Vol. 6 No. 4 (1986)
How to Cite
Declining trend of profit rate and technical progress
Abstract
Given a stable rate of surplus value and an increasing organic composition of
capital, Marx asserted that the rate of profit would tend to decline. The increase of the
organic composition of capital depends, however, on the type of technical progress. It can
be labor-saving – and then the organic composition of capital will rise – but can also be
neutral or capital-saving. On the hand, only in a very special case firms will adopt new
techniques that increase their costs and lower their profits. The recent debate on the Okishio
theorem about this problem and Shaikh’s attempt to reestablish the Marxian orthodoxy are
discussed. The author concludes that the law of the declining tendency of the rate of profit
is an essential instrument to understand the long-run dynamics of the process of capital accumulation,
but does not mean that the rate of profit will actually decline.
JEL Classification: E11; B51.
Keywords: Profit capital accumulation Marxism