Hi Adam, Well, I’ve got the
Hi Adam,Well, I’ve got the 10th edition of the same book by Samuelson and while he refers to the “dreamworld of perfect competition” (meaning he doesn’t think it at all realistic) he does go on to say that in such a dreamworld “the economist says there would really be no profits at all!”. Also: “perfectly free entry of numerous competitors; would in a static world of perfect knowledge , bring price down to cost and squeeze out all profits above and beyond competitive wages , interest and rent” (p621-2). I think this does actually accord with what Steele is saying. He (Steele) is not denying that perfect competition is impossible as far as I can ascertain; He is merely asserting that profits arise from, and are made possible by, the very imperfections that necessarily beset the market economy as it actually works in practice – .imperfections that allow some to outguess the market and others who are not similarly gifted with “entrepreneurial canniness” to fall by the wayside. Profit is a zero sum game in other wordsIt should also be mentioned that the Misesian perspective that Steele presumably still adheres to is highly critical of Walrasian general equilibrium theory with its completely static view of the economy.If you check out economic textbooks, a distinction is sometimes made between an accountant’s notion of profit and an economist’s notion of the same. The former boils down to the difference between a firms revenue and its costs. This is not that far removed from our understanding of the term although we would conceptualise profit as a component of surplus value alongside rent and interest. Steele, and by extension bourgeois economists. would call what we call profit,” interest”My take on all this – though I am not entirely sure of this at all – is that this is an ideologically motivated construct. which entered economic discouse around the time oif the “marginalist revolution”of the late 19th century; to justify the return on capital in terms that denote something positive and beneficial to society as a whole – such as innovativeness and being able to anticipate shifts in market demand, the better to be able to “serve the needs of consumers ” etc etc” This is what this peculiar interpretation of profit is all about isn’t it? It presumes an imperfect market that rewards those who succeed in this market with “profit” . It is a way of highlighting those qualities that supposedly enable you to succeed and for which you “justifiably” reap the rewards of such successin the form of “profit” over and above “interest!Thats a curious thing too. “Interest” is the return on lending money – or liquid capital – and usually by financial institutions such as banks. By relabelling profit as interest this makes no distinction between external sources of funding (i.e.loans from a bank); and the reproduction of capital out of surplus value. Again, one has to ask – is this ideologically motivated to divert attention away from this latter source of capital?