Date: Thu, 19 Dec 1996 08:47:52 -0500
From: dhenwood-AT-panix.com (Doug Henwood)
Subject: RE: M-I: Rate of Profit


At 3:52 AM 12/19/96, Adam Rose wrote:

>Anyway, I still think my basic argument, that huge companies
>entering new markets in this way breaks the near monopoly
>situation in both the old and new markets, so increasing the
>downward pressure on the rate of profit in both markets, is
>correct. I also think the very fact that this happens at all is
>an indication of the low rate of profit in the original market
>place. This certainly applies to the two examples so far :
>cars and credit, supermarket chains and petrol.

Ford Credit's return on assets of 1.1% after taxes is very respectable.
Most commercial banks, for example, would be overjoyed to achieve it.

>I think perhaps it is hard for people to get their heads around
>the idea that the rate of profit is falling in the long term when
>at the same time there is continuous downward pressure on
>wages and conditions and companies are reporting high profits
>during a cyclical boom. Nevertheless, I think over the long term
>the tendency is there, even in the US where, exceptionally in the
>advanced countries, real wages have been falling over a long
>period. Perhaps someone could provide us with GDP figures
>over a long period ?

I'll repeat what I said yesterday, and have said before, but which seems
not to have penetrated the heads of the FROP crowd: yes, profitability
declined from the 1950s through the mid-1970s, at least in the U.S., but it
has since risen. OECD figures show a similar story for most OECD countries,
with the prominent exception of Japan. "Neoliberalism" has succeeded on its
own terms. The last 15 years have been the story of Marx's countervailing
tendencies to FROP.

Doug

--

Doug Henwood
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