Within the 'crisis theories’, there is a crucial problem that, although it comes from bourgeois economic

science, Marx has definitively given it the character that later Marxist thinkers will have. The problem
in question is the tendency of the rate of profit to fall (TRPF). Since then, various perspectives have
arisen and, within a Marxist framework, have given different theoretical causation and empirical
explanation to the issue. In fact, not only through the XIX and in the XX century but especially since
the Marxist debates of the 70s and the renaissance post-global financial crisis, this controversy has
never stopped1.

In Grundrisse and in Capital, Marx argued that technological innovation (constant capital) enabled
more efficient means of production. On one side, productivity would increase as a result, i.e. a more
use values would be produced, per unit of capital invested. On the other, technological innovations
replaced wage labour (variable capital) with machinery, and the organic composition of capital
increased (the disproportion between the value of machines and the value of wage labour). Having
the theory of value of starting point, this productivity would embody a gradually decreasing value
and surplus value, relative to the value of production capital invested. In response, the average rate of
industrial profit would therefore tend to decline in the longer term. It declined in the long run not
because productivity reduced but instead because it increased.

However, this is not a deterministic law or a mechanical procedure. Indeed, Marx first, and Mandel
later, underlined a massive amount of countertendencies to this 'capitalist development law' that have
increased since the development of late capitalism.

The ‘classical’ problems of the TRPF are several. However, I would like to focus on two of them. First,
Is the TRPF useful to understand, explain and surpass crises and capitalism at the neoliberal stage?
Second, what kind of empirical data would best describe this tendency and would justify the
hypothesis?

In answering the first question, I would analyze and compare different points of view within the history
of Marxism. Bernstein in his Preconditions of Socialism was the first to go against the theory according
to which the TRPF led to the 'breakdown', that is, that capitalism was doomed. However, it overlooked
what Marx already described in the Economic Manuscripts, where the factors that contrasted this
tendency are mentioned. Despite this, he inaugurates the so-called revisionism within Marxism.
Subsequently, to strike revisionism, Grossmann in his The Law of Accumulation and Breakdown of the
Capitalist System had merit and guilt. On the one hand, he made the theory more sophisticated by
talking about how an increase in the organic composition of capital would lead to a crisis of over-
accumulation2. On the other, it made deterministic not only the capitalist mode of production but also
the historical-dialectical materialism because it attempted to establish the exact date of the slump3.
This anti-deterministic position, closer to Marx own point of view, was later expressed by Lenin in his
Speech to the Second Congress of the International Communist. In short, he said that capitalism was able
to find the solution to the crises or, said differently, it was able to create, intensify or develop factors
that would counteract the TRPF. Further explanation about the problem of crises and of the TRPF have
been provided by Anwar Shaikh (1978) where he focused in the various perspectives abaout the
anarchy of capitalist production, sectoral disproportions, underconsumption and realization

1 Nevertheless, I tend to agree with Callinicos and Choonera’s How not to write about the rate of profit a response to David Harvey (2016) but
not about the TRPF in Harvey’s opus but in general about the position this ‘law’ has had in Marxism.
2 A similar point of view can be found in the late 60s with Mattick’s Marx and Keynes – The limits of the mixed economy.
3
Later he changed slightly the point of view in order to fight determinism, and he started to take into account also ‘subjective factors’.

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problems, labor-shortage and population pressures, credit insufficiency, excess capital and wages
squeezing profits. Furthermore, Cullenberg (1994) published a book on the TRPF which reviewed the
whole controversy to date.

Unlike Heinrich I do not believe that ‘If for Marx the TRPF was really such an important point for
explaining crisis as many Marxists believe, then this silence is rather strange. However, if Marx
changed his mind about the LTPRF then this silence is not at all strange’ (2013)4.

Monocasual theory of crisis. The crisis is due the TRPF.

Turan Subasat The great financial meltdown: systemic, conjunctural or policy created?. Cheltenham:
Edward Elgar, 2016.

See further Michael Roberts' blog at http://thenextrecession.wordpress.com/

Multi-causal theory of crisis. The crisis is due the many factors, including TRPF. With or without a
hierarchy of causes?
Mandel.

Cycle vs trend.

One dispute which has never been finally resolved is whether the TRPF should be interpreted as a
cyclical tendency, or as a secular long run trend. Geert Reuten from the University of Amsterdam has
argued that there is evidence that Marx originally believed in a long run secular tendency, but that,
later on, he changed his position to a cyclical tendency. In contrast to this view, Anwar Shaikh from
the New School in New York City has argued that Marx meant the TRPF as a secular long run trend. A
cyclical tendency and a long-run tendency could also be combined in one theory, where a series of
cycles shows a gradual fall in the average rate of profit, despite an upturn in each cycle.

Alfred Kleinknecht, Ernest Mandel and Immanuel Maurice Wallerstein, New findings in long-wave
research. New York, N.Y.: St. Martin's Press, 1992.

Steve Cullenberg, The Falling rate of Profit. London: Pluto, 1994.

Debt-driven economy

Ernest Mandel, "World Monetary Crisis". International(London), Volume 7, No. 6,

November/December 1982, pp. 3–6; Makoto Itoh & Costas Lapavitsas, Political economy of Money and
Finance. Palgrave Macmillan, 1998; Éric Toussaint, Your Money or your Life. The Tyranny of the Global
Finance. Chicago: Haymarket, 2005; Willi Semmler, Asset prices, Booms and Recessions, 2nd edition.
Berlin: Springer, 2006 (based on New School and Bielefeld lectures)

Continua da ‘first empirical tests’.

4
The debate around the TRPF is very prolific in Monthly Review. Carchedi and Roberts’ A Critique of Heinrich’s, ‘Crisis Theory, the Law of the
Tendency of the Profit Rate to Fall, and Marx’s Studies in the 1870s (2013 ) begun the critique that led to Heinrich’s Heinrich Answers Critics in
the same year, responding also to Mage (2013) and Moseley (2013).

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