The rate of surplus value, the organic composition, and the general rate of profit in the U.S. economy, 1947-1967: Reply

Marx's of the tendency of the rate of profit to has been the subject of much debate, both theoretical and empirical. The states that over time the organic composition of capital will tend to rise, thereby causing the general rate of profit to fall (vol. 3, ch. 13). At issue on the theoretical side are the analytical relations between the organic composition of capital and the general rate of profit and, more broadly, between labor values and prices of production. At issue on the empirical side are the actual movements of the organic composition and the general rate of profit over time. This paper will investigate both sides of this issue. The first part will develop and criticize the of the falling rate of profit. The presentation will rely heavily on the analytical apparatus developed for Marxian analysis over the last twenty years (see particularly Francis Seton, Michio Morishima and Seton, Paul Samuelson, Morishima, William Baumol, and John Roemer), as well as Jens Christiansen's review of the arguments. The major conclusion that will be drawn is that the general rate of profit does not necessarily move inversely to the organic composition of capital and there is thus no necessity for the rate of profit to fall with capitalist development. What remains of the law of the falling rate of profit is then the empirical question of whether in fact the rate of profit had fallen and, if so, what factors have contributed to its decline.' The second part of the paper will present empirical estimates of the general rate of profit, the organic composition of capital, and other key variables in the Marxian system for the 1947-67 period in the United States. The study is confined to this period because the required data (inputoutput tables) are available only for years 1947, 1958, 1963, and 1967. Two questions will be addressed. First, has the rate of profit fallen? Second, what is the observed relation of the rate of profit to the organic composition and other variables in the system? In this regard, particular attention will be paid to relative productivity increases over the period and their impact on the rate of profit, the organic composition, the rate of surplus value and other variables.