Monday, August 5, 2013

This graph is an attempt to demonstrate Marx's theory of the tendency of the capitalist rate of profit to fall. The data used to construct the chart are from the Bureau of Economic Analysis (BEA), National Income and Product Tables, Table 1.15, Price, Costs and Profit Per Unit of Real Gross Value Added.

The rate of profit (vertical axis) is calculated as Rate of Profit = Profit / Costs (the labor and non-labor costs per unit of value added production as shown in Table 1.15.) No attempt is made to adjust the profit for total capital, capital invested, capital depreciation, etc. 

There is no question that over the past 83 years the rate of capitalist profit has slowly fallen. If the period of the Great Depression and World War II are removed, the rate of fall would be more dramatic. Of course, WW II and the military spending of the Cold War, Korea, Vietnam, Iraq and Afghanistan, as well as government spending on social programs and the recent trillion dollar bank bailouts have had the effect of "moderating" the periodic crises of the capitalist system. The tendential fall in the rate of profit continues, however. 

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