[PEN-L:33726] RE: Re: RE: Rates of Profit: Recent Estimates

["Devine, James" <jdevine@xxxxxxx>]

Title: RE: [PEN-L:33721] Re: RE: Rates of Profit: Recent Estimates

_Of course_ it's very difficult to measure the capital stock (K), but (1) Dumenil and Levy and the BEA are quite conscious of the index-number problems of this task; (2) D&L don't use it as part of a neoclassical theory of production and distribution, where the problems of measurement of K are paramount; (3) the various measures of the rate of profit don't show markedly different trends or cycles; and (4) the various measures of the rate of profit can play a useful role in a plausible story of the dynamics of the US economy.

Thus, I think it would be a mistake to jump from measurement problems into empirical nihilism. The various theories we spin are doubtful, too, so it's good to have some empirical endorsement. (BTW, almost all statistics are subject to doubt: is it really valid to treat each unemployed worker as equal to all others and then add them all up to get the total number of unemployed? Aren't some people more unemployed than others?)

Finally, it's important to remember that no theoretical or empirical analysis can give the "final word" on any subject. Rather, every analysis is (and should be) subject to empirical or theoretical criticism. But merely rejecting empirical data or the theory won't wash. The only way to trump an analysis to is to provide a better analysis.

Software is currently counted as part of the capital stock (which may explain part of the reason why K depreciation rates have surged), but it's possible to get disaggregated figures and get rid of the software component.

------------------------
Jim Devine jdevine@xxxxxxx &  http://bellarmine.lmu.edu/~jdevine

> -----Original Message-----
> From: Michael Perelman [mailto:michael@xxxxxxxxxxxxxxxxx]
> Sent: Friday, January 10, 2003 9:40 AM
> To: pen-l@xxxxxxxxxxxxxxxxxxx
> Subject: [PEN-L:33721] Re: RE: Rates of Profit: Recent Estimates
>
>
> To beat on a not yet dead horse, of the major problems in estimating a
> rate of profit is the denominator -- the capital stock.  Most of the
> debates center around the measurement of total profits, but
> the capital
> stock is the truly difficult part to measure.
>
> In recent decades, investment has been shifting from
> long-lived capital
> goods and buildings to capital goods of a very uncertain lifetime.  I
> believe that even software is now suppose to be part of the
> capital stock,
> but I'm not sure.
>
>  --
> Michael Perelman
> Economics Department
> California State University
> Chico, CA 95929
>
> Tel. 530-898-5321
> E-Mail michael@xxxxxxxxxxxxxxxxx
>
>