THE MARXIAN PROFIT RATE: A SUGGESTED REFORMULATION

Authors : Reşat KAYALI

Pages : 170-180

Doi:10.14780/muiibd.582317

View : 22 | Download : 18

Publication Date : 2019-07-12

Article Type : Research Paper

Abstract :The paper attempts to reformulate Marx’s definition of the profit rate in a two-good framework so that  it can be compared with the definition of the profit rate in the Ricardo-Sraffa tradition. The implications  of this reformulation are investigated wıth regard to Marx’s theory of value and distribution and his  theory of capitalist development. Specifically, the labor theory of value is proven where the price ratio  in a two-good framework is shown to be equal to the ratio of unit labor requirements. Then, profits  are discussed in terms of allocative efficiency and in the context of their appropriation by the capitalist  class. Subsequently, there is a discussion of the compatibility of the law of the falling rate of profit and  the law of increasing misery. The conclusion of the paper is that the suggested reformulation of the  profit rate increases the number of necessary conditions that must be satisfied for some key results to  hold in Marx’s theory of value and distribution and his theory of capitalist development.
Keywords : Marxian Economics, History of Economic Thought, Political Economy