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Technical Change and the Rate of Profit: An Obituary for Okishio's Theorem

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  • D L Rigby

    (Department of Geography, University of California, Los Angeles, CA 90024, USA)

Abstract

The effects of technical change on the aggregate rate of profit are unclear. On the one hand, it is argued that laboursaving innovations cause the profit rate to fall. On the other hand, Okishio proved that in an economy where wages are constant and realization problems are assumed away, cost-reducing technical changes must raise the rate of profit. Okishio's theorem presents an important challenge to explanations of industrial and regional restructuring that are premised on the theory of the falling rate of profit. In this paper, Okishio's claims are examined under more general conditions, in particular when wages vary to ensure market clearing. The effects of capital-saving and laboursaving technical changes on the rate of profit are examined. It is shown that Okishio's theorem is not as robust as some have claimed.

Suggested Citation

  • D L Rigby, 1990. "Technical Change and the Rate of Profit: An Obituary for Okishio's Theorem," Environment and Planning A, , vol. 22(8), pages 1039-1050, August.
    • Handle: RePEc:sae:envira:v:22:y:1990:i:8:p:1039-1050
    DOI: 10.1068/a221039
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    References listed on IDEAS

    as
    1. Roemer, John E, 1979. "Continuing Controversy on the Falling Rate of Profit: Fixed Capital and Other Issues," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 3(4), pages 379-398, December.
    2. Bowles, Samuel, 1981. "Technical Change and the Profit Rate: A Simple Proof of the Okishio Theorem: Note [Technical Change and the Rate of Profit]," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 5(2), pages 183-186, June.
    3. José Alberro & Joseph Persky, 1979. "The Simple Analytics of Falling Profit Rates, Okishio's Theorem and Fixed Capital," Review of Radical Political Economics, Union for Radical Political Economics, vol. 11(3), pages 37-41, October.
    4. repec:ags:ucdavw:225734 is not listed on IDEAS
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