DJP wrote:
Not sure if you’re confusing profits with super profits?
I don’t think Robin is but Walras and Steele certainly are. Both definitely meant the profits that accrue to firms because of some market condition over and above “normal” profits which they disguise under the name of “interest” (which is somehow mysteriously generated by fixed capital).Their definition is not followed by other bourgeois economists. For instance, here’s what Paul Samuelson writes in his widely-used textbook about the same imaginary situation envisaged by Walras where price (P) is exactly equal to long-run costs:
Quote:
Under such conditions of free “replication,” is it not obvious that long-run P cannot remain above this same critical breakeven point at which they all cover their long-run total costs—including in these(1) all labor, materials, equipment, tax and other expenses;(2) all wages payable to the identical managers at the level determined competitively by the bidding in all industries for people of such talents and industriousness; and(3) the interest yield that any of them could get on the amounts of capital that they tie up in this industry instead of investing it elsewhere?These “full competitive costs” are seen to include more than accountants usually include in costs: they include a normal return to management services, as determined competitively in all industries; and a normal return to capital as determined competitively everywhere by industries of equal riskiness. In the above sense we may say that “normal profits” are included in costs and that “excess profits” are competed away by entry and “abnormal losses” are eliminated by long-run exit of firms (Economics, 5th edition, pp.470-1).
Of course Walras’s “generalised equilibrium” is only a mathematical construct that is never realised and in fact never could be realised under capitalism, but despite this is considered by most bourgeois economists to be the normal state of capitalism. Capitalism in fact is in a permanent state of disequilibrium brought out precisely by firms seeking “super profits” and leading to recurring cycles of boom and slump.
