Tendency Of The Rate Of Profit To Fall

(Classical Economic)

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Classical Economic
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What is Tendency of the rate of profit to fall?

The tendency of the rate of profit to fall (TRPF) is a hypothesis in economics and political economy, most famously expounded by Karl Marx in chapter 13 of Capital, Volume III. Economists as diverse as Adam Smith, John Stuart Mill, David Ricardo and Stanley Jevons referred explicitly to the TRPF as an empirical phenomenon that demanded further theoretical explanation, yet they each differed as to the reasons why the TRPF should necessarily occur. In his 1857 Grundrisse manuscript, Marx called the TRPF "the most important law of political economy" and sought to give a causal explanation for it in terms of his theory of capital accumulation. In Capital, Volume III, Marx described the TRPF as "the mystery around which the whole of political economy since Adam Smith revolves" and in a letter he called his own TRPF theory "one of the greatest triumphs" over all previous economics. The tendency is already foreshadowed in chapter 25 of Capital, Volume I (on the "general law of capital accumulation"), but in Part 3 of the draft manuscript of Marx's Capital, Volume III, edited posthumously for publication by Friedrich Engels, an extensive analysis is provided. Geoffrey Hodgson stated that the theory of the TRPF "has been regarded, by most Marxists, as the backbone of revolutionary Marxism. According to this view, its refutation or removal would lead to reformism in theory and practice". Stephen Cullenberg stated that the TRPF "remains one of the most important and highly debated issues of all of economics" because it raises "the fundamental question of whether, as capitalism grows, this very process of growth will undermine its conditions of existence and thereby engender periodic or secular crises". Marx regarded the TRPF as proof that capitalist production could not be an everlasting form of production since in the end the profit principle itself would suffer a breakdown. However, because Marx never published any finished manuscript on the TRPF himself, because the tendency is hard to prove or disprove theoretically and because it is hard to test and measure the rate of profit, Marx's TRPF theory has been a topic of global controversy for more than a century.

Technology Types

classical economicmarxian economic

Synonyms

LTRPFTRPF

Translations

Baisse tendancielle du taux de profit (fr)Caduta tendenziale del saggio di profitto (it)Gesetz des tendenziellen Falls der Profitrate (de)Profitkvotens fallande tendens (sv)Tendenca falo de la profitkvoto (eo)Wet van de dalende winstvoet (nl)Тенденция нормы прибыли к понижению (ru)이윤율의 경향적 저하 법칙 (ko)利潤率の傾向的低下の法則 (ja)

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