Technical change, constant rate of exploitation and falling rate of profit in linear production economies

Author:

Basu Deepankar1,Orellana Oscar2

Affiliation:

1. Department of Economics University of Massachusetts Amherst Amherst Massachusetts USA

2. Departamento de Matemática Universidad Técnica Federico Santa Maria Valparaíso Chile

Abstract

AbstractCan cost‐reducing technical change lead to a fall in the long run rate of profit if class struggle manages to keep the rate of exploitation constant? In this paper, we derive three results that, taken together, answer this question in the affirmative. First, we identify three properties that new real wage bundles must satisfy to keep the rate of exploitation constant and lead to a falling rate of profit. Second, we derive sufficient conditions for existence of an infinite number of such real wage bundles. Third, we show that, if the initial real wage bundle is such that the maximum price‐labor value ratio is larger than 1 plus the rate of exploitation, then starting from any configuration of technology, there always exists a viable, capital‐using labour‐saving technical change that satisfies the sufficient conditions of the previous result. These results vindicate Marx's claim that if the rate of exploitation remains unchanged then technical change in capitalist economies can lead to a fall in the long run rate of profit.

Publisher

Wiley

Subject

Economics and Econometrics

Reference24 articles.

1. The Logic of Capital

2. Technical change and the profit rate: a simple proof of the Okishio theorem

3. Chen W.(2019).Technical change income distribution and profitability in multisector linear economies. UMass Amherst Economics Working Papers 273.

4. The implications of technical change in a Marxian framework

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