[video]Paul Mattick Jr (and his amazing glasses) explains Falling Rate of Profit

[HEAD ICE]

http://vimeo.com/28609702

sorry don't know how to embed vimeo...

[DaringMehring]

His account isn't quite satisfactory because the way he leaves it is "capitalism has a boom/bust cycle."

But the falling rate of profit is more than boom/bust. It produces a directionality in terms of the intensity of busts vs. booms. It means that capitalism is not sustainable in the long run.

[Matija]

As DaringMehring said he talks too much about business cycles.
Constant-variable capital ratio (or OCC) rises due to accumulation and technical progress, and this reduces rate of profit.

One may argue that ratio will not rise becouse technical progress will make constant capital cheaper. But this has its limits becouse, although technology advances fast, it is hard to replace raw materials which are limited on earth and will become more expensive due to thair smaller and smaller reserves.

Even if you dismiss this argument, you have to take into account that production takes place in time. Capitalist pays for constant capital on the begining of the production process, and if everything becomes cheaper in the end of it (due to technical progress, or higher productivity), it is too late for him. He has to sell his products for a smaller price, but he has already paid his constant capital for old, higher one. His profit rate still falls.