Declining trend of profit rate and technical progress

Luiz Carlos Bresser-Pereira ()

Brazilian Journal of Political Economy, 1986, vol. 6, issue 4, 535-563

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.

Keywords: Profit; capital accumulation; Marxism (search for similar items in EconPapers)
Date: 1986
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