Turnover Time and Marx’s Law of the Tendential Fall in the Rate of Profit
From Canberra comrade Peter Jones a very interesting paper: Abstract: This paper develops a method for quantifying the influence of four factors on the average rate of profit (ROP): the organic composition of capital (OCC), prices of constant capital, the rate of surplus value, and the average turnover time of variable capital. This is applied to data for the US from 1947-2011. The OCC is the largest influence on the ROP, and outside of periods of crisis, it rises consistently. But during 1947-1966 and 1980-97 the ROP was nevertheless able to rise, mainly due to shortening turnover times and cheapening constant capital. During periods of falling profitability these two counter-tendencies were absent or were reversed, leading to the crises of the mid-1970s and recently. This suggests that Marx correctly predicted the main direction of influence of the tendency and each counter-tendency, but that for the ROP to actually fall, capital cheapening and improvements in turnover time generally have to cease.