Bruno Miller Theodosio

Economic modeling struggles often with a lack of realism. The reason for that is that economic theory for the last 100 years has focused on simplifying assumptions which reduced important aspects of the economic reality. Concentrating on fix-point solutions and external statistical shocks prevented the profession from accurately describing the economy as a complex system with characteristics like feedback mechanism, evolution, and emergence. We propose a re-evaluation of major findings in the Classical economic literature. The classical literature described the economic system as inherently probabilistic. In this spirit, we discuss the importance of statistical equilibrium models as one way to model complex economic systems in a probabilistic way.

This paper investigates the economic dynamics of Brazil in the 2000-2016 period, based on the profit rate and its determinants (technology, distribution, and demand), linking it with the financialization of the economy. Between 2003 and 2010, the Brazilian economy experienced economic growth with income distribution in favor of wages. The rate of profit fell from 2011 on, culminating in a crisis in 2014. The research finds the existence of cooperation between capitalists and workers under Lula’s government and competition under Dilma’s years. We calculate the profit rate on net worth, corroborating our findings of functionality between finance and production from 2003 to 2010 and the dysfunctionality of finance for accumulation starting in 2011, when profitability fell along with the increase in leverage

O presente trabalho discute a teoria monetária de Marx frente aos desenvolvimentos do capitalismo do século XXI. Defendemos que o dinheiro é uma mercadoria mesmo no capitalismo moderno porque mercadoria é uma forma social, portanto, o dinheiro tem valor (mas não um preço). O dinheiro de crédito é equivalente geral porque funciona como um símbolo de valor ancorado em uma forma de capital fictício, o passivo do Banco Central, além de guardar uma relação com o trabalho social. Para mostrar a relação entre o dinheiro e o trabalho abstrato seguimos a formalização da expressão monetária do tempo de trabalho (MELT) em uma economia de dinheiro de crédito. Ao final discutimos algumas teorias de inflação com raiz na teoria monetária de Marx.

This paper discusses Marx's monetary theory in the face of the developments of 21st century capitalism. We argue that money is a commodity even in modern capitalism because commodity is a social form, so money has value (but not a price). Credit money is the general equivalent because works as a symbol of value anchored in a form of fictitious capital, the liabilities of the Central Bank, besides maintaining a relationship with social work. In order to show the relation between money and abstract labor, we follow the formalization of the monetary expression of labor time (MELT) in a credit money economy. In the end we discuss some theories of inflation rooted in Marx's monetary theory.

The theme of this research is the economic dynamics of Brazil between 2000 and 2016, based on the rate of profit and its determinants (technology, distribution and demand), linking the profitability approach with the financialization of the Brazilian economy. The rate of profit is a central variable in the analysis of capital accumulation and in the performance of capitalist economies. Departing from a Marxist perspective, the realized profit rate impacts on companies’ expected profitability and influences the capitalists’ investment plans and the level of employment of the economy. We estimate the rate of profit on the stock of fixed capital for Brazil based on data from the National Accounts of the Brazilian Institute of Geography and Statistics (IBGE). For the capital stock data, we used the Perpetual Inventory Method (MEP) and for distribution Gollin’s (2002) approach. We use Weisskopf’s (1979) methodology to decompose the rate of profit into its technological, distributive, and demand determinants, since the decomposition allows us to understand the impact of profitability on Brazilian economic performance in the period measured by the level of activity, inflation, employment and income, public finance and the external sector. The period’s overview was of economic growth with income distribution in favor of wages between 2003 and 2010 and drop in the rate of profit from 2011 and crisis from 2014 on. We point out that the Lula government was sustained by a social pact between the banking-financial fractions of capital and the workers, under the tutelage of Lulism. The Dilma government, in facing the rentier gains, lost political support and suffered the setback of the economic policy errors adopted in an environment of reduction of the Chinese dynamism and fall of the profitability. We also estimate a Goodwin Cycle for the period that points in the direction of cooperation between capitalists and workers under the Lula Era and competition under Dilma’s government. We then proceeded in the study of Brazilian financialization showing the interest burden on income (rentier-share), discussing the negative impacts of fiscal austerity in 2015 and pointing to particular facts of Brazilian financialization such as the power of commercial banks and sector’s concentration. Finally, we discuss the investment-profit nexus and the false opposition between interest and profit from a Marxist point of view. Finally, we used Economática’s database on balance sheets for Brazilian companies to calculate the profit rate on net worth (ROE) in order to explain, at the firm level, the impacts of financialization on the dynamics of the profit rate in the period. The decomposition of the profit rate on net worth in return on assets (ROA) and leverage (AL) shows the relationship of cooperation between finance and production in the period from 2003 to 2010 and the dysfunctionality of finance for accumulation from 2011 on, when profitability fell together with the increase in leverage, showing that the companies acquired assets through financing with third-party capital.

Keywords: Rate of profit; Financialization, Brazilian Economy