[lbo-talk] Austerity In The Face Of Weakness

[123hop at comcast.net]

Profit might indicate the rate at which capital expands itself, but if it is not reinvested, it's not necessarily a sign of "health." For example, if all capital is used for speculation, whether in real estate or art, the rate of profit at T1 might not say anything about the rate of profit at T2.

Joanna

----- Original Message ----- 
From: "Julio Huato" <juliohuato at gmail.com> 
To: "Lbo Talk Lbo Talk" <lbo-talk at lbo-talk.org> 
Sent: Tuesday, August 31, 2010 5:15:30 PM 
Subject: [lbo-talk] Austerity In The Face Of Weakness 

SA wrote: 


> Wouldn't this analysis suggest that the profit rate - 
> an indicator fetishized by Marxists - is a pretty 
> irrelevant indicator of the health of capitalism? 

I'm not sure I understand why the profit rate would be irrelevant. It 
seems to me that it's exactly the opposite. The profit rate is the 
rate at which capital expands itself. If a capitalist is (or we are) 
trying to determine how effective an individual particle of capital 
is, we need to look at its profit rate. If we are trying to determine 
how effective it may be in the future, we try to estimate its future 
profitability. Etc. That's why the entire disciplines of accounting 
and corporate finance exist.