On Inequality and the Rate of Profit in the Long Wave

The Marxist economist Ernest Mandel has argued that upswings of the Long Wave in the world economy are based on an increase in the rate of profit resulting from 'capitalist victories in the class struggle', while downturns follow a fall in the rate of profit associated with a move in the workers' favour in that struggle. This paper argues, on the contrary, that the changes in profit rate are consequence, not cause, of the Long Wave fluctuations, and that the latter in fact follow changes in underlying inequality in the opposite direction to those alleged by Mandel: pronounced falls in inequality lead the upturn, while the downturn follows the undermining of these changes. The conclusion is that the next upswing requires neither of Mandel's alternatives -another 'capitalist victory' or world revolution -but a new move towards reduced inequality.