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22. The Law of the Tendency of the Rate of Profit to Fall

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Chapter Summary

The definition of the law of the falling rate of profit is based on a very simple idea, even if Marx was the first to have formulated it. For a given rate of exploitation, every increase in the social productivity of labour through the increase in the organic composition of capital, results in the reduction of the rate of profit. The rise in the productivity of labour in the sectors producing constant capital, periodically leading to the depreciation of the constant capital employed, lowers the organic composition of capital and constitutes an additional factor counteracting the fall in the rate of profit. Foreign trade or unequal exchange constitutes a factor counteracting the fall in the rate of profit. The merging of the categories of law and tendency, particularly the law of the tendency of the rate of profit to fall, raises a theoretical problem that deserves some attention.

Keywords: constant capital; foreign trade; labour productivity; Marx; rate of profit; social productivity



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