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This paper offers a framework for understanding the financial system using Marx’s theory of value. It examines how to interpret the Marxist concepts of the rate of profit and fictitious capital when analysing the financial sector, showing how accounting terms such as ‘return on equity’ and ‘leverage’ can also be understood in this context. The analysis argues that the capitalist system’s rate of profit should be conceptualised in a way that includes finance, but that one should not mix up the accumulation of financial assets with the accumulation of advanced capital. While the costs of finance are negative for the system’s average rate of profit, the paper concludes by noting how this is not inconsistent with financial operations being very profitable for imperialist powers that can use the financial system to appropriate surplus value from elsewhere in the global economy.

This paper aims to present the salient features of Smith's argument of the falling rate of profit. This theory has usually been interpreted as a result of the intensification of competition in the markets of goods and services of the factors of production. This aspect of Adam Smith had been initially posed by Ricardo and subsequently was widely adopted by the major economists of the past as well as from the majority of the modern historians of economic thought.

This paper reviews the major interpretation of the argument from Ricardo and Marx as well as from major historians of economic thought, and then attempts to reconstruct Smith's argument, which is scattered throughout the Wealth of Nations. The authors present some indirect empirical evidence based on the evolution of interest rates on annuities lending support to Smith's insights of the falling rate of profit.

In the author's view, Smith's analysis of the falling tendency in the rate of profit is by far more complex than usually presented and that the intensification of competition is the result of the falling rate of profit rather than its cause which is the capitalization of the production process.

This paper presents a review of existing literature and an interpretation of Adam Smith's original model of the falling rate of profit.

“Economics is a Serious Subject.” Edwin Cannan.

Allyn Young′s lectures, as recorded by the young Nicholas Kaldor, survey the historical roots of the subject from Aristotle through to the modern neo‐classical writers. The focus throughout is on the conditions making for economic progress, with stress on the institutional developments that extend and are extended by the size of the market. Organisational changes that promote the division of labour and specialisation within and between firms and industries, and which promote competition and mobility, are seen as the vital factors in growth. In the absence of new markets, inventions as such play only a minor role. The economic system is an inter‐related whole, or a living “organon”. It is from this perspective that micro‐economic relations are analysed, and this helps expose certain fallacies of composition associated with the marginal productivity theory of production and distribution. Factors are paid not because they are productive but because they are scarce. Likewise he shows why Marshallian supply and demand schedules, based on the “one thing at a time” approach, cannot adequately describe the dynamic growth properties of the system. Supply and demand cannot be simply integrated to arrive at a picture of the whole economy. These notes are complemented by eleven articles in the Encyclopaedia Britannica which were published shortly after Young′s sudden death in 1929.

From time to time we have had occasion to refer to earnings per share in terms of the new ‘imputation’ system of company taxation. This is a somewhat complex system and we have asked our Financial Correspondent to explain in some detail what is involved. In attempting an explanation, he has found it useful to compare the present system not only, as others have done, with the preceding corporation tax system inaugurated by Mr Callaghan in his 1965 Budget, but also with the earlier profits‐cum‐ income tax system. There are of course many other systems of company taxation, but for purposes of explanation a comparison of the three systems — profits‐plus‐income tax, the Callaghan‐type corporation tax, and the imputation system—is sufficient.

This book is a policy proposal aimed at the democratic left. It is concerned with gradual but radical reform of the socio‐economic system. An integrated policy of industrial and economic democracy, which centres around the establishment of a new sector of employee‐controlled enterprises, is presented. The proposal would retain the mix‐ed economy, but transform it into a much better “mixture”, with increased employee‐power in all sectors. While there is much of enduring value in our liberal western way of life, gross inequalities of wealth and power persist in our society.

This chapter argues that the Marxian theory of exploitation underlies the concepts of surplus and deficit industries that appear in Sraffa’s (1960) Production of Commodities by Means of Commodities. This is seen from archival research of the unpublished papers of Piero Sraffa housed at the Wren Library, Trinity College, University of Cambridge. There it is shown that the origin of these concepts lies in the Marxian theory of exploitation that Sraffa developed regarding the notion of the ‘pool of profits’ the Italian economist utilized over a 14-year period from 1942 to 1956. The chapter engages in an extensive textual study of the archival evidence and then presents a simple analytical model of these relations.

Monetary conditions necessary for equilibrium:[Keynes] “A Treatise on Money,” Vol. I, Books 3 and 4Robertson's “Banking Policy and the Price Level”Hayek's “Prices and Production”Marshall (short period of equilibrium: quasi-rent – supplementary cost, Book V, Chapters 4, 5, 9)Harrod, The Economic Journal, June 1930, “Notes on Supply”Kahn, The Economic Journal, June 1931, “Relation of Home Investment to Unemployment”