On Dec 24, 2007, at 12:14 PM, Michael Smith wrote:
>> It's also a useful way of adjusting the profit rate downwards when
>> bourgeois data tell you otherwise. The rate of profit has been
>> falling so long it's a miracle that it's not negative.
>
> I'd be interested to hear more about this idea, if you'd like to
> elaborate.
Every quarter when the flow of funds accounts come out, I compute a profit rate for nonfinancial corps using the pre- and after-tax profits figures from the national income accounts and dividing them by the value of the tangible capital stock from the FoF (a pretty standard technique). It shows a sharp decline in profitability from the mid-1960s into the early 1980s, a strong rise back to close to Golden Age levels into the late 1990s, a sharp decline from 1997-2002, a strong rise into 2005, and a significant decline since. Marxist economists who adjust the bourgeois numbers by stripping out such "unproductive" fields as retail generally adjust away the 1982-97 rise. Therefore FROP continues FROPping. I say the bourgeois offensive was quite successful in restoring corp profitability. The adjusters don't agree. I'm sure Rakesh can say more.
Doug