Universidad Nacional Autónoma de México
Question
Asked 24th Aug, 2015
What about a Kaleckian/Marxian Profit Rate?
Could a high Kaleckian degree of monopoly make possible for a high Marxian surplus value? which is then realized as a high profit rate? What about interest rate mark-ups and their effect on the share of profits?
Most recent answer
According to Prof. Dr. Eckhard Hein : The principle of effective demand – Marx, Kalecki, Keynes and beyond, Institute for International Political Economy Berlin,
"The respective price levels for consumption goods and investment goods and the weighted average price level for aggregate output are determined by mark-up pricing in incompletely competitive goods markets. Marginal and average variable costs which are marked up by firms are constant up to full capacity output, and prices are hence constant as long as the sectors of the economy operate below full capacity utilisation. Subtracting wages from both sides of equation .
Profits are thus equal to consumption out of profits plus investment minus saving out of wages. If workers do not save and rather spend their income entirely on consumption goods" pages 5 and 6
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All Answers (14)
Loyola Marymount University
If Kalecki's "degree of monopoly" rises for the economy as a whole, that could raise the Marxian rate of surplus-value and (all else constant) the rate of profit. This is central to Baran & Sweezy's later theory. But a rise of one sector's degree of monopoly (a fall in the absolute value of the price elasticity of demand) could be at the expense of another sector's degree of monopoly. (I don't know anything useful about interest-rate mark-ups.)
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The University of Sheffield
Eckhard Hein has a number of papers (and books) attempting to incorporate interest rate effects into mark-ups
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Universidad del Norte (Colombia)
check in the real banking world for the hurdle rate which is inherent to any business
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Loyola Marymount University
Marx's rate of profit is akin to Keynes' _average_ efficiency of capital, except that the latter is an expected variable. In volume III of Capital, one of the key roles of the interest rate (which Marx saw as moving with the supply of and demand for funds) is to distribute surplus-value between industrial and banking capitalists.
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Universidad Nacional Autónoma de México
Kalecki’s theory of profits, one of his most original contributions.
equation:
P = I + Ck
Where P is gross profits, I is (private) investment, and Ck is capitalist
consumption, but I didn´t find the relationship between the rate of interest and the rate of profits, However I found that Kalecki explains in this context the sense of causality between profits and capitalist expenditure.
Loyola Marymount University
while Marx developed a theory of the production of property income (surplus-value), Kalecki created a theory of its realization as actual income. Both are important in practice.
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University of Utah
@Martha, check out this paper
Article Marx on the Rate of Interest
Universidad Nacional Autónoma de México
Hello David:
good morning Iam waiting the article to review it.
you have a good day
Royal Society for the Encouragement of Arts, Manufactures and Commerce (RSA)
Clearly, the answer to your first question is "Possibly and very probably, Yes". Will higher surplus value then be realized in a high profit rate? Well, on the assumption that higher total surplus value further reduces the opportunities for investment and expansion, it rather depends upon the propensities of different corporations towards generating expensed 'waste' versus the propensity to pay taxes and make political and charitable payments to encourage militaristic and/or imperialistic spending goals. Both courses of action cycle surplus value back into industrial demand. 'Waste' tends to be raise private debt whilst 'foreign expenditures' can be more subtle, longer term and require no additional effort by dominant corporations. In both cases, the holding of a significant 'buffer' fund of accumulating surplus provides strategic flexibility, enabling participation in 'debt' opportunities as they arise in either the private, public and sovereign arenas. As always the downside is the risk generated from the tendencies for the clustering of common responses to financial signals, amongst 'buffer' holders, that result in the creation and collapse of investment 'bubbles' and destruction of the 'value' perceived to be held in whatever 'property' was thereby over-priced by optimistic sentiment.
Universidad Nacional Autónoma de México
According to Prof. Dr. Eckhard Hein : The principle of effective demand – Marx, Kalecki, Keynes and beyond, Institute for International Political Economy Berlin,
"The respective price levels for consumption goods and investment goods and the weighted average price level for aggregate output are determined by mark-up pricing in incompletely competitive goods markets. Marginal and average variable costs which are marked up by firms are constant up to full capacity output, and prices are hence constant as long as the sectors of the economy operate below full capacity utilisation. Subtracting wages from both sides of equation .
Profits are thus equal to consumption out of profits plus investment minus saving out of wages. If workers do not save and rather spend their income entirely on consumption goods" pages 5 and 6
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