The tendency of earnings estimates to fall

Charles Brown CharlesB at CNCL.ci.detroit.mi.us
Thu Apr 5 13:54:03 PDT 2001



>>> SAckerman at FAIR.org 04/03/01 04:50PM >>>

Doug Henwood wrote:


> U.S. corporate profitability peaked in late 96/early 97, and has been
> flat-to-down since. It makes you wonder where the alleged
> productivity boom is paying off.
. Well it paid off in the NIPA statistics, didn't it? Output per worker zoomed. So why didn't it show up in the profit rate? Accounting-wise, wouldn't it have to be because the output/capital ratio (aka "capital productivity) stagnated? Is that consistent with the data?

(((((((((

CB: In Marx's terms, the tendency of the rate of profit to fall is because the rate of profit is :

rate of profit = surplus value/ (constant capital + variable capital).

so

rate of profit = (s/v) /( 1 + c/v)

so if productivity goes up because of introduction of new technology raising the technical composition of capital, to the extent that rise in technical composition is reflected in a rising of the value composition ( i.e. the ratio of c to v ), the rate of profit will fall



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