Marx’s general rate of profit: How turnover time, accumulation and rate of surplus value affect the formation of prices of production

Abstract

Most scholars interpret Marx’s prices of production as those which achieve simple reproduction assuming profit rates are equal and all capitals turn over completely each year. The dynamics of equalization, as circulation intertwines with production over the business cycle, is absent. The traditional ‘Marxist’ equation for the profit rate likewise considers only simple reproduction. This leaves a gap in our understanding of Marx, particularly regarding the impact of turnover time on the profit rate, one of Ricardo’s original problems which Marx claimed to solve. Starting from a critique of Veronese Passarella’s and Baron’s attempt to extend the traditional equation to expanded reproduction, I develop a more general equation showing how changes in turnover times, rate of surplus value and accumulation affect the equalization process, the formation of the general profit rate and hence of prices of production. Finally, considering Moseley’s introduction to the recently published translation of a 27-page excerpt from Marx’s Economic Manuscript of 1867–1868, I suggest an equation for decomposing the profit adjustment during equalization. JEL Classification: B24, B51, E11.