Tendency of the rate of profit to fall

[Howard509]

I don't understand Marx's concept of the tendency of the rate of profit to fall. What does it mean and what is the proof of it being true?

P.S. I hope those Che shirts weren't made in a sweat shop.

[JimmyJazz]

try this:

http://www.marxists.org/archive/mand...et/ch02.htm#s7

though I would strongly suggest you start at the beginning:

http://www.marxists.org/archive/mand...omet/index.htm

[Howard509]

It appears to follow from this analysis that as industry becomes more mechanised, using more constant capital and less variable capital, the rate of profit ought to fall. For as a proportion less capital will be advanced on labour, and only labour can create value. In Capital Volume 3 Marx does indeed make the prediction that the rate of profit will fall over time, and this is one of the factors which leads to the downfall of capitalism. (However, as pointed out by Marx's able expositor Paul Sweezy in The Theory of Capitalist Development, the analysis is problematic.) A further consequence of this analysis is a difficulty for the theory that Marx did recognise, and tried, albeit unsuccessfully, to meet also in Capital Volume 3. It follows from the analysis so far that labour intensive industries ought to have a higher rate of profit than those which use less labour. Not only is this empirically false, it is theoretically unacceptable.
plato.stanford.edu/entries/marx/#3

Does the tendency of the rate of profit to fall mean that with increasing mechanization, there is less in wages given to labor, and thus less money to be spent on consumer goods, thus causing profit to decline? I can agree with that and I believe it's true.

[SocialismOrBarbarism]

+ YouTube Video

+ YouTube Video

[ckaihatsu]

A Business Perspective on the Declining Rate of Profit [diagram]

http://tinyurl.com/2bvq3a

[Nwoye]

Does the tendency of the rate of profit to fall mean that with increasing mechanization, there is less in wages given to labor, and thus less money to be spent on consumer goods, thus causing profit to decline? I can agree with that and I believe it's true.

First of all, this is all explained in Marx's Kapital. You can find a great beginners guide to that here.

[Howard509]

The videos really helped. I was familiar with the ideas expressed, but not the term "the tendency of falling rate of profit" itself.