Accumulation and the rate of profit: regulating the macroeconomy

Abstract. In this paper we argue that as models of profitability and growth within the Marxist tradition have become more formal, they have relied increasingly upon assumptions of equilibrium. An alternative single-region, single-commodity model is proposed in which output, demand, and capital accumulation are independently determined and therefore potentially in disequilibrium. In the short run this means that profitability can be rising or falling, depending upon the rates of growth of demand, supply, and net exports, the rate of capital accumulation, the rate of change of unit costs of production, and the initial starting position of the economy. In the longer run, though, output is limited by the capacity of capital to produce and by the size of the labour force, and demand cannot exceed supply. These constraints place an upper bound on the rate of profit and its growth, a bound that depends on the rate of change in the unit costs of production and on the rate of growth of the labour force. In the longest term, net exports cannot continue to grow, and certain regulatory conditions are deduced: if those conditions are met as equalities then the rate of profit is constant; if they are met as inequalities, the rate of profit falls. Can capitalist economies enjoy continued uninterrupted growth? The history of capitalist accumulation suggests that growth has continued now for a couple of centuries bu