Le paradoxe du profit et le circuit économique.
Essai sur la structure macroéconomique des sociétés capitalistes.

Some retrospective comments.

I defended my PhD dissertation at Université de Dijon, France, under supervision of Prs Henri Guitton and Bernard Schmitt, the 6^th of October 1976, a long time ago. This dissertation has been published by the Service de reprodution des thèses de l'Université de Grenoble, France.

Of course, today I do not agree with all I have written at that time. Nevertheless the main ideas remain mine, especially the fact that profit is not money. I considered that profit was a set of investment goods which appeared with the "consommation monétaire de l'investissement" ("monetary consumption of investment") (c.m.i.) and disappeared with the "consommation réelle de l'investissement" ("real consumption of investissement") (c.r.i.).

c.r.i is the integration of an investment good in a consumption good, either through intermediate consumption for the working capital, either by its depreciation for the fixed capital. It is the end of real circuit, or circuit of value.

c.m.i. is the fact that the revenue attached to the production of a commodity comes back definitively into a firm. It is the end of the monetary circuit.

A definitive flow back is a flow which occurs to buy another good or to subscribe new equity shares. It is opposed to a povisional flow back which occurs when a household lends money to a firm (on this point see Intérêts, répartition et théorie des circuits in Généralisation de la préférence pour la liquidité, Economie appliquée, 1988, n° 2, pp. 355-388.)

Thus profit occurs when monetary circuit ends before real circuit. Today I have the same analysis, albeit I do not say any more that profit is the set of commodities that the firm post-finances itself, but the measure of the firm assets that the firm post-finances itself, since in general it is difficult to tell precisely what investment goods are post-fianced by the firm itself, and tell those which are post-financed by debt.

Thus to apprehend profit one must distintinguish the real circuit or circuit of value, object of the chapter 2 of my dissertation from the monetary circuit, object of the chapter 3. That is the reason why I talk about the theory of circuit(s) and not about the theory of monetary ciruit, expression, which, I think, has been invented by Augusto Graziani.

The real circuit uses prices, that I have called in my dissertation, production prices and that Bernard Schmitt called macroeconomic or social prices, while the monetary circuit uses prices that I have called distribution prices and that Bernard Schmitt called microeconomic or individual prices (cf. l' introduction de mon ouvrage Monnaie, Profit et Valeur (MPV)).

In my dissertation I set C_p and I_p as the global consumption and investment when measured in production prices, and C_d the global consumption when measured in distribution prices.

Later I have replaced the concept of production price by the concept of income-value or value, and the concept of distribution price by the concept of selling price or price; and I have replaced the global values C_p, I_p and C_d by C', I' and C.