-living agreements have a similar calculation
which allows one to see how real wages have changed and adjust
accordingly) but, of course, it doesn't resolve other issues concerning
GDP accounting.

> An example to the contrary, the sports shoes manufactured in Asia
> may have 10% of third world labour costs devoted
> to production and 90% of first world well paid "services" value added.

I agree that there are accounting issues associated with MNCs.
E.g. the corporations, for tax-liability reasons, may 'cook the books'
and make it appear as if revenues generated from one location/subsidiary
were generated in another.  Among other things, this creates some
problems for GDP accounting.

> Anothe example, when introducing technical changes, only one part goes to
> lowering price the other goes to increasing profits (or wages): The
> conclusion,  a product with more profit per unit of real costs, whatever
> system you use to measure it. Irrespective of competition forces.

How does that lead to problems concerning the meaurement of
aggregate (rather than individual) profit?  The increase in individual
profit
for one firm _may be_ offset by a loss in profit by other capitalists.
I.e. there is a redistribution of surplus value and profit with technical
change.

> Profits in relation to the output real measure (the work embodied)
> seem to have increased,  accumulating - apparent - wealth. Increasing the
> impression of rate of profit increase.
> Am I right?

Rates of return on investment have been going up,  haven't they?
This, though,  doesn't mean that rates of profit have also been going
up since these two rates are measured quite differently.  E.g. where
there is fictitious capital, RRIs can go up but 'eventually' ....

In solidarity, Jerry