Capitalist Economics: Long Run Economic Profit????

[B0LSHEVIK]

In capitalist economics you learn that 'perfectly competitive' firms earn no economic profit in the long run because of the ease of both entry and exit into the industry/market. I dont get it, then whats the point? I mean seriously, you get no economic profit, only an accounting profit? I really dont comprehend that.

Any help?

[B0LSHEVIK]

Fuck, anyone?

[a rebel]

your not supposed to get it, Its capitalist economics

[bailey_187]

Most economists will admit that there are barriers to entry though. i made a thread on this a while back, ill find it and post it.

[bailey_187]

http://www.revleft.com/vb/why-capitalists-dont-t130743/index.html?t=130743

Here you go. I think the answer to ur question tho is that its impossible to have such conditions in the first place. maybe austrians would disagree, but most "moderate" capitalist economists agree

[ar734]

Capitalism leads inevitably from competition to monopoly. The best examples are the gigantic corporations like Microsoft, Walmart, Exxon, etc. One capitalist always kills many capitalists. (Marx said that somewhere.)

The capitalist economists apparently refuse to see what is happening right before their eyes. The profits of the monopolist corporations are higher than ever; how do they explain that? And perfect competition with ease of entry into the market? The whole point of competition is to defeat your opponent, and make it next to impossible for anyone else to enter the market. What capitalist can easily enter into the market and compete with Microsoft?

Marx said that modern economists were bag-men for the capitalists. That is a perfect description of Bernanke. He puts billions of dollars into a bag and delivers it to Wall St. Of course he now does it with the stroke of a computer keyboard.

They come up with an imaginary economic system to try to explain the reality of the existing system. How is their perfect competition going to be enforced? With the anti-trust laws? No, they say government interference must be avoided. The result? Gigantic, monopolist corporations; exactly as Marx predicted.

[ar734]

I see the point of your question. If the capitalist economists say that there is no profit in the long run in a perfectly competitive market then why would the capitalists even bother to enter the market?

The whole point of capitalism is to make a profit. The economists think that profit is determined by the market; thus, in a perfect market all capitalists would split the profit equally among themselves. But what does this mean? If 10 capitalists produce a total profit of $100, then each capitalist gets a profit of $10. How does profit disappear in the long run? Also, the long term disappearance of profit sounds a lot like Marx's tendency of the rate of profit to fall.

The fundamental misunderstanding is in the origin of profit. Profit is produced, on average, before a capitalist product even enters the market. Marx called profit "surplus value," which is produced by labor. As long as capital can use labor to produce a product it will produce a profit.
The real question becomes, I think, who owns the profit?

Capitalist (bourgeois sounds better) economists don't have a clue as to what value or profit really is. Marx said it over 150 yrs ago, and it is still true.

sorry to ramble like this. But it always amazes me when I read Marx and see his predictions, analysis, etc. confirmed almost every day.

[B0LSHEVIK]

Thanks for that comment, that helped out quite a bit actually.

So it all comes down to how you define 'profit' eh? Thats a pretty convenient point to leave out of lecture, and the book. Lol

Thanks comrade.

Oh btw, I also think capitalist economics is bullshit. I've not once heard the words greed, exploitation, coercion, etc.

Thanks again.