>I can see the point and realism of Doug's usage, but I still think the above
>is erroneous. Productive (leading to increased goods/services output)
>capitalist investments are made based on the existence or non-existence of
>promising pools of effective demand, not on the basis of some general
>profit-rate calculation: "I have x-million dollars. If I invest it in
>Project A, how much more money am I likely to get back? Are there enough
>potential buyers of the goods/services we'll make to make this bet? What
>returns have other recent investors been getting from this firm?"
The investment will be made only if there's a satisfactory rate of profit - i.e., one sufficiently above the T-bill rate to compensate for the added risk. Of course individual capitalists don't make specifici investment decisions based on the aggregate profit rates. Still, the aggregate rate of profit is a measure of general conditions, the general investment environment. If it's bad, the capos get pissed. The size of the market is only of interest as long as it's a guide to profitability. Back in the 1980s, it was said that Japan was cleverly ignoring short-term profit consideration in favor of a long-term strategy of building market share; that didn't work out too good.
Doug