Land, Technical Progress and the Falling Rate of Profit

Howard Petith ()

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: The paper sets out a one sector growth model with a neoclassical production function in land and a capital-labour aggregate. Capital accumulates through capitalist saving, the labour supply is infinitely elastic at a subsistence wage and all factors may experience factor augmenting technical progress. The main result is that, if the elasticity of substitution between land and the capital-labour aggregate is less than one and if the rate of caital augmenting technical progress is strictly positive, then the rate of profit will fall to zero. The surprise is that this result holds regardless of the rate of land augmenting technical progress; that is, no amount of technical advance in agriculture can stop the fall in the rate of profit. The paper also discusses the relation of this result to the classical and Marxist literature and sets out the path of the relative price of land.

Keywords: Marx; classical economics; falling rate of profit (search for similar items in EconPapers)
JEL-codes: B24 E11 O41 (search for similar items in EconPapers)
Pages: 23
Date: 2006-09-01
New Economics Papers: this item is included in nep-agr and nep-hpe
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Persistent link: https://EconPapers.repec.org/RePEc:aub:autbar:667.06

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