Bill Burgess writes:> Yes, I did find your talk interesting. Do you have any similar numbers for other countries, or when you compare your trends for the US with profit trends in other countries, what are the differences?<
I don't have that data, though the OECD used to publish them. It's clearly a relevant avenue of research. > I generally agree with your focus on fixed capital and using 'conventional' profits rates, but I also wonder if something important is not being missed when circulating constant capital (raw materials and other non-fixed-capital inputs) is left out of the analysis of the reasons for the trends, especially about the role of the organic composition of capital. If I remember correctly, Fred Mosely also leaves out circulating constant capital from his profit rate [ROP]. Several questions come to mind.< yes, he leaves circulating capital out of both his Marxian and conventional ROPs. > My impression from the business press is that faster throughput and reducing waste in transforming materials have been a key element of productivity changes in recent years. This element of change in the organic composition of capital is ignored when the profit trends are expressed as yearly profits over the stock of fixed capital alone.< shouldn't an improvement in inventory management techniques help labor productivity and profits (all else constant) and thus raise the rate of profit? So it wouldn't be ignored altogether. >A useful series by the US Federal Reserve (see (www.federalreserve.gov/releases/G17/ip_notes.htm) shows that more than half of industry (roughly manufacturing and mining) value-added is accounted for by materials and intermediate goods, as opposed to final goods. The materials share of total industry value-added has been rising. This breakdown of industry by the stage of production underlines the *quantitative* significance of circulating constant capital. Or, am I misunderstanding something?< I don't get how half of "value-added is accounted for by materials and intermediate goods" since the cost of materials and purchased intermediate goods is subtracted from total revenues when calculating a company's value-added (since they are part of another company's total revenues and we don't want to double-count). If you look at retail, intermediate goods would swamp value-added altogether. Anyway, my focus is on the aggregate level (or close to it, since my numbers are not truly macro-level). > Subcontracted inputs have become more important. While I suppose that in principle the accounting in separate business units should not affect the aggregate shares of fixed capital, profits, etc., I wonder if this is really is true. For example, is subcontracting an important vehicle for transferring profit from subcontracters to their oligopolistic customers. Even if the overal capital-output ratio does not change, who gets the profits does change, through unequal exchange. Also, is it prossible that more subconstractors means that more profit is taken in the form of profits rather than big salaries for managers?< I interpret these changes in terms of changing relations of production -- including intracapitalist relations -- which has an effect on the aggregate level. > As we all know, measures of fixed capital are always a problem. In a comparison of productivity trends in US and Canadian manufacturing, Andrew Sharpe of the Centre for the Study of Living Standards (http://www.csls.ca/pdf/lanc.pdf) notes that all of the 1990-1997 increase in US manufacturing productivity (and almost all of the difference between Canada and the US) is concentrated in industrial machinery and electronic equipment sectors alone. He seems to question how accurate the US data is, but more to the point here, the boom in this sector suggests that a lot of machinery and computers has been scrapped and replaced with the latests and greatest, but probably before passing on its value. < I agree with the view that US productivity growth during the "new economy" period was exaggerated. The rate of depreciation sped up, so as Dean Baker shows, the rate of growth of real net domestic product -- and of net product per worker -- was not spectacular. >You note the decline in K/Y is related to the shake-out in manufacturing but, for example, while computer prices have declined massively, the fixed capital numbers may not reflect their service life.< I don't think that the role of PCs is very large as part of the total K. It only has an effect as part of a welter of different forces affecting K/Y. >Another question - how much of computer-type purchases are counted as fixed capital?< I'm pretty sure they count as short-lived fixed capital, but I don't know for sure. Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
