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Technical Change, Accumulation and the Rate of Profit

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  • Frank Thompson

    (Department of Economics, University of Michigan, Ann Arbor, Michigan 48109)

Abstract

The effect of technical change and accumulation on the profit rate depends on their effect on the real wage rate. Employing a standard one-sector "circulating-capital" model, it is assumed that the wage rate is at least non-decreasing in labor demand. Then, ceteris paribus , capital-using labor-saving technical change does not increase the real wage rate. Depending on parameters, there are then cases of viable capital-saving technical change, possibly labor-saving as well, in which the rate of profit falls, as well as other cases in which it rises. But, in the absence of sufficient accumulation, capital-using labor-saving technical change, and, further, technical change in which the organic composition of capital rises, induces a rise in the rate of profit.

Suggested Citation

  • Frank Thompson, 1995. "Technical Change, Accumulation and the Rate of Profit," Review of Radical Political Economics, Union for Radical Political Economics, vol. 27(1), pages 97-126, March.
    • Handle: RePEc:sae:reorpe:v:27:y:1995:i:1:p:97-126
    DOI: 10.1177/048661349502700105
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    Cited by:

    1. zamparelli, luca, 2008. "Direction and intensity of technical change: a micro-founded growth model," MPRA Paper 10843, University Library of Munich, Germany.
    2. Luca Zamparelli, 2009. "Direction and Intensity of Technical Change: a Micro Model," Working Papers 4, Doctoral School of Economics, Sapienza University of Rome.
    3. Luca Zamparelli, 2015. "Induced Innovation, Endogenous Technical Change and Income Distribution in a Labor-Constrained Model of Classical Growth," Metroeconomica, Wiley Blackwell, vol. 66(2), pages 243-262, May.
    4. Vaona, Andrea, 2011. "Profit rate dynamics, income distribution, structural and technical change in Denmark, Finland and Italy," Structural Change and Economic Dynamics, Elsevier, vol. 22(3), pages 247-268, September.
    5. Ekaterina Ponomareva & Alexandra Bozhechkova & Alexandr Knobel, 2012. "Factors of Economic Growth," Published Papers 172, Gaidar Institute for Economic Policy, revised 2013.
    6. Luca Zamparelli, 2011. "Induced Innovation, Endogenous Growth, and Income Distribution: a Model along Classical Lines," Working Papers CELEG 1102, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    7. Edward N. Wolff, 2000. "What's Behind the Recent Rise in Profitablity?," Economics Working Paper Archive wp_297, Levy Economics Institute.
    8. A. J. Julius, 2005. "Steady‐State Growth And Distribution With An Endogenous Direction Of Technical Change," Metroeconomica, Wiley Blackwell, vol. 56(1), pages 101-125, February.

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