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Three Models of the Falling Rate of Profit

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  • Thomas R. Michl

    (Department of Economics, Colgate University, Hamilton, NY 13346)

Abstract

Three models are presented which hold in common the assumption of imperfect competition but differ in their treatment of technical change. When technical change is purely endogenous (Model I) or exogenous (Model II), the rate of profit declines to some steady-state value, either as capital accumulates or as time passes. Dynamic wage-profit curves describe the paths over time of the product wage and profit rate. Under a combined form of technical change (Model III), the slope of the dynamic wage-profit curve is indeterminate but it converges on some steady state. These steady states are the terminus of a historical process rather than the equilibria of the models. The models invite comparisons between neoclassical and Marxian theory.

Suggested Citation

  • Thomas R. Michl, 1994. "Three Models of the Falling Rate of Profit," Review of Radical Political Economics, Union for Radical Political Economics, vol. 26(4), pages 55-75, December.
    • Handle: RePEc:sae:reorpe:v:26:y:1994:i:4:p:55-75
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    Cited by:

    1. Howard Petith, 2006. "Land, Technical Progress and the Falling Rate of Profit," UFAE and IAE Working Papers 667.06, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    2. Petith, Howard, 2008. "Land, technical progress and the falling rate of profit," Journal of Economic Behavior & Organization, Elsevier, vol. 66(3-4), pages 687-702, June.
    3. Vaona, Andrea, 2011. "Profit rate dynamics, income distribution, structural and technical change in Denmark, Finland and Italy," Structural Change and Economic Dynamics, Elsevier, vol. 22(3), pages 247-268, September.

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