Marx’s Theory of the Falling Rate of Profit
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The most important conclusion of Marx’s theory of capitalism is that the rate of profit would tend to decline over time as a result of technological change. Marx called his law of the tendency of the rate of profit to fall “in every respect the most important law of modern political economy” (G. 748). In a letter to Engels, Marx claimed that this law was one of his most important achievements over classical economics (SC. 194).1
KeywordsTechnological Change Real Wage Aggregate Productivity Fixed Capital Annual Flow
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