[PEN-L:4866] profit-rate equalization

[Jim Devine <JNDF%LMUACAD.BITNET@xxxxxxxxxxxxxxxxx>]

(topic was: asset tax)
On Fri, 28 Apr 1995 13:26:54 -0700 Doug Henwood said:
>There's a paper in The Deal Decade, edited by Margaret Blair (Brookings,
>1994), that looks at rates of return for a broad sample of US firms from
>the late 1970s through the late 1980s/early 1990s. Despite the deregulation
>of the markets and a furious pace of transactions, which should
>theoretically have narrowed the dispersion of profit rates, this didn't
>happen. Profit rates were as dispersed as ever at the end of the deal
>decade as at the beginning.
>
Just because capitalism involves a tendency for profit rates to
equalize between sectors (in the absense of barriers to mobility)
doesn't mean that profit rates actually equalize. As Farjoun and
Machover argue:

"in a capitalist economy, the very forces of competition, _which
are internal to the system_, are responsible not only for pulling
an abnormally high or low rate of profit back towards normality,
_but also for creating such 'abnormal' rates of profit in the first
place." (LAWS OF CHAOS, Verso, 1983, p. 34, their emphasis)

Not only is there an endogenous tendency for profit rates to
equalize, but endogenous tendencies toward
innovation, centralization, etc.
lead to disequalization. I don't think Marx really took this
conflict of opposing tendencies as seriously as he should have.
(He followed Ricardo to assume equalization when
discussing the so-called transformation problem. My article
on that problem in the 1990 RESEARCH IN POLITICAL ECONOMY
tries to get away from the Ricardian assumption.)

in pen-l solidarity,

Jim Devine
jndf@xxxxxxxxxxxxxx or jdevine@xxxxxxxxxxxxxxx
Econ. Dept., Loyola Marymount Univ., Los Angeles, CA 90045-2699 USA
310/338-2948 (daytime, during workweek); FAX: 310/338-1950
"Segui il tuo corso, e lascia dir le genti." (Go your own way
and let people talk.) -- K. Marx, paraphrasing Dante A.