The Tendency for the Rate of Profit to Fall and the Realization Crisis

Bob Milward
Additional contact information
Bob Milward: University of Central Lancashire

Chapter 8 in Marxian Political Economy, 2000, pp 96-106 from Palgrave Macmillan

Abstract: Abstract For Marx, the law of the tendency of the rate of profit to fall is an essential element in the laws of motion of a capitalist economy. It occurs in a dynamic context as technological change leads to the increasing productivity of labour with the increase in capital accumulation leading to an increasing organic composition of capital which effects a fall in the rate of profit. This in turn leads the capitalists to accumulate and innovate to prevent the fall, leading to centralization and concentration of capital. The law is composed of two opposing forces that are contradictory and the resolution of these contradictions is what creates the movement within the system. The realization crisis is a problem that is discussed throughout the history of economic thought either in explicit or implicit terms as underconsumption theory or problems associated with the lack of effective demand and is therefore not unique to a Marxian analysis. However, the manner in which Marx sets his discussion of the problems of realization is firmly set in the specific nature of the capitalist relations of production. Hence, the crisis occurs as a result of commodity production being motivated by accumulation rather than use-value, the dynamic nature of the system which involves economic change and disrupts the pattern of production, and the increasing division of labour produced by capitalist commodity production.

Keywords: Real Wage; Labour Power; Commodity Production; Organic Composition; Effective Demand (search for similar items in EconPapers)
Date: 2000
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-28748-8_8

Ordering information: This item can be ordered from
http://www.palgrave.com/9780230287488

DOI: 10.1057/9780230287488_8

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().