[Marxism] Stock Capital and the rate of profit

S. Artesian sartesian at earthlink.net
Sun Oct 11 11:54:15 MDT 2009

You're not alone.  I've read that section over and over, worked for 
railroads, and studied the economics of railroading, and I'm still not sure 
that I grasp Marx's thought on this completely.

  I think, and emphasize think, that Marx finds that the portion of capital 
represented in the issuance of stock and producing dividends is not part of 
the process of creating a general rate of profit because the dividend rates 
are so much lower than the average rates of profit.

Of course, as Michael Milliken and the LBOs, vulture investors, asset 
strippers have proven, that situation can be reversed-- utilizing the 
purchase of joint stock companies to award themselves dividends, interests, 
payment far above the actual rate of profit, in effect liquidating the 
company from the inside.

The stock-capital could be included, added to the constant capital, employed 
in production, but if so, then the rate declines even more.  I think, again 
emphasize, think we see something along these lines if you look at the US 
Dept. of Commerce Quarterly Financial Review of industries-- there you see 
rates of return calculated as a return on equity, and rates of return 
calculated on net property, plant, equipment.

----- Original Message ----- 
From: "brendan cooney" <callmecooney at gmail.com>
To: "David Schanoes" <sartesian at earthlink.net>
Sent: Sunday, October 11, 2009 1:24 PM
Subject: [Marxism] Stock Capital and the rate of profit

>I have been puzzling over a paragraph in Volume 3 of Capital. I was
> hoping some kind and wise soul on the list might be able to help me
> understand it better. In the chapter on counteracting influences on the
> falling rate of profit Marx ends with a paragraph about the way in which
> Stock Capital enters, or doesn't enter into the rate of profit. I can't
> seem to wrap my head around Marx's argument. I understand that the
> division of surplus value into rent, interest, industrial profit, etc.
> is secondary to calculating the rate of profit. But then he says that
> interest payments don't go into the leveling of the general rate or
> profit, giving the example of railroads. Is he saying that joint-stock
> companies don't enter in the equalization of profit rates b/c dividend
> payments are lower than the real profit rate? Or is he saying that
> joint-stock companies do enter into the equalization of the rate of
> profit but must calculated in terms of total mass of profit in these
> industries and not just interest payments? How is this a counteracting
> influence?
> Lawrence Harris' entry on "forms of capital and revenues" in the
> Dictionary of Marxist thought says that joint-stock companies
> represented a unique historic stage in capitalism and act as a
> counteracting influence on the FRP because of their willingness to
> accept a lower yield as a result of the dominance of interest. But I
> don't see how a lower yield halts a falling rate of profit. I suppose
> that I may have to wait until I get to Part 5 of Volume 3, but that may
> take some time at the rate I'm going.

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