The tendency of profit to fall...

[ComradeRed]

I have been thinking about this for a while now, how to measure profit? We need to know this to figure out if profit is rising/falling. We can guestimate this to be approximately the price of a good multiplied by the number of said commodities sold, right? Then from this, on a month by month or season by season increment, we can determine the tendency for capitalism to fall, can't we??? :huh:

[Faceless]

Yeah, there is one big snag though;
the price of a commodity is always above or below the cost of production and fluctuates about this cost according to supply and demand causing the price generally to reciprocate only roughly around the cost of production. It is as such hard to measure these sort of things empirically. Over time these reciprocations may well balance eachother about the cost of production for one industry but even this is not general enough. There is the further complication that some industries, through effective monopolies, such as information/communication industries and music industries, push their prices disproportionately above the cost of production and as such devalue other commodities in a way as a result of their price only representing an exchange value; a relative amount. So some industries will have higher profits and reciprocally cause all other industries to be devalued. All these complications mean that you have to take an average of the whole global changes in the rate of profit. No doubt if you could do this you would find a tendency for the rate of profit to fall. But that would be one helluva task to set yourself ;)

[ComradeRed]

Yeah, there is one big snag though;
the price of a commodity is always above or below the cost of production and fluctuates about this cost according to supply and demand causing the price generally to reciprocate only roughly around the cost of production.
Yes, I have thought of that. However, the plain fact of the matter is that in US capitalism, there are rarely natural shortages with goods due to the number of sweat shops overseas. Due to this, there will always be an adequate supply (adequate enough for the bourgeois to remain rich!). So, I am confident that this way is proper to calculate the rough profit.

[antieverything]

. All these complications mean that you have to take an average of the whole global changes in the rate of profit. No doubt if you could do this you would find a tendency for the rate of profit to fall. But that would be one helluva task to set yourself
It has been tried, many times...with violently conflicting results. The fact is, we probably can't know.

[ComradeRed]

No doubt if you could do this you would find a tendency for the rate of profit to fall. But that would be one helluva task to set yourselfIt has been tried, many times...with violently conflicting results. The fact is, we probably can't know. Well, I have nothing better to do, so ComradeRed is on the case! I'll take the heavy burden of studying (over, and over, and over again!) Das Kapital, and David Ricardo's works! And now, to read!

If you guys have any suggestions on how to calculate profit, just lemme know...

[percept¡on]

accounting profit is revenue minus cost, or marginally, marginal revenue minus marginal cost.

economic profit, or rent, is the difference between the revenue received from the sale of an output and the opportunity cost of the inputs used.

You don't have to waste your time trying to 'prove' that profits are in a general state of decline; it's generally accepted that in a state of perfect competition economic profits are 0 and accounting profits are minimal. The only way to increase profits is through a legal monopoly (patent, copywrite, etc.) or developing a new innovation or commodity that allows you a temporary period of lax competition until new producers enter the market. But every industry has a standard Rate of Return, which is the profit the business owner expects to receive or he will exit the industry; ROR is directly correlated to the level of risk involved - low for mature industries, high for new, uncertain or generally risky industries.

The way business owners counter the decling rate of profits is by expanding the size of their businesses (I'm sure you've observed this general trend), so they can pocket a smaller percentage of a larger pie and still be filthy rich.