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Analysis of the Law of Falling Rate of Profit: European Case

Author

Listed:
  • Víctor M. Fernández-Aguilera
  • Ignacio Amate-Fortes
  • Almudena Guarnido-Rueda

Abstract

This work aims to analyse the existence or non-existence of a decreasing rate of profit in Europe and determine the factors influencing it according to the Marxist theory of profitability. To do so, a panel data model was estimated for seven European countries over more than 60 years (from 1960 to 2021, inclusive). The results obtained allow us to verify the tendency for profitability to fall, which could lead the capitalist system to fail.

Suggested Citation

  • Víctor M. Fernández-Aguilera & Ignacio Amate-Fortes & Almudena Guarnido-Rueda, 2022. "Analysis of the Law of Falling Rate of Profit: European Case," Politická ekonomie, Prague University of Economics and Business, vol. 2022(2), pages 193-208.
    • Handle: RePEc:prg:jnlpol:v:2022:y:2022:i:2:id:1342:p:193-208
    DOI: 10.18267/j.polek.1342
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    References listed on IDEAS

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    1. Morishima, Michio, 1974. "Marx in the Light of Modern Economic Theory," Econometrica, Econometric Society, vol. 42(4), pages 611-632, July.
    2. Robinson, Joan, 1980. "Time in Economic Theory," Kyklos, Wiley Blackwell, vol. 33(2), pages 219-229.
    3. Joan Robinson, 1961. "Prelude To A Critique Of Economic Theory," Oxford Economic Papers, Oxford University Press, vol. 13(1), pages 53-58.
    4. Joan Robinson, 1980. "Time In Economic Theory," Kyklos, Wiley Blackwell, vol. 33(2), pages 219-229, May.
    5. R. W. Jones, 1956. "Factor Proportions and the Heckscher-Ohlin Theorem," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 24(1), pages 1-10.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Marxian economics; falling rate of profit; panel data analysis;
    All these keywords.

    JEL classification:

    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian

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