Marxist economics

Steve.Keen at Steve.Keen at
Fri Oct 6 02:31:58 MDT 1995

I've resisted the temptation to reply to any of Jim Miller's
posts on the transformation problem (Jim might not get this
reference, but I've tired of my role as Captain Ahab). However,
his comments on the tendency for the rate of profit to fall
have persuaded me to intervene.

My comment is a simple one, which is to point out Elias Khalil's
argument in The Journal of the History of Economic Thought, Vol. 16
No. 2, "The implications for socialism of Marx's theory of the
tendency of the rate of profit to fall". There Khalil argues that,
if one accepts the tendency, then there is nothing in Marx's
argument which makes this phenomenon specific to capitalism. It
should, therefore, afflict socialism as much as it afflicts

To quote Khalil on this:

"Stated tersely, the essay tries to put to rest Marx's thesis about
the law ... by showing that it is *not* unique to the capitalist
mode of production. In this manner, if any economist insists on the
validity of the lat with regard to capitalist production, he or she
should also accept ... its validity with respect to socialist

"The proposed contention is based on two arguments drawn from Marx's
writings. First, labor-time calculation remains valid in the socialist
economy. Second, technological innovations continue to take place--
at an even faster rate... Taking these two arguments into
consideration, Marx's theory implies that the socialist economy
would also be afflicted by the falling-rate-of-return law." (p. 293)

Khalil concludes that:

"Either Marx's theory is about the contradictions of production
in general and, hence, cannot serve as the scientific grounding
of revolutionary politics, or the theory is untenable as an
explanatory proposition of economic crises." (p. 307)

I suggest that anyone who would like to see the TRPF as the
former (a grounding for revolution) should see whether they
are able to fault Khalil's logic.

Steve "Ahab" Keen

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