What does determine the profit rate? The neoclassical theories presented in introductory textbooks

Naples, Michele I.; Aslanbeigui, Nahid

doi:10.1093/oxfordjournals.cje.a013607

Cited by 17 publications

(11 citation statements)

References 7 publications

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“…In any case, the concept of profit is so ill-define by neoclassical economists that it is meaningless and devoid of coherent content. Hence the concept of a profit function or profit anything in NCMT is meaningless (Salvadori and Steedman 1985, Gram 1985, Naples and Aslanbeigui 1996.…”

Section: Market Supply Curvementioning

confidence: 99%

The Incoherent Emperor: A Heterodox Critique of Neoclassical Microeconomic Theory

Lee

Keen

2004

Review of Social Economy

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It is somewhat common for heterodox economists to come to the defense of neoclassical microeconomic theory. This is due to many reasons, but perhaps the commonest one is ignorance. It seems that most heterodox economists are not aware of the many critiques or that as a collective they completely undermine neoclassical theory. The objective of the article is to dispel ignorance by using the existing criticisms to delineate a systematic critique of the core components of neoclassical microeconomic theory: the supply and demand explanation of the price mechanism and its application to competitive markets. The critique starts by examining the choices, preferences, utility functions, and demand curves, followed by examining production, costs, factor input demand functions and partial equilibrium, and ending with perfect competition and the supply curve. In the conclusion, the implications of the results will be extended to the firm and imperfectly competitive markets, and then the question whether general equilibrium theory or game theory can save neoclassical microeconomic theory.neoclassical microeconomic theory, heterodox critique,

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Section: Market Supply Curvementioning

confidence: 99%

The Incoherent Emperor: A Heterodox Critique of Neoclassical Microeconomic Theory

Lee

Keen

2004

Review of Social Economy

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“…Interestingly, the profit rate has not been at the forefront of economic inquiry for many decades, which is probably due to the fact that orthodox theories have not been able to provide a coherent explanation for the profit rate (see, e.g., Naples and Aslanbeigui, 1996). Profit rates have nevertheless been studied in the context of the so-called persistence of profits literature that starts with Mueller (1977) (see, e.g., Cuaresma and Gschwandtner, 2006, for a more recent take on the subject), and more recently also in the context of a statistical equilibrium framework (Alfarano and Milaković, 2008;Alfarano et al, 2012;Erlingsson et al, 2013) that will guide our present investigation.…”

Section: Introductionmentioning

confidence: 99%

The Real Versus the Financial Economy: A Global Tale of Stability Versus Volatility

et al. 2014

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The question how the real and the financial side of a capitalist economy relate to each other has been a frequently recurring topic in the history of economic thought. Our paper addresses this question from the viewpoint that capital ultimately seeks returns from its perpetual reallocation and essentially faces two choices: it can either be "entrepreneurially" allocated to real economic activity, or it can be "financially" invested in legal claims against such activity. Adopting such a perspective, we study here how real and financial returns relate to each other over the past fifteen years, both within and across countries, by considering more than 30,000 publicly traded firms in more than forty countries that stand for 70% of the global population and about 90% of world income. We compare the average rates of return to both types of investment and their respective volatilities. While average returns, perhaps somewhat surprisingly, turn out to be roughly equal across the two domains, the volatility of financial returns exceeds 'real volatility' by an order of magnitude. From a systemic point of view, these findings raise the question why capital would seek out financial investments in the first place.

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“…No other motive can explain the entrepreneurial activity of the owner of the means of production. "At best, entrepreneurship is just another word for capitalist behaviour" (Naples and Aslanbeigui, 1996) and it can be used to declare not a separate function, as neoclassical economists do, but to denote the different level of success that the owners of capital reach in their attempt to increase the value of their property. Competition among capitalists forces entrepreneurs to be successful.…”

Section: Discussionmentioning

confidence: 99%

Marx on entrepreneurship: A note

Tsaliki

2006

RISEC

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What does determine the profit rate? The neoclassical theories presented in introductory textbooks

Cited by 17 publications

References 7 publications

The Incoherent Emperor: A Heterodox Critique of Neoclassical Microeconomic Theory

The Incoherent Emperor: A Heterodox Critique of Neoclassical Microeconomic Theory

The Real Versus the Financial Economy: A Global Tale of Stability Versus Volatility

Marx on entrepreneurship: A note

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