The General Rate of Profit in a New Market Economy: Conceptual Issues and Estimates

Using national income data, we estimate levels and identify trends in the general rate of return in Russia from 1994 to 2002. Endogenous distributional and efficiency determinants of profitability are discussed in the Marxian analytical framework. We find that in spite of the major decline in output, the average rate of profit in Russia during the transition period was relatively high. This is primarily explained by the high level of the rate of surplus value (rate of exploitation), which was estimated to be 1.5-2 times as high as comparable estimates for the United States. In view of problems with data for profits and capital in Russia, we consider our estimates as only tentative indicators of the underlying trends and levels of profitability in the Russian economy.