1998•Review of Radical Political EconomicsRequires access

The Composition of Capital and the Rate of Profit: A Reply to Laibman

Frank Wilson Thompson

Abstract

In response to a critique by Laibman (1996) of earlier work (Thompson 1995) exploring the effect of technical change and accumulation on the real wage rate and thus, via the Okishio Theorem, the rate of profit, it is demonstrated that in a wide range of one-sector models (including that of Laibman) of a capitalist economy, increases in the composition of capital do not cause a fall in the equilibrium rate of profit. On the contrary, if anything, increases in the composition of capital cause the rate of profit to be higher.

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Key concepts: Rate of profit, Economics, Profit rate, Profit (economics), Wage rate, Capital accumulation, Monetary economics, Wage