Sine Adam Smith, debate has razed over the long-run tendencyof the rate of profit in capitalist society. Aunfortunately, the debate often takes an extremely ratefied form, so rarefied that its implications for theory, muchjless for practice, are at b...
Sine Adam Smith, debate has razed over the long-run tendencyof the rate of profit in capitalist society. Aunfortunately, the debate often takes an extremely ratefied form, so rarefied that its implications for theory, muchjless for practice, are at best obscure so, this paper aims to analyize the tendency of profit rate to fall in 1970s in relation to actual capitalist dynamism, although some theoretical inconsistency.
I can summerize the results of this analysis as followings. First, increasing prower of labor class led to an increase in real wage and to a fall in the profit share. Secondly, reduction in the large pools of labor and dwindling of technological advance(a direct consequence of the earlier fast accumulation) increased the capital-output ratio and decreased the rate of capital accumulatiion. This effect in turn led to a fall in profit rate.
Thirdly, natural resources prices also affected an adverse influence on the capital putput ratio and decreased the profit rate.
Fourthly, manufactured goods prices fell relatively to consumer goods, so the profit share in terms of manufactured goods also decreased.