The Profit Rate in the Presence of Financial Markets: a Necessary Correction
AbstractThis is a prepublication version of the article by the same name in the Journal of Australian Political Economy. It should be cited as “Freeman, A. 2012 'The Profit Rate in the Presence of Financial Markets: a Necessary Correction'. Journal of Australian Political Economy, Number 70, Summer 2012, pp 167-192” In the past two decades the number, variety, and monetary value of marketable financial instruments have grown by orders of magnitude. While traditional equities have certainly grown in number and value, the greatest growth has taken place in securities since the turn to securitized lending in the 1970s. This is probably the single most significant development in what many writers term ‘financialisation’. This article argues that these assets, when they function as money-capital, enter into the equalization of the rate of profit. They constitute part of the capital advanced by the capitalist class as a whole and should therefore be included in the denominator of the rate of profit. In the two main world financial markets at least – the UK and the US - The resulting measures of the rate of profit reveal a general, systematic and virtually uninterrupted decline in the rate of profit in these countries since the late 1960s. The paper then re-examines the definition of the rate of profit found in Marx’s writings on the subject and argues that it confirms the inclusion of financial instruments in both the concept and measure of the general rate of profit as defined by Marx.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 52625.
Date of creation: 01 Jul 2012
Date of revision: 01 Jul 2012
theory of value; Marxian economics; TSSI; New Solution; temporalism;
Find related papers by JEL classification:
- B24 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Socialist; Marxist; Scraffian
- B3 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals
- B5 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches
- B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Shaikh,Anwar M. & Tonak,E. Ahmet, 1997. "Measuring the Wealth of Nations," Cambridge Books, Cambridge University Press, number 9780521564793, October.
- Freeman, Alan, 2009. "How much is enough?," MPRA Paper 13262, University Library of Munich, Germany.
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