Revisiting the Marxian conjecture of the Falling Rate of Profit

Réexamen de la conjecture marxienne de la baisse du taux de profit

Stefano Bosi and Cuong Le Van
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Stefano Bosi: UEVE - Université d'Évry-Val-d'Essonne
Cuong Le Van: PSE - Paris School of Economics

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Abstract: The law of Falling Rate of Profit is a fundamental conjecture of Marxian economics and a pillar of Marxist theory with significant political and historical effects. To understand its scope, we consider a simple economy with many capital goods and a single wage good, as well labour times across these sectors. Technology is represented by a Leontief matrix. While finding that the profit rate is strictly less than the exploitation rate, a classic result of Marx, we prove also a version of the Fundamental Marxian Theorem: these rates are equal if and only if they are zero. Interestingly, we provide necessary and sufficient conditions for a specific Transformation Problem of values into prices, that are exogenous, involving only technologies and labor times; and we show that the profit rate is inversely proportional to the total unit cost of production. Under a constant exploitation rate, the law of FRP is a mere tautology. Importantly, without this empirically questionable assumption, we prove in a new way that the law can be violated: the key of our reasoning is the transformation of values into prices in the spirit of Morishima (1973).

Keywords: Values; Labor times; Leontief technology; Exploitation rate; Profit rate; Transformation of values into production prices; Law of Falling Rate of Profit (search for similar items in EconPapers)
Date: 2026-05-05
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