[PEN-L:265] Re: Re: rising rate of profit

[bill Burgess <burgess@xxxxxxxxxxx>]

At 11:40 AM 23/07/98 -0700, Michael P. wrote in reply to Jim Devine's
question on (rising) profit rates in the US:

>I can think of several reasons.  Perhaps the most important is
outsourcing.  If
>I have little domestic investment, outsource inputs, and just assemble them
>output/per capital should increase.

Has the increase in outsourcing really been so great as to account for a
signficant portion of the rise in profits? And, I get lost in the
accounting, but wouldn't only *foreign* outsourcing affect *aggregate or
average* US profit rates in this way? Also, I presume Jim's data is for US
operations and excludes foreign subsidiaries, but if not, what difference
would that make?

Jim mentioned that the organic composition of capital falls as (fixed)
capital/output rises. If Michael is right about outsourced inputs (which
are part of circulating constant capital) the trend in the OCC might change
(quite apart from unproductive labour, etc.), since the OCC includes both
fixed and circulating constant capital.

Years ago I estimated circulating c at about 1/3 of fixed c in
manufacturing in Canada (on a "flow" basis, i.e. raw materials and energy
plus inventories /capital consumption allowances). I think Mosely and
others fail to properly count circulating c (or, more to the point in trend
analysis, changes in the ratio of circulating to fixed capital). As I
recall, Mosely uses business inventories for circulating c, which is
problematic given the different (presumably, but also unknown) rates of
turnover of raw material, goods in process and finished goods which are
included under this one figure.

I confess I find the high (average or aggregate) non-financial profit rates
a puzzle.

Bill Burgess