The US rate of profit 1964–2017 and the turnover of fixed and circulating capital

Abstract

This article addresses how Marxist economists have estimated the quantity of fixed and circulating capital advanced in the denominator of the rate of profit calculation. Generally, Marxist economists have used neoclassical fixed capital estimates of opportunity cost, as applied most notably, in the US system of national accounts. These Hulten and Wyckoff measures aggregate the lifetime revenues (both costs and profits) of fixed assets and so grossly over estimate the value of the fixed capital stock. This article applies the Internal Revenue Service Depreciable Assets less Depreciation for a more accurate estimate of the actual quantity of fixed capital advanced. Furthermore, it criticises the absence of a convincing measure of the rate of turnover of Marx’s circuit of capital accumulation M . . . C . . . P . . . C’ . . . M’ in most rate of profit estimates. Developing the work of Bertrand and Fauqueur, this article demonstrates that the cash conversion cycle or net operating cycle mirrors Marx’s circuit. This article applies the cash conversion cycle to Internal Revenue Service Total Corporations data 1964–2017 to estimate the rate of turnover. The article addresses the distinction between unproductive and productive output and develops an estimation of those respective quantities based on Internal Revenue Service data. It combines these elements together to estimate the US rate of profit from 1964 to 2017. It finds that the US rate of profit rose strongly, albeit with dramatic fluctuations, after 2001.