ABSTRACT
The theoretical explanation of trends in rate of return on capital involves capital theory, which is undoubtedly one of the more difficult and more controversial parts of economic analysis. The rate of return on capital plays such an important role in economic theory that it is only natural that attempts should be made to measure the return in order to assess the relevance of some of the theoretical results. When using the rate of return to measure the profitability of manufacturing industry it seems appropriate to use the value of capital in the denominator. The numerator is some measure of profit which is a value rather than a physical concept and the use of a value concept in the denominator results in a ratio which is in absolute units. The mobility of capital is crucial to the efficiency and growth of the economy: in a world of unending change in types of products that consumers and business and governments desire.
