Technical change and falling profitability: A critical review of theoretical perspectives

Abstract

This article critiques the theoretical attempts to refute the Marxian law of the tendency of the rate of profit to fall through an analysis of the relationship between technical change and the decline in profitability as formalized by Marx. Focusing on the arguments of the critics, we have divided the latter between those who consider that the law cannot operate due to its ‘indeterminacy’ and those who claim that technical change must increase the rate of profit. In this article, we will demonstrate that these positions are based either on misunderstandings or on theoretical principles that are antithetical to the Marx’s critique of political economy and are therefore not adequate as a refutation of the law of the tendency of the rate of profit to fall. Our final conclusion is that the logical-formal critical approach is unproductive, and that only a more advanced empirical analysis can dictate a verdict on this relationship in capitalist historical development.

Keywords

law of the tendency of the rate of profit to fall Marxism profitability technical change theoretical debate

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