FALLING PROFIT RATES AND RISING SURPLUS: ALTERNATIVE MARXIAN THEORIES ABOUT THE SECULAR DECLINE OF CAPITALISM AS THEY APPLY TO THE UNITED STATES SINCE WORLD WAR II (CRISIS)
Three theories about the secular decline of capitalism, each claiming roots in Marxian thought, have been evaluated as explanations of the problems facing the United States economy since World War II: (1) A long run tendency for return on capital to fall due to a tendency for the organic composition of capital to rise, as explained by Marx. (2) A falling rate of return caused by a rising share of output being extracted as compensation by labor, as advanced by Andrew Glyn and Bob Sutcliffe. (3) The economic surplus comprising a growing share of annual output, producing realization problems that result in stagnation, wasted resources, and economic instability, as posited by Paul Baran and Paul Sweezy. The theories were tested using U.S. data, 1946-1981. The Glyn and Sutcliffe thesis was rejected. No declining trend in rates of return--capital income relative to fixed capital--could be clearly established, but even if they could, rising employee compensation was rejected as a cause. The data confirm, however, that the surplus has risen continuously as a share of output, although the forms of its disposition have deviated from Baran and Sweezy's analysis. The organic composition, measured as fixed capital relative to the social subsistence of productive labor, has risen continuously since the mid 1960s, while Marxian rates of return--capital income relative to fixed and circulating capital--may show a secular decline for the same period. The latter result is provisional due to the crudity of the data. Two problems for U.S. capital were therefore identified. First, the growth of unproductive consumption relative to return on capital as a surplus absorption mode can lead to stagnation unless unproductive consumption can be continuously increased. Second, rising organic composition signals difficulty in maintaining rates of return as fixed capital replaces labor, narrowing the grounds for labor's exploitation. Further study of surplus value components, the productive labor that generated it, and the fixed capital used by that labor is needed to better understand the factors affecting the relationship between surplus value produced and the part of it realized as return on capital.