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      Is There a Tendency of the Rate of Profit to Fall? Theory, Evidence and an Adequate Model

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            Abstract

            The Law of the Tendency of the Rate of Profit to Fall, put forward by Marx in Capital Vol.3, is a theoretical summary of the social reality of capitalist society. However, this law is still controversial and some scholars have criticized Marx for it, including Japanese scholar Okishio Nobuo in his Okishio Theorem, although these criticisms are theoretically untenable. In this article, after commenting on the relevant arguments, we show that the rate of profit inevitably falls and develop a model to illustrate this. We find Marx's claim that the falling rate of profit, followed by the higher organic composition of capital, is justified even under the circumstance that the rate of surplus value rises and new fixed capital reduces.

            Content

            Author and article information

            Journal
            10.13169
            worlrevipoliecon
            World Review of Political Economy
            Pluto Journals
            2042891X
            20428928
            Winter 2016
            : 7
            : 4
            : 411-423
            Article
            worlrevipoliecon.7.4.0411
            10.13169/worlrevipoliecon.7.4.0411
            1d05ed02-faae-4bcb-9733-a4979ca1c5c9
            © 2016 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
            law of the tendency of the rate of profit to fall,capital depreciation,Okishio Theorem,rate of profit

            References

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            2. 2007. “The Rate of Profit and the World Today.” International Socialism , July 2.

            3. 2008. “The Rate of Profit and the Current World Economic Crises.” [In Chinese.] Foreign Theoretical Trends , no. 10: 8–16.

            4. , and . 2005. “The Basic Situation and the Historical Trend of Capitalism in the World.” [In Chinese.] Theoretical Front of Higher Education , no. 5: 55–58.

            5. 2004a. Capital , vol. 2. [In Chinese.] Beijing: People's Publishing House.

            6. 2004b. Capital , vol. 3. [In Chinese.] Beijing: People's Publishing House.

            7. , and . 2011. “Profit Rate Dynamics in American Entity Economy: 1975–2008.” [In Chinese.] Journal of Renmin University of China , no. 2: 81–91.

            8. , , and . 2006. Senior Political Economics . [In Chinese.] Beijing: Renmin University of China Press.

            9. 2010. “European and American Scholars' Debate about the Current Crisis and the Rate of Profit to Fall.” [In Chinese.] Foreign Theoretical Trends , no. 10: 29–38.

            10. 2008. “Study on Determination Mechanism of Profit Rate and Its Change Trend—New Explanation Based on the Theory of Labor Value.” [In Chinese.] Finance and Economics Research , no. 7: 27–38.

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