From the industrial average rate of profit to the general average rate of profit and bank profit – a formalization based on Marx

Abstract

The main objective of this paper is to expose and formalize Marx's complete conception of the average rate of profit. Unclarified points remain and will be pointed out, which could serve as challenges for the extension of this research. In this paper it is mainly addressed the quantitative aspect of the development of the average rate of profit, giving less space to the analysis of the relevant theoretical points. The second objective, complementary to the first one, is to propose a formalization of bank capital and profit, compatible with the true average rate of profit, at this point already exposed. This objective is necessary in order to provide a comprehensive approach to the true average rate of profit and its consequences for all forms of capital.