ABSTRACT
Okishio summarised the classical Marxian argument in the following way: competition among capitalists forces them to introduce new techniques which raise the productivity of labour; production techniques which raise the productivity of labour usually increase the organic composition of capital; it follows that, if the rate of surplus-value remains constant, the rate of profit decreases as the organic composition of capital rises. Thus there is a tendency for the rate of profit to fall as a consequence of technical change. Okishio observes that, in the classical Marxian argument, it is suggested that this process is partially offset by the recognition that production techniques which raise the productivity of labour in wage-good industries increase the rate of surplus-value. However: ‘in spite of this offsetting effect the rate of profit has the tendency to fall owing to continuous introduction of new techniques which increase the organic composition of capital’ (Okishio 1961, p.85). This is the position which Okishio sought to challenge, claiming that the falling rate of profit hypothesis is not a ‘corner-stone’ upon which a Marxian system can be built. Instead, movement in the rate of profit is determined by the struggle between conflicting classes (p.96). Thus it is important to separate changes in the rate of profit stemming from class conflict from those which arise from the process of technical change.
