Welcome to the a blog on John R.Commons and some thoughts on institutional economics as it has evolved at Michigan State University under A. Allan Schmid, Robert Solo, Warren Samuels, Sandra Batie and James Schafer. I hope to explore some of the current academic articles being written about Commons and MSU faculty who worked in this tradition to see how our understanding of this important vein of economics continues to expand and evolve.
Commons Futurity VII. The Margin for Profit pg 526-528 In this section, Commons turns to thinking about a specific aspect of modern banker capitalism addressing the question of profit's role in the economy. He starts with some terminology regarding profit share - the share of national income that goes to profit earners and the profit margin - the dynamic aspect that drives a going concern forward. We then move into another set of terms that are rate of profit and profit yield. The rate of profit is related to the par value of stock and yield is related to market value of stock or outstanding equity. The social question to Commons is what the role of profit in keeping the overall economy and does society or community pay too much or too little for this service. Economists have long thought about the role of profits in driving the economy up or down. Commons believes there are profit share theories and profit margin theories as two diction categories in economic thinking...
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