I wondered about Jim D. not including circulating constant capital (basically materials) in explaining the change in the ROP, especially since this is an area there have been productivity gains. Jim wrote
>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. It is partly included, and (probably) raised the ROP. But as I understand it, in 'explaining' the ROP, you are assuming that K/Y moves with the OCC (and that S/Y moves with the RSV?). Isn't it worth getting some indication of the role of circulating (M) as well as fixed (K) capital, roughly, that (change in) ROP = (change in) K/Y+M/Y+S/Y? I cited a series that breaks down US industrial output into three 'stages' of production (materials, intermediate goods and final goods), noting that the first two make up half of total industrial output. >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. I wasn't very clear. I cited the breakdown by stage of production to note that, to the degree that the materials and intermediate goods are inputs to the final goods, M is large. It is typically? larger than one year's K, i.e., there is lots of quantitative room here for 'non-K, non-S' changes to affect the ROP. > > 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. Do you mean, *no* effect on the aggregate level? I suggested a further reason to not focus on K alone is the problem of measuring K. Recent US manufacturing output and productivity gains are restricted to 2 sectors (industrial and electronic equipment), and may be exaggerated. Since a lot of these products become part of K in other sectors, this is another reason to question K values. As Jim notes, they are part of a recent speedup in rates of K depreciation. >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. I accept this, but isn't it striking that in the output and producitivity data, a 2 industry tail has supposedly wagged the all-industry dog ? Bill Burgess
