Technical change, income distribution, and profitability in multisector linear economies

Arbeitspapier

This paper analyzes the effect of technical change on income distribution and profitability by comparing the long-run outcomes defined by a uniform profit rate in a multisector linear economy. We study three scenarios with (i) fixed real wage; (ii) fixed profit rate; or (iii) fixed wage-profit ratio, and show that any viable capital- using and labor-saving technical change itself (in the absence of power change) would bring about a fall in the rate of profit. Profit rate would not rise unless the technical change is so power-biased against the working-class that the wage-profit ratio can not be maintained. Our result conclusively supports the argument of the falling rate of profit due to a rising organic composition of capital as an underlying economic force.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2019-15

Classification and Topics

• Classification: Wirtschaft ; Current Heterodox Approaches: Socialist; Marxian; Sraffian ; Factor Income Distribution ; General Equilibrium and Disequilibrium: Input-Output Tables and Analysis
• Subject: Technical Change ; Falling Rate of Profit ; Okishio Theorem

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Chen, Weikai
• Event: Veröffentlichung
• (who): University of Massachusetts, Department of Economics
• (where): Amherst, MA
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/227881
• Last update: 10.03.2025, 11:43 AM CET