Unraveling the Internal Contradictions of the Law of the Falling Tendency of the Rate of Profit and Crises

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Other Title
  • 利潤率の傾向的低下法則の内的諸矛盾と恐慌
  • リジュンリツ ノ ケイコウテキ テイカ ホウソク ノ ナイテキ ショ ムジュン

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In chapter XV part III volume III of "Capital" Marx studied "Unraveling the Internal Contradictions" of "The Law of the Falling Tendency of the Rate of Profit". In this study he reached many important conclusions about the connection between this law and crises. But these conclusions have not necessarily been comprehended. The theme of this paper is to study for what reasons Marx regarded this law as one of the most important causes of crises. In the study of the connection between this law and crises, we must comprehend the influences of this law on the development of the process of accumulation of capital. A fall of the rate of profit brings forth the capitals which cannot compensate it by the mass of profit, thus it compels these capitals to competitive struggle to compensate it. This competitive struggle causes the rise in wages and the glut of markets. A fall in the rate of profit checks the formation of new independent capitals and brings forth "plethora of capital", so lowers the rate of accumulation of capital on the one hand, and pushes the mass of the small divided capitals into speculation, fraudulant credit etc. on the other hand. This law is composed of many moments which affect the rate and the mass of profit in opposite ways. These moments are the fall in the rate of profit and the increase in its mass, the relative decrease of the working population compared with invested capital and the increase of the absolute number of them, the increase of the constant capital and the cheapening of its elements etc. These agencies operate simultaneously and antagonistically in the process of accumulation of capital. In this chapter crises are also regarded as the periodic vent of the conflict of these antagonistic agencies. Therefore so-called "the absolute overproduction of capital" should be comprehended as the effects of these influences of the fall of the rate of profit on the process of accumulation of capital.

Journal

  • The Journal of Agrarian History

    The Journal of Agrarian History 19 (4), 1-14, 1977

    The Agrarian History Society (Renamed as The Political Economy and Economic History Society)

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