<html><div style='background-color:'> <DIV>A question for Doug, </DIV> <DIV></DIV>In reading through Marx's critique of Ricardo's lack of clarity on the transformation of value into prices of production in Theories of Surplus Value, Vol II (p. 199), I ran across the following passage on average profit: <DIV></DIV> <DIV></DIV>"...[average profit is embodies in] commodities...whose composition the various organic constituents [c, v, and s] enter in the average proportions, and whose period of circulation and reproduction is also are of average length. For these, cost-price [price of production] and value coincide, because for them, and only for them, average profit coincides with their actual surplus-value." <DIV></DIV> <DIV></DIV>Would it be possible to pick a commodity, or basket of commodities, one or more from each Department, and use these as indexes for the average rate of profit in the economy as a whole. For example, for Department II, Marboro cigarettes, Budwiser and Chevrolets. These are the three top selling brand-names in terms of gross revenue, which makes me suspect that a large number of Americans drive around in Chevy's, drinking Budwiser and smoking Marboros. Choose comparable commodities for Department I. In choosing the commodities, the turnover has to be average as well. <DIV></DIV> <DIV></DIV>Assume that prices of production coincide with value, that is, k+kp" = c+v+s, and extrapolate to get average rate of profit. <DIV></DIV> <DIV></DIV>k+kp" = (1+k)p" = k + s, where p" is avg rate of profit, k is c+v <DIV></DIV>p" = (k+s)/(1+k) <DIV></DIV> <DIV></DIV>That is average rate of profit equals = cost-price [depreciation of fixed capital + circulating capital + wages] plus gross profit divided by (1 + cost-price). Fill in the dollar amounts from financial records to get average rate of profit. Because prices of production coincide with value, this basket of commodities approximates the average rate of profit for the economy as a whole. Use it to determine whether the rate is rising or falling over various time periods. <DIV></DIV> <DIV></DIV>If this or something similar has been done already, let me know the references. <DIV></DIV> <DIV></DIV>RS <DIV></DIV> <DIV></DIV> <DIV></DIV></div><br clear=all><hr>Get your FREE download of MSN Explorer at <a href='http://go.msn.com/bql/hmtag_itl_EN.asp'>http://explorer.msn.com</a><br></html>