The purpose of this article is to ascertain empirically whether the "law" of the tendential fall of the rate of profit, considered as an element of long wave theory, can explain the present economic stagnation in German industry. The results are negative for the explanatory power of the "law": the rate of profit is declining in the long run, but the organic composition, instead of increasing, decreases or remains stationary - the opposite of the predicted change. This evolution of the organic composition of capital is essentially due to: 1) the net effects of technical change (i.e. the technical composition of capital and its results in terms of productivity); 2) the income distribution changes. In fact, generally productivity grew more than technical composition, so exerting a downward pressure on the organic composition (and a positive effect on the rate of profit). The noticeable increase in the wage share had a double effect; it amplified the downward pressure on organic composition and contributed to the decline in profitability.
Get full access to this article
View all access options for this article.
References
1.
Albers, D.
, W. Goldschmidt, and P. Oehlke. 1976. Lotte sociali in Europa 1968-1974. Francia - Gran Bretagna - Repubblica federate tedesca. Roma: Editori Riuniti.
2.
Altvater, E., J. Hoffmann, and W. Semmler. 1976. Zum Problem der Profitratenberechnung. Eine Replik und ein Versuch, das Indikatorenverfahren zu prazisieren. Prokla 24:191-206.
3.
Altvater, E., J. Hoffmann, and W. Semmler. 1979. Vom Wirtschaftswunder zur Wirtschaftskrise. Okonomie und Politik in der Bundesrepublik. Berlin: Olle & Wolter.
4.
Armstrong, P.
and A. Glyn. 1980. The Law of the Falling Rate of Profit and Oligopoly: A Comment on Shaikh. Cambridge Journal of Economics4(l): 69-70.
5.
Armstrong, P.
, A. Glyn, and J. Harrison. 1984. Capitalism Since World War H. The Making and the Breakup of the Great Boom. London: Fontana.
6.
Barou, Y., M. Dolld, C. Gabet, and E. Wartenberg. 1979. Les performances comparees de l'6conomie en France, en RFA et au Royaume-Uni. Les collections de l'INSEE E, 69.
7.
Bertrand, H. and A. Fauqueur. 1978. Rotation du capital circulant et rentabilitd. Revue economique 2: 291-331.
8.
Bossier, F. and P. Huge. 1981. Une verification empirique de l'existence de cycles longs Apartirde donnees belges. Cahiers gconomiques de Bruxelles, 90:253-267.
9.
Cyert, R. M.
and J. C. March. 1963. A Behavioral Theory of the Firm. Englewood Cliffs: Prentice-Hall.
10.
Duharcourt, P. 1979. Sur le concept de composition du capital. Issues 2:45-66.
11.
Fine, B.
and L. Harris. 1979. Rereading Capital. London: Macmillan.
12.
Frateschi, C. 1981. Salari e profitti nell'economia della Germania federale nel dopoguerra. In, L'economia tedesca. La Germania Federale verso l'egemonia economica in Europa, V. Valli (ed.). pp. 163-181. Milano: Etas libri.
13.
Görzig, B. 1981. Entwichlung von Gewinnen und Renditen im Unternehmensbereich. Vierteljahreshefte zur Wirtschaftsforschung 4:321-333.
14.
Hodgson, G.1974. The Theory of the Falling Rate of Profit. New Left Review84: 55-82.
15.
Hunt, I.1983. An Obituary or a New Life for the Tendency of the Rate of Profit to Fall?Review of Radical Political Economics15(1): 131-148.
16.
Lipietz, A. 1982. Derriere la crise: la tendance a la baisse du taux de profit. L'apport de quelques travaux franqais recents. Revue &conomique 33(2):197-233.
17.
Mandel, E. 1980. Long Waves of Capitalist Development: The Marxist Interpretation. Cambridge and Paris: Cambridge University Press and Editions de la Maison des Sciences de l'Homme.
18.
Marx, K.1962. Capital, 3 Vols. London: Lawrence and Wishart.
19.
Okishio, N.1961. Technical Changes and the Rate of Profit. Kobe University Economic Review7: 85-99.
20.
Reati, A. 1980/1981. A propos de la baisse tendancielle du taux de profit: analyse desagregee de l'industrie italienne 1951-1971. Cahiers 6conomiques de Bruxelles 88 (Part I):507-545; 89 (Part II): 75-108.
21.
Roemer, J. E.1979. Continuing Controversy on the Falling Rate of Profit: Fixed Capital and Other Issues. Cambridge Journal of Economics3(4): 379-398.
22.
Rusconi, G. E. 1979. I1 movimento degli scioperi in Germania (1900-1974). In, ll movimento degli scioperi nel XX secolo, pp. 397-450. G.P. Cella (ed.). Bologna: I1 Mulino.
23.
Schmidt, J. 1979. Das Anlagevermogen in der Bundesrepublik Deutschland. Mitteilungen des RWI 4:257-275.
24.
Schmidt, J. 1980. Zur Entwicklung der Kapitalrentabilitat in den Unternehmensbereichen der Bundesrepublik Deutschland. Mitteilungen des RWI 4:207-223.
25.
Seidel, B. 1981. Internationaler Vergleich der Kapitalrentabilitat fir den gesamten Unternehmenssektor und einzelne Industriesektoren. Berlin: DIW.
26.
Shaikh, A.1978. Political Economy and Capitalism: Notes on Dobb's Theory of Crisis. Cambridge Journal of Economics2(2): 233-251.
27.
Shaikh, A.1980. Marxian Competition Versus Perfect Competition: Further Comments on the So-Called Choice of Technique. Cambridge Journal of Economics4(l): 75-83.
28.
Sherman, Howard
. 1979. A Marxist Theory of the Business Cycle. Review of Radical Political Economics11(1): 1-23.
29.
Steindl, J.1979. Stagnation Theory and Stagnation Policy. Cambridge Journal of Economics3(1): 1-14.
30.
Sweezy, P.1981. Marxian Value Theory and Crises. In, The Value Controversy, I. Steedman et al. pp. 20-35. London: Verso.
31.
Van Ewijk, C.1982. A Spectral Analysis of the Kondratieff-Cycle. Kyklos3: 468-499.
32.
Van Parijs, P.1980. The Falling-Rate-of-Profit-Theory of Crisis: A Rational Reconstruction by Way of Obituary. Review of Radical Political Economics12(1): 1-16.
33.
Van Parijs, P.1983. Why Marxist Economics Needs Microfoundations: Postscript to an Obituary. Review of Radical Political Economics15(2): 111-124.
34.
Weeks, J.1982. Equilibrium, Uneven Development and the Tendency of the Rate of Profit to Fall. Capital & Class16: 62-77.
35.
Weisskopf, T. E.1979. Marxian Crisis Theory and the Rate of Profit in the Postwar U.S. Economy. Cambridge Journal of Economics (4): 341-348.
