> I just quickly picked up the book, turned to the "Summary &
> Conclusions" and then to the section "Empirical Results" (pp
> 221-224). Shaikh&Tonak start by saying "...Marxian "total product"
> is roughly... about 1.5 times GNP...Marxian "gross final product"
> is about 15% smaller than GNP..."Surplus value" is almost double
> the most inclusive measure of profit type income..." etc etc. They
> show the different measures between the philosophies for
> productivity data, employment categories, and the rest. They then
> show different statistical picture you get from the two methods
> when you look at the trends for the major components of the economy
> that interest the analysts. It seems to be all summarized in 4
> pages. The full version is about 60 pages (i.e. Chap 5).
Ok. Total product is 1.5 times GNP and gross final product 15% less. So what?
> IMO, most of the book should be thought of as basic research --
> statistical methods that others can then apply (and some have since
> then). But S&T also apply their statistical methods to what they
> believe is a critical issue. The rate of profit for the period
> they examine (1948-89, they published the book in '94) was in a
> long run decline, bottoming out in the late 70s. Twelve years
> later we take this for granted, using similar methods others have
> shown the same, and today it is much less hard to convince people
> that something structural had happened to the economy in the post
> war decades that can not be explained by neo-classical theory
> (there have also been some new developments in the economy since
> 1989). But when S&T wrote this it was both fundamental and highly
> disputed, even on the left, and certainly from liberals over to
> conservatives (most of whom had tended to see post-war profit rates
> as cyclical and without a long run trend).
>
> S&T go on to assert what they believe to be a principal cause of
> the decline in the profit rate: the rise in "unproductive"
> activities. Since Adam Smith and Ricardo this has been an
> important point among Classical economists: activities like the
> war, most advertising, most finance, health insurance companies,
> prisons, sales cashiers, supervisors devoted to monitoring the
> labor force, police, etc don't help get people the goods and
> services they want -- however "necessary" under capitalism and
> competition they are a cost and sap the growth of the economy.
>
> Would you get the same results using the conventional National
> Accounts?
Every quarter, when the flow of funds accounts come out, I take NIPA profits and divide them by the capital stock to come up with a rate of profit. It peaked in 1966, fell into the early 1980s, rose to a peak in 1997, fell some in the bust, and is now back close to the 1997 level, which is just a little below the 1966 peak. So this highly orthodox (in the bourgeois sense) method matches the early part of the S&T story.
But the rate of profit seems to have risen a lot since S&T did their work (though maybe they could define that increase away with the proper adjustments). Yet the share of "unproductive" labor has undoubtedly increased. As I recall, Shaikh does not want to believe the profit decline was caused by labor getting a bit of an edge in the class struggle in the 60s and 70s (the explanation that makes sense to me), so he's looking for a non-squeeze explanation of the profit decline. But if the profit rate has increased - and everything you can see in the U.S. economy says it has - then this would be support for the class struggle theory of the profit rate, since labor has been smashed and capital runs free.
Doug