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

Ricardo and Marx twain had theories of a falling tendency of the rate of lolly in the development of capitalism. What were the different theoretical bases for t - Essay ExampleThe tendency of the rte of profit to fll rose neither from incresed contention (Smith) nor lower productivity in griculture (Ricrdo). It ws, rther, the expression under cpitlism of the incresed productivity of lbour.ccording to Mrx, lw of the tendency of the rte of profit to fll (LTRPF) is possibility 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 aim 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 property of the cpitlists outly. However, securing lrger shre of the mrket counterbalances 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 solicittion 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, independently 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 widely rgued, nd