Marx at 200 – Inquiries into the Measurement of Profitability and its Determinants: The US Economy, 1950-2016

Abstract

Since the 1950s, various Marxist political economists have confirmed the empirical actuality of the ‘law of the tendency of the rate of profit to fall’. While the present thesis contributes to the burgeoning body of empirical literature that has substantiated Marx’s law, it differs from many of them in the underlying theoretic-methodological specifications guiding how the data provided in the national accounts should be translated for purposes of empirical research. Informed by a theoretical, methodological and empirical survey of the relevant literature, the thesis engages in a value-theoretical re-specification of Marx’s fundamental value-ratios for purposes of ‘testing’ Marx’s most crucial historical forecasts in relation to the concrete post-war evolution of the global epicentre of “advanced” capitalism: the US economy. It suggests some innovative methods of measuring ‘systemically necessary unproductive labour’, the ‘composition of output’ and economic growth alongside Marx’s fundamental value-ratios: namely, the rate of surplus value, the organic composition of capital and the average rate of profit. It also proposes a unique normalizing procedure for distinguishing between components of financial profit resting on surplus-value production from ‘fictitious’ components deriving from relations of credit/debt. This ‘normalization procedure’ permits a more realistic assessment of the amount of actual surplus-value transferred to finance, and therewith a more accurate calculation of the average rate of profit for the social capital as a whole in the “era of fictitious capital.” In sum, the empirical results disclose a long-term tendency for a rising composition of capital to exert a downward pressure on the average rate of profit – a tendency that has been offset in the neoliberal era to some extent by a rising rate of surplus-value (exploitation) and by a proliferation of fictitious capital imputed in the national accounts. Accordingly, this study confirms the empirical actuality of Marx’s most crucial historical forecasts – most notably, his law of the tendency of the rate of profit to fall – while also revealing the systemic roots of the deepening malaise of the US economy and of world capitalism as a whole.