ABSTRACT
Adam Smith, David Ricardo and other classical political economists held that the rate of profit—profit as a percentage of the amount of money invested in production—tends to fall in the long run. Karl Marx accepted these economists' claim that the rate of profit tends to fall over time, but not the theories that they had put forward to account for the fall. Smith, Ricardo and other classical political economists believed that the falling tendency of the rate of profit would eventually result in a stationary state, or no-growth economy. In Marx's view, the fall in the rate of profit is only an indirect cause of financial crises and downturns. Marx thought that capitalism was once justified, from a long-term historical perspective, because it contributed to human development by greatly increasing the scientific and productive powers. The main criticism of the alleged theorem has come from proponents of the temporal single-system interpretation (TSSI) of Marx's value theory.
