Chapter 3: The Falling Rate of Profit
Is the Falling Rate of Profit the Key to Periodic Economic Crises?
Among Marxists today, the tendency of the rate of profit to fall is perhaps the most popular explanation for capitalism’s cyclical economic crises, with underconsumption a distant second. In its more naive forms, this theory leaves out the question of realizing surplus value altogether.
A Critique of Crisis Theory 
Some good observations and connections but you draw too many conclusions based on patchy information. No one can interpret the dynamics of capitalist production without recourse to turnover. Without turnover you cannot solve for circulating capital. Therefore you cannot see capital nor investment in its fullness. Nor can you assess the volatility of circulating capital and compare it to the volatility of consumer spending. Nor can you appreciate why most companies fold not because they have not invested in sufficient fixed capital but because e they have run out of circulating or working capital, the very definition of insolvency. Nor can you discover that the crisis of realisation is actually a crisis of turnover. Nor can you understand why and how a relative fall in the rate of profit converts into an absolute fall. I could go on. Were you to use turnover you would realise that most of the conclusions in your article are false positives. I am tired of appealing to my fellow Marxists to stop avoiding turnover now that we can extract it from the SNA. I sometimes feel like Moses in the desert waiting for a generation of Marxists no longer satisfied with using annual wages as a proxy for variable capital and the rate of return for the rate of profit. Please examine this issue in the numerous articles on my website theplanningmotive.com and follow what Chinese universities are doing.
What actual disagreements do you have? How do you expect any productive discussion to occur if your comment is nothing but vague assertions and self-promotion?
Read my analyses it’s so concrete it will really test your understanding of capitalism. Chinese universities are using the formulas so should you. theplanningmotive.com
Hello Sam! It’s a pleasure to read you, and congratulations on this ebook. I’ve been reading you for about 2 years. I’m an economics student at the UBA, Buenos Aires, Argentina. I wanted to ask you about the position of Professor Rolando Astarita, a well-known Marxist, at least in Latin America, who has Very visited blogs, I leave the link, in his latest posts, he defends a position that can explain the cyclical crises by “overproduction” at least for developed countries, I leave the links to his notes, I would like some comment on this position when I can.
This is about Okishio’s theorem.
Regards, Sam.
I think your writing is highly commendable in that some one like myself, a complete neophyte to economics, is able to understand most of it, yet from what I can tell reaches deep technical content. I can usually understand the first two-thirds of each post before feeling overwhelmed. May you please recommend background reading to bring someone up to speed with the level of discussion on this blog who has never read any economic theory before (other than this blog and a couple other Marxist ones casually)? Still Das Kapital?
To gain an understanding of Marxist economics, I’d recommend to start
with:
Once you get through those, you can tackle Capital.
After that, you might want to read the books that Marx himself studied including Principles of Political Economy and Taxation by David Ricardo and The Wealth of Nations by Adam Smith. There are also works by modern Marxists like Paul Sweezy and Anwar Shaikh, which have been assessed here.
Most importantly, though, is to observe the real world: Pay attention to the economic forces shaping your own life and the world around you.
Remember, there is no royal road to knowledge if you want to achieve a deep knowledge of the Marxist critique of bourgeois political economy or any other field of science. Even after decades of study, I’m still learning new things.
My sincere thanks for your well-informed study plan. I hope that I will realize the dedication to execute it. I can not be a completely sincere revolutionary until my political convictions are justified on a scientific basis.