From: "Patrick Bond" <pbond-AT-wn.apc.org>
Date:          Wed, 18 Dec 1996 09:12:07 +0000
Subject:       Re: M-I: Rate of Profit


Siddharth Chatterjee wrote:
> 
> >Why is it that they can get away with it at the
> >present time, that is, what is it about the present economic circumstances
> >that are making manufacturing companies like Ford, GE, etc. get into
> >the financial sector? 

Doug replied:
> The deregulation of absolutely everything, the elimination of antitrust
> enforcement, the generalized growth of finance, etc. I.e., both long- and
> short-term. There's no question that as national economies mature, finance
> becomes ever more important. Corporate structures change from family- and
> state-held to joint-stock, and profits accumulate over time and find their
> way into money form rather than real physical capital. A capitalist class
> then becomes a generalized holder of a nation's capital stock through the
> institutional mediation of financial markets, rather than being
> specifically tied to individual enterprises.

Then Siddharth replies
> >that the organic composition of capital in the auto industry is so high,
> >the rate of profit has declined which *tendency* was predicited by Marx,
> >and this is forcing the manufacturing companies to look for other avenues
> >for higher rate of profit. Remember that companies make decisions on
> >the rate of return on investment (not mass of total profits) generally.
> 

Patrick Bond (rookie effort, from Johannesburg):

Isn't there something simpler here? The real rate of return on 
financial assets in relation to productive assets soared after 1979, 
across the world, and though it's been down and up remains at an unprecedented high 
rate.

I don't think, Doug, that this reflects "maturity" of an economy. 
It's getting to that stage of the ol' accumulation cycle, in which 
overaccumulation in production sends K in search of a temporal fix, 
through credit, and hence the development of speculative markets and the 
rise in power of financial players (as well as the vulnerability to 
all sorts of silly Wall Street games) just becomes awesome.

Patrick Bond
National Institute for Economic Policy
PO Box 32848 Braamfontein 2017 South Africa
(2711-403-3009 * fax 339-6395)
or
51 Somerset Road
Kensington 2094 South Africa


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