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SERNATIONA Profits provide the finance investment which in turn is the driving force in capitalist economies. Yet information on profitability ordinarily hard to come by, for figures given in the annual accounts of companies are hopelessly distorted by inflation.
For the USA and UK there are the following relatively reliable series for the rate of profit-the mass profits in relation to the total amount of capital laid out in the form of buildings machinery, stocks of materials etc. Rates of Profit, Industrial and Commercial companies % 1964 1970 UK-Pre-tax 11.8 7.3 Post-tax 7.6 3.7 USA-Pre-tax 15.0 9.1 Post-tax 9.1 5.3 *Figure in brackets is after Healey's tax concessions Sources:
UK-Bank of England Quarterly Bulletin March 1976. USA-Brookings Papers 1974 No.1.
NOTES WORLD PROFITS the incentive for is extrainvestment.
1973 1974 6.6 4.0 3.9 0.2 [3.5]* 10.5 5.4 The Bank of England's figures for the UK actually show that without Healey's tax concessions, the rate of profit after tax in 1974 would have been negligible-that is the companies would have had'to borrow the money to pay the shareholders their dividends, as well as to finance More recent evidence is only available for the share of profits-the ratio of profits to value added (wages paid plus profits) —which is a rough indicator of what Marx called the rate of exploitation. For the UK profits as a share of national income fell from about 7% in 1974 to 6% in the first half of 1975. The most recent figures-for the last quarter of 1975—show a sight recovery to 6½%, reflecting in part the first effects of the f6 per week wages policy. What the capitalist class hopes for is a sharp rise in production and productivity, while wages are held dwn and competitiveness is improved by the depreciation of the pound. But the size of the task of restoring profits is shown by the fact that the rate of profit, after tax, is still well under half the level of the early 1960's, despite the fact that the tax concessions and extra investment incentives have virtually eliminated company taxation. In the USA, where the share of profits in company output fell from 18% in 1973 to 16% in the first quarter of 1975, the beginnings of recovery from the recession in the third quarter pushed the profit share back to 19%. But this still leaves the post-tax rate of profit not much
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