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

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.

Are Services Post-Capitalist? A Marxian Interrogation

“…Although only Mason (2015) does so explicitly, all arrive at this self-destructive conclusion through some version, or close imitation, of Marx's core theory that (1) productive labor is the source of capitalist profit, (2) competition pushes firms to automate and reduce this share internally, and (3) when generalized, this reduces the source of profit and threatens capitalism's existence. Yet none engage substantively with the chorus of Marxist economists who, in recent decades, have both revived and refined these fundamental insights, demonstrating declining profit rates (Basu et al 2022;Kliman, 2012;Moseley, 1991;Roberts, 2016;Shaikh, 2016: 729-735;Yu, 2016), clarifying what labor is and is not productive for capital (Moseley, 1991;Shaikh and Tonak, 1994;Smith, 1993: 123-151) and, in the case of Basu and Foley (2013), finding that service industries contribute significantly to a sectoral 'weakening of the relationship between . .…”

Lean In for Industrial Workers? Comments on Management Divided

“…While 'lean production with substantive empowerment' may have 'been institutionalized as best practice in American manufacturing', this seems to have been restricted to the minds and materials of lean boosters rather than actual practice in US factories (p. 10). The most plausible 'reason why lean surpassed other [post-Fordist] contenders' such as Volvo Uddevalla's selfdirected teams or Italy's flexibly specialized craft firms 'to become widely seen by practitioners as best practice' is likely because it enabled greater extraction of profit in a decreasingly profitable environment (Kliman, 2012;Roberts, 2016;Shaikh, 2016: 729-735;Yu, 2016). Indeed, Marx's fundamental prediction of rising organic composition of capital (automation) and lowered aggregate profit rates are strongly supported over this period (Basu et al, 2022;Benanav, 2020) which, again, is coterminous with lean's rise and even inherent in its emphasis on thinning out and broadbanding the workforce.…”