Profit rates: Current Cost vs. Historical Cost
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The main purpose of this paper is an analysis of profitability trends prior to the 2007 financial crisis. First of all, we discuss the importance of profit rate in economic analysis. Profit rate is the variable that not only expresses business capacity but also strongly impacts on capitalist investment decision-making. Thus there can be various definitions of profit rates suitable for each circumstance. We trace the pre-crisis trends of profitability in the US economy, particularly by the profit rates that are estimated by using current-cost and historical cost net capital stock. Besides these general profitability trends (profit rate á la Marx), considering taxation, we estimate after-tax profit rates using current cost and historical cost capital stock as the denominators. Concerning capitalist decision-making and data reliability, we suggest that historical cost profit rate is irrelevant to the analysis of profitability trends.
Abstract
The main purpose of this paper is an analysis of profitability trends prior to the 2007 financial crisis. First of all, we discuss the importance of profit rate in economic analysis. Profit rate is the variable that not only expresses business capacity but also strongly impacts on capitalist investment decision-making. Thus there can be various definitions of profit rates suitable for each circumstance. We trace the pre-crisis trends of profitability in the US economy, particularly by the profit rates that are estimated by using current-cost and historical cost net capital stock. Besides these general profitability trends (profit rate á la Marx), considering taxation, we estimate after-tax profit rates using current cost and historical cost capital stock as the denominators. Concerning capitalist decision-making and data reliability, we suggest that historical cost profit rate is irrelevant to the analysis of profitability trends.
참고문헌 (8)
- Duménil, G, "The Crisis of Neoliberalism" (2011), Harvard University Press
- Foley, D., "Adam’ s Fallacy" (2006), Harvard University Press
- The Persistent Fall in Profitability Underlying the Current Crisis: New Temporalist Evidence, "Kliman, A", Pace University, ~ (2009)
- Rate of Profit and Crisis in the US Economy, 1890-2009, "Mohun, S", version 25 June2011, ~ (2009)