The UK rate of profit and others

The emphasis of most Marxist research on the rate of profit has been on the US, partly because it is the most important and largest capitalist economy and partly because the data available are so much better than elsewhere. In a previous post, I said that I would look at what was happening to the rate of profit in the UK and also perhaps at rates of profit in the other major capitalist economies (see my post, Measuring the rate of profit: up or down?, 20 November 2011).

The UK’s data are not too bad and we can make a stab at coming up with an account of the movement in the UK rate of profit. I did this in my book, The Great Recession. But I have revisited the data. To measure the rate of profit a la Marx, to use Gerard Dumenil’s phrase, I took the net operating surplus on the UK’s non-financial corporations (if you like, that’s profit after deducting for consumption of fixed capital) and divided it by the net stock of fixed assets. The UK statistics measure net fixed assets in current or replacement cost terms. As you know, if you read this blog regularly, this is controversial in Marxist economic circles, as valuing fixed assets at current costs does not really provide an accurate rate of profit (indeed Andrew Kliman would argue that it is not a rate of profit in any meaningful sense – see my post, Andrew Kliman and the failure of capitalist production, 8 December 2011). So I have attempted to adjust the current cost measure to an historic cost measure by using the equivalent ratio of depreciation between the two measures as used in the US data. This is the best I can do to deliver a rate of profit measure based on historic costs.

The data for all this are only available in the UK going back to 1987. What they show is that there has been an upward trend in the UK rate of profit for non-financial corporations over the period 1987-09. The rate of profit on both measures peaked in 2007 and then fell by 25-30% through to 2009 to reach levels not seen since the big UK slump of 1990-1.
Leer la entrada completa en Michael Roberts Blog



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