Adalmir Antonio Marquetti, Henrique Morrone,

Alessandro Miebach, Luiz Eduardo Ourique

Abstract

A debate in Marxist literature concerns the methodology for measuring the profit rate. This paper investigates this question computing the rate of profit at historical cost, current cost, constant prices, and constant GDP price for Brazil in the 1955–2008 period. Like many developing countries, Brazil experienced medium to high inflation during this period. Inflation determined the trend and cyclical movements of the profit rate at historical cost. It increased in years of rising, and declined in years of falling, inflation. The profit rate at historical cost was at odds with Brazilian economic history. The profit rate at current costs remained unaffected by the inflation rate, and its movements correspond to the historical phases of the Brazilian economy. The same is true for the profit rate at constant prices and at constant GDP price. However, the profit rate at constant prices does not account for changes in relative prices, while the profit rate at constant GDP price is computed using a weighted average of the current and past relative prices.

Keywords

Rate of profit, aggregate capital stocks, rate of inflation

From: Review of Radical Political Economics 2019 51 (1)

Editor: Wang Yi