Workers-Control-Over-Prod
3rd October 2012, 21:15
The Rate of Profit is simply the relation of the "Vorgeschossenen" Capital (Constant Capital) and later Variable Capital to the Surplus that the Capitalist takes out after the production cycle completed. It is S/C+V= Rate of Profit
So if the Constant Capital (what the Capitalist brings in machines) is C = 26, and then (once the worker has produced the commodity) the Variable Capital (the Wage), V = 14 and the end Surplus (after the Capitalists' "Costs" of C and V have been calculated) S = 13; then the Ratio reads: S13/(C26+V13)= a profit rate of 33.3%.
What is its relevance?
The relevance of the Rate of Profit is in comparing it (once taxes have been calculated in in real world analyses) to the Rate of Profit in other economic sectors. For instance, if C=52, V=4.3 and the surplus S=4.3 then the Rate of Profit would read S4.3/(C52+V4.3)= a rate of profit of 7.7% compared to our first, less constant Capital intensive, example.
So if the Constant Capital (what the Capitalist brings in machines) is C = 26, and then (once the worker has produced the commodity) the Variable Capital (the Wage), V = 14 and the end Surplus (after the Capitalists' "Costs" of C and V have been calculated) S = 13; then the Ratio reads: S13/(C26+V13)= a profit rate of 33.3%.
What is its relevance?
The relevance of the Rate of Profit is in comparing it (once taxes have been calculated in in real world analyses) to the Rate of Profit in other economic sectors. For instance, if C=52, V=4.3 and the surplus S=4.3 then the Rate of Profit would read S4.3/(C52+V4.3)= a rate of profit of 7.7% compared to our first, less constant Capital intensive, example.