پویایی نرخ سود، توزیع درآمد، تغییرات ساختاری و فنی در دانمارک، فنلاند و ایتالیا

Under less restrictive assumptions than in previous contributions, this paper highlights various patterns of profit rate dynamics that are common to the countries under scrutiny. Without a substantial re-distribution of income in favour of profits, the profit rate declines. When labour productivity is weak the profits/wages ratio declines leading to a decline in the profit rate, also due to capital deepening. Developments in the capital–labour ratio tend to increase the organic composition of capital while those in the ratio between the capital price deflator and the average wage tend to decrease it. Falls in the profit rate took place in countries with a weak technological change with episodes of Marxian bias. Employment shifted from low to high capital intensity sectors, from low to high organic composition industries and from low to high productivity sectors. Rising strength of labour and realization failures tend to have a greater role than rising organic composition in cyclical profit rate dynamics. Over the cycle, the first mechanism is also the first one to show up, while the others tend to follow it. Theoretical and policy implications are offered.

The present paper contributes to the empirical analysis of the interweaving of income distribution, structural change, technical change and profit rate dynamics, where by profit rate we mean the ratio of total profits over the capital stock. We do so by introducing a number of novelties to the relevant literature. First we highlight the impact on the aggregate profit rate of sectoral developments not only in technical change, but in income distribution too. This is particularly important on several grounds. In the first place, when analysing economies on a time period of some decades it is not said profit rate or real wage equalization takes really place as either shocks might be highly persistent or there might be barriers to capital mobility – see Dumenil and Lévy (1993, pp. 155) – in the form of, for instance, sectoral differences in industrial relations, innovation capabilities, barriers to firms’ entries and exits, and capital market imperfections. In the second place, the hypothesis of gravitation of profit rates was recently criticized on theoretical grounds (Dupertuis and Sinha, 2009) and it has found a mixed empirical support (Tsoulfidis and Tsaliki, 2005 and Vaona, 2011). Finally, as showed below, supposing that income distribution is the same across sectors might hide the effect on the aggregate profit rate of labour re-allocation from less to more productive industries. Regarding this issue, in the present work we will make use of panel unit root tests to understand whether sectoral profits/wage bill ratios displayed a mean reverting behaviour. A second novelty of this paper is the analysis of countries (Finland, Denmark and Italy) that have so far been overlooked by the literature. Our choice of these countries is largely determined by data availability, as they are those with the most complete information in the STAN OECD database. However, these countries carry a particular economic interest as well. First they are small countries, especially compared to the US, which, as it will be showed below, has attracted most of the attention in the literature. So one might wonder whether small countries, being more exposed to international competition, had a dissimilar profit rate dynamics than larger ones, especially regarding its link with structural change and income distribution. In the second place, these countries differ in terms of product market regulations (Høj et al., 2007), which might had a diverse impact on their economic performance, for instance hampering to various extents the reallocation of production inputs across economic sectors. A further difference among these countries is their system of welfare state, being it “conservative” in Italy and “social-democratic” in Finland and Denmark (Esping-Andersen, 1990). So it is possible to wonder whether different welfare systems produced dissimilar incentives to economic agents, leading to a different dynamics of capital profitability. Finally, Finland, in the last decade, underwent major structural changes and it recovered from a severe banking crisis in the early 1990s, which considerably affected the soundness of its public finances. So it might be an example for many advanced countries to exit the fiscal strains they had been subjected to after the 2008 crisis (IMF, 2009). Given the great diversity of the countries we consider, our main aim is to individuate common developments among them. The rest of the paper is structured as follows. The next section reviews the relevant literature. Section 3 introduces the accounting framework, defines our variables and illustrates our data sources. Section 4 illustrates the dynamics of the aggregate profit rate and of its components both graphically and resorting to two popular decompositions. It further makes use of wage–profit curves to understand whether technological change was labour saving, capital saving, both labour and capital saving or it was labour saving and capital using. Section 5 explores how this dynamics was affected by structural change both in income distribution and technological development. Section 6 moves to consider the cyclical dynamics of the aggregate profit rate and of its components. The last section concludes, while Appendix A contains the calculations underlying our decompositions.

In this paper we have analysed the connection between technological development, income distribution, structural change and profit rate dynamics in Denmark, Finland and Italy over about three decades. Notwithstanding the broad differences characterizing these countries, we have highlighted ten common patterns, though, of course, they might not hold for other countries or other time periods. Our results can be summarized as follows. Regarding the long-run, preconditions for the profit rate not to decline are a redistribution of income from labour to capital and strong productivity growth. In countries where technological change is weak, it also tends to show episodes of Marxian bias. Regarding the organic composition of capital, it is increased by changes in the capital–labour ratio and decreased by those in the ratio of the price of capital over the average wage, as the latter tends to grow faster than the former. Structural change was a major driver of the aggregate profit rate, as the weight of capital intensive and high organic composition sectors as well as of those with high productivity increased. Regarding the short run, profit rate dynamics is driven more by rising strength of labour and realization failures than by increasing organic composition. Over the cycle, the first mechanism is also the first one to show up, while the second and the third ones appear at later stages. All our results are consistent with previous findings in the literature, especially those concerning the US contained in Wolff (2003), with the exception of those concerning structural change. In this case, we highlighted the role of employment shifts towards more productive sectors, which could not be found without relaxing the restriction of industrial profit/wages ratios to be equal. Regarding our findings about capital intensity and organic composition, they are exactly the opposite of those in Wolff (2003). While in the US employment tended to concentrate in more labour intensive sectors, boosting the aggregate profit rate and lowering the organic composition of capital, in the countries we considered the weight of capital intensive sectors in total employment and in the total wage bill increased, with opposite effects on the aggregate profit rate and organic composition. In order to provide an intuition for such difference, it is helpful considering the explanations proposed by Wolff (2003) for his findings. First, new lines of production usually start with low capital intensity, experiencing a growth in the capital–labour ratio over time. Secondly, the expansion of firms in capital intensive sectors might be hampered by capital shortages due to a low investment rate. In the third place, changing power relations in favour of capital and against labour, together with product market regulations and – after Dumenil and Lévy (2001) – changes in monetary policy, might restrain real wages and depress the labour share of income, rendering production in labour intensive sectors cheaper. The countries we analysed allow us to rule out the latter two explanations. Declines in the investment share of output affected to a similar extent the US and Denmark and to a greater extent Finland and Italy (see, for instance, Pelgrin et al., 2002, Table 1). Furthermore, in the three countries analysed in the present study structural change had the same direction notwithstanding that the profit share was increasing in Finland and Italy and stable in Denmark. We are left with the explanation regarding the new lines of production. However, it is necessary to explain why in the US new lines of production concentrated more in labour intensive sectors than in capital intensive ones, while in Finland, Denmark and Italy the opposite happened. Looking at Fig. 5 it is possible to argue that the three European countries here analysed were specializing in the sectors using more intensively the production factor that was getting relatively cheaper. The US, instead, though experiencing a similar trend in pk/w to the other countries (see Wolff, 2003, Fig. 6), specialized in those sectors using more intensively the production factor that was getting relatively more expensive. It is tempting to explain this specificity of the US as a change in consumers’ preferences in a relatively closed economy. The change in preferences towards labour intensive sectors can be connected to the “marketization” hypothesis, which explains the greater specialization of the US economy in service industries on the basis of higher female labour force participation (Freeman and Schettkat, 2001 and Freeman and Schettkat, 2005). Women, increasing their market work hours, led to a substitution of household production for market products (marketization), which raised aggregate demand in the US economy and affected demand for services especially. This process was not hampered in the US by an attempt to exploit comparative advantages. Indeed, regarding the exposure to international trade, it is worth recalling that, according to the Penn World Tables, the ratio of the sum of imports and exports over GDP in current prices was about 60% in Denmark in 1970 and it reached 103% in 2007. In Italy these figures were 31.3% and 58.7% and in Finland 50.4% and 84.4%. In the US, instead, they were 11.27% and 29.07%. This was also reinforced by the fact that, for the US, the external constraint was not binding during the period of observation, so they could finance their increasing specialization towards more labour intensive activities by resorting to debt. Our study also carries theoretical and policy implications. Regarding the former ones, given our results, economic models incorporating structural change should be adopted once trying to explain aggregate profit rate dynamics. To understand the latter ones, it is worth recalling the differences among the countries under scrutiny mentioned in the Introduction in terms of product market regulations, exposure to financial crises and systems of welfare state. In the first place, different product market regulations do not seem to hamper the general direction of structural change, as this was similar to all the countries considered. In the second place, the case of Finland is illustrative of a possible way out for advanced economies from the recent financial and economic crisis. Rebuilding long-run capital profitability requires to hasten the pace of labour productivity growth and technological progress together with labour reallocation from less to more productive economic sectors. However, under capitalism, it will also entail that the consequent benefits will accrue more to capital than to labour, increasing the profits/wages ratio, which, after Weisskopf (1979), is nothing more than the price analogue of the Marxian rate of exploitation. On the other hand, income redistribution among households does not per se hamper economic performance, given that, according to Eurostat data, in 2009 the Gini coefficient was equal to 25.5 in the most successful country – Finland – and to 27 and 31.5 in the least successful ones – Denmark and Italy respectively. Social democracy is not dead once coupled with innovation and structural change.