SAMUELSON'S MARX-KRITIK rt^ur-e 1 Thjg v^^9g ^?rg>^ ( i'>e« view which matters—such a change would not be a technical improvement at all.18 Relevance to Underdeveloped Economies It could be objected that capitalists are neither completely rational nor entirely efficient, and generally operate within (rather than on) the frontier. But in order for technical change to result in a continuous fall in r (with w constant), they would have to become increasingly irrational and inefficient. So long as profits remain the goal of capital accumulation, and this goal is pursued as eagerly as before, Samuelson is quite right, and Marx's theory of technical progress must be judged to be internally inconsistent. This does not entail that either w or r must increase in all circumstances. Marx's analysis is conducted on the assumption of a closed economy. In an open economy a deterioration of the terms of trade may offset the effects of technical progress and induce a simultaneous decline in both r and w.14 Most Marxists had in any case already accepted that something was wrong with Marx's argument, since in advanced capitalist countries real wages have risen very substantially over the last century. The practical relevance of Samuelson's criticism is probably greatest in underdeveloped countries, where the industrial reserve army may well be strong enough to maintain a subsistence wage level. Here we would expect technical progress to result in an increasing rate of profit. This seems to have