Crisis Theories: Falling Rate of Profit (cont’d)

Is the falling rate of profit the key to periodic economic crises?

Perhaps among Marxists today, the tendency of the rate of profit to fall is the most popular explanation for capitalism’s cyclical economic crises, with underconsumption a distant second.

This theory, which naively leaves out the question of *realizing* surplus value, goes something like this: During the boom, the combination of technological progress, competition of the industrial capitalists among themselves, and, especially, competition between the industrial capitalists and the working class forces the industrial capitalists to increasingly substitute machinery—dead labor—for living labor. This is especially true near the peak of the boom, when conditions are most favorable for the working class on the labor market.

More and more of the surplus value that is consumed *productively* is transformed into constant capital, and less and less is transformed into variable capital. The result is a rise in the organic composition of capital and a fall in the rate of profit.

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One Response to “Crisis Theories: Falling Rate of Profit (cont’d)”

  1. allan harris Says:

    Can you give me a site or sites from which I can get statistics on the U.S. corporate or business profit rate over the last 50 years?

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