About the use of this surplus cash to centralize capital--and leaving aside the significance of the use of equity in mergers and acquisitions-- Paul Mattick wrote: "And because the centralizaton process can raise the rate of profit even in the absence of capital concentration, simply by the reorganization and different utilization of the existing capital, a relative stagnation of capital does not at once express itself in lower profits. On the other hand, the hastened concentraton and centralizaton of capital can also be seen as measures foruced upon capital to maintain its profitability. Insofar as these measures compensate for lack of sufficient new investments, they hold down the rising organic composition of capital, thus bolstering the rate of profit at the expense of accumulation. But while the rate of profit may be maintained, general economic economic activity stagnates, for it cannot advance without the production of additional capital. Sooner or later, the stagnation leads to a crisis, which can be overcome through the resumption of the accumulaton process" *Marxism: last refuge of the bourgeoisie?*
I am not denying that corporations have free cash flow; I am suggesting
that despite surplus cash, the ratio of undistributed corporate profits to fixed non residential consumption had fallen preciptiously--which is not to say the mass of UCP has not increased, nor the share of it paid out to rentiers fell.In rephrasing me, you suggested that I think there is an absolute shortage of retained earnings. Rather I am emphasizing that the amount of capital required for a firm simply to stay on the treadmill, as Moishe Postone may put it, has indeed increased in relation to UCP. I admit not to have made much of this factoid.
As for other issues, I only wanted to raise the question of whether the Anglo American stock market driven system of finance is truly the efficient cause of "short-term" behavior; and I was only pulling toes about the market undervaluation of high tech stock. Actually I was rather disgusted by Warren Buffet's recent comment that he preferred Big Macs and Coke to the internet.
As I said, I would like to make a read of Hilferding's magnum opus to understand his theoretical treatment of the rate of interest and rentier income (e.g., why he thought they would rise vis a vis industrial profit, which seems to me to be argument with which you may agree).
Best, Rakesh