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Declining trend of profit rate and technical progress

Author

Listed:
  • Luiz Carlos Bresser-Pereira

Abstract

Given a stable rate of surplus value and an increasing organic composition ofcapital, Marx asserted that the rate of profit would tend to decline. The increase of theorganic composition of capital depends, however, on the type of technical progress. It canbe labor-saving – and then the organic composition of capital will rise – but can also beneutral or capital-saving. On the hand, only in a very special case firms will adopt newtechniques that increase their costs and lower their profits. The recent debate on the Okishiotheorem about this problem and Shaikh’s attempt to reestablish the Marxian orthodoxy arediscussed. The author concludes that the law of the declining tendency of the rate of profitis 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.

Suggested Citation

  • Luiz Carlos Bresser-Pereira, 1986. "Declining trend of profit rate and technical progress," Brazilian Journal of Political Economy, Center of Political Economy, vol. 6(4), pages 535-563.
    • Handle: RePEc:ekm:repojs:v:6:y:1986:i:4:p:535-563:id:1818
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    More about this item

    Keywords

    Profit; capital accumulation; Marxism;
    All these keywords.

    JEL classification:

    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian

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