Technical Change, Accumulation and the Rate of Profit

Abstract

The effect of technical change and accumulation on the profit rate depends on their effect on the real wage rate. Employing a standard one-sector "circulating-capital" model, it is assumed that the wage rate is at least non-decreasing in labor demand. Then, ceteris paribus, capital-using labor-saving technical change does not increase the real wage rate. Depending on parameters, there are then cases of viable capital-saving technical change, possibly labor-saving as well, in which the rate of profit falls, as well as other cases in which it rises. But, in the absence of sufficient accumulation, capital-using labor-saving technical change, and, further, technical change in which the organic composition of capital rises, induces a rise in the rate of profit.