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      Is the Theory of a Falling Profit Rate Valid?

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      research-article
      World Review of Political Economy
      Pluto Journals
      Marx, falling rate of profit, capital, capital accumulation, world economy
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            Abstract

            Marx's theory of the falling rate of profit makes two main appearances in his work. The first is in Chapter 25 of Capital Volume 1, entitled “The General Law of Capitalist Accumulation.” It is further developed in Part III of Volume 3 of Capital, entitled “The Law of the Tendency of the Rate of Profit to Fall.” In this article I will outline the structure of the theory presented in these two volumes of Capital. Following that I will look at some criticisms that have been leveled at it. I will go on to argue that the criticisms are based on a misunderstanding of some of the dynamic causal mechanisms that Marx assumed. Following on from this I shall present a dynamic solution to the equations of accumulation and show under what circumstances these lead to a falling rate of profit. The dynamic model will then be used to analyze the trajectories of some contemporary capitalist economies and to help understand the current structure of the world economy.

            Content

            Author and article information

            Journal
            10.13169
            worlrevipoliecon
            World Review of Political Economy
            Pluto Journals
            2042891X
            20428928
            Fall 2013
            : 4
            : 3
            : 323-340
            Article
            worlrevipoliecon.4.3.0323
            10.13169/worlrevipoliecon.4.3.0323
            0ded3fff-5a85-43f3-8bd6-d8a1b656a7d7
            Copyright 2013 World Association for Political Economy

            All content is freely available without charge to users or their institutions. Users are allowed to read, download, copy, distribute, print, search, or link to the full texts of the articles in this journal without asking prior permission of the publisher or the author. Articles published in the journal are distributed under a http://creativecommons.org/licenses/by/4.0/.

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            Categories
            Articles

            Political economics
            world economy,Marx,falling rate of profit,capital,capital accumulation

            Note

            1. What follows is a condensed version of the analysis in Cockshott, Cottrell, Michaelson, Wright, and Yakovenko (2008).

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