Re: Re: Re: Re: the profit rate & recession

[Doug Henwood <dhenwood@xxxxxxxxx>]

Fred B. Moseley wrote:

> Doug, this may be misleading.  The rate of profit certainly did not
> increase continuously from 1980 to 1977, and then decline.  Rather, the
> rate of profit fluctuated up and then down in the 1980s, so that the rate
> of profit in 1992 (7.0%) was only slightly higher than it was in 1980
> (6.2%).  Similar fluctuations (with somewhat larger amplitudes) occurred
> in the 1990s, first an increase to 1997 and then a sharp decline to 7.1%
> in 2001).  So that the rate of profit today remains only slightly above
> what it was in the trough of the early 1980s.
>
> My conclusion from these estimates, as I have said many times before, is
> that the fundamental problem in the US economy of insufficient
> profitability has not yet been solved and continues to causes recessions
> and stagnation.

Of course, nothing in social life goes straight up or down (except
maybe Mariah Carey's record sales). But the trend in the 80s and most
of the 90s was certainly up.

We're working with different numbers. I'm using pretax profits from
the NIPAs divided by the Fed's estimate of the capital stock from the
flow of funds accounts (for nonfinancial corporations). My series
bottoms in 1982, rises choppily to 1988, sinks a bit with the
recession/credit crunch/debt hangover, bottoms in 1991, then rises
pretty steadily to a peak in 1997. The dropoff since 1997 is quite
sharp, giving back 2/3 of the rise between 1982 and 1997. This
explains a good bit of the bubble bursting and investment dropoff.

To bracket out that 15-year rise and imply that nothing much has
changed would miss a whole economic era.

By the way, Anwar Shaikh told me just the other day that he still
thinks the U.S. is in a long upwave.

Doug