Sunday, May 19, 2013

Of Profit Rates and Paper, as opposed to Paper Rates and Profit

I strongly recommend Alan Freeman's paper "The Profit Rate In the Presence of the Financial Markets" available here.

It was, for me personally, great fun to read (fun? that's my idea of fun? I need to get out more).  Alan Freeman argues that by accounting for finance as capital, as integral to the cost and the price of value production  (1) there has been no sustained recovery in the rate of profit since (pick one) 1970, 1973, 1980, 1986, etc. {although I do think there was a temporary uptick, which did not exceed previous highs, in the 1994-1998 period} (2) a clear and insightful exploration of “fictitious capital” and (3) in the last paragraph on page 18 regarding rent—that rent is part of, essential to, the equalization of profit rates—the same conclusion I reached after studying the impact of the oil price spikes (and collapses) in the recent decades (see: section 3.4).

I wrestled long and hard with Marx’s analysis of rent, and couldn’t quite integrate it until I linked it to the equalization process. It's nice to read something that makes me feel a little bit less alone in my conclusion, and being a little less alone really is my idea of fun.

May 19, 2013

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