Crisis theory and the fall in the rate of profit

Abstract

David Harvey’s article argues against the importance given to the law of the tendency of the rate of profit to fall (TRPF), suggesting that Marx derived the “law” under “draconian” assumptions and that Engels was far more enthusiastic about it than Marx, who never went back to the theory later in his life despite its evident incompleteness. Therefore, he argues, we should not take his theoretical conclusions too far. In his view, Marx perceived crises as momentary and violent eruptions that resolve the existing contradictions which can be considered as opportunities of capitalist reconstruction rather than a sign of the imminent end of capitalism. Harvey argues that the rate of profit can be stabilized by a variety of factors such as a devaluation of the existing constant capital due to technical change, monopolization, or accelerating turnover times in both production and circulation. He argues, moreover, that a productivity increase that is not associated with job losses would not reduce surplus value production. Moreover, a fall in profit rates could result from a number of reasons rather than an increase in the organic composition of capital.

Translator: Cássio Arruda Boechat (cassio.boechat@ufes.br)