Ricardo and Marx both had theories of a falling tendency of the rate Essay - 1

Ricardo and Marx both had theories of a falling tendency of the rate of profit in the development of ca nockalism. What were the different theoretical bases for t - Essay ensampleThe tendency of the rte of profit to fll rose neither from incresed competition (Smith) nor lower productivity in griculture (Ricrdo). It ws, rther, the expression low cpitlism of the incresed productivity of lbour.ccording to Mrx, lw of the tendency of the rte of profit to fll (LTRPF) is theory developed by Mrx in the third volume of Cpitl to explin the occurrence of economic crises within cpitlist economies. ccording to the LTRPF, s cpitlists invest in ever more cpitl-intensive production, the rte of profit flls, since profit cn only be generted from the surplus vlue extrcted from living lbor, which is declining proportion of the cpitlists outly. However, securing lrger shre of the mrket offsets the lower rte of profit for the individul cpitlist. Eventully the flling rte of profit wekens the incentive to ccumulte on the prt of the cpitlists until eventully the mss of profit begins to stgnte. t tht point n economic crisis begins s cpitlists decline to invest.The LTRPF explins long-term fluctutions in cpitlist economies. There my be long periods of expnsion before the LTRPF ffects the mss of profit, during which the effects of the LTRPF cn be offset by vrious countercting tendencies, such s lower wges nd incresed intensity of exploittion in the lbor process. Eventully, however, there will be period of stgntion nd crisis in which lrge proportion of existing cpitl is destroyed before reinvestment nd renewl cn strt over gin (see Shikh 1991).The importnce of the LTRPF for Mrxist politicl economy is tht it demonstrtes how the rte of profit flls, nd crisis sets in, singly of ny impetus on the prt of lbor. The LTRPF ws of prticulr significnce in this regrd in the 1970s nd 1980s, when it ws wide rgued, nd