The chronic disease that produced such severe symptoms as world war and the Great Depression had already been analyzed by Marx. He called it the tendency of the rate of profit to fall. Bourgeois economists had previously observed this law, but Marx discovered the reasons for it. Its underlying cause is the growing concentration of capital, the need to step up productivity, that compels capital to produce with an increasing preponderance of “dead labor” (machinery, buildings, raw material) over living labor. Since surplus-value is extracted only out of the labor of current workers, (machinery in production only transfers to new commodities value that has been previously produced), the rate of profit as a proportion of capital invested necessarily declines.
Recent bourgeois economists as well as many professed Marxists have disputed this law of Marx’s. History, on the other hand, has verified it. Significant evidence is provided by statistics on capital accumulation: since new investment must come out of profits, a tendency for the profit rate to fall will naturally bring about a falling rate of growth. And while exact, reliable information on capitalist profits is impossible to find (the capitalists conceal it from the workers, from the government tax agents and from each other through innumerable maneuvers, “legal” and illegal), scholars have been able to come up with aggregate figures on accumulation for given countries. Consider the figures in the table taken from the book Capital in the American Economy, by Simon Kuznets, pages 64-65. He observes that the percentage rate of growth in capital stock for the U.S., per decade, was 60.8 in the 1869-89 period, 59.4 in 1889-1909, 43.3 in 1909-29, and 29.6 in 1929-55.