Falling Tendency of the Rate of Profit in Indian Manufacturing Industries
MARX'S LAW of the falling tendency of the rate of profit, which states that the rate of profit tends to fall in the course of capitalist development, was deduced from the long-term dynamic trend of capitalism for capital accumulation accompanied by^continuous technological progress.
The continued existence of capitalist production depends mainly on the technological innovations leading to the introduction of new labour-saving techniques. This means a continuous growth in the expenditures of capitalists on machinery at the expense of labour. In other words, the organic composition of capital displays a steadily rising trend. From this trend Marx deduced that the rate of profit tends to fall in the course of capitalist development.
In the Marxian system the value of any commoduy is expressed by the formula:
c 4- v 4- s == total value ... (1) where c represents the value of the materials and machinery used up, v represents the variable capital which reproduces the equivalent of its own value and also produces an excess, a surplus value; s represents the surplus value produced.
From (1) we can have three basic ratios:
i) the rate of profit p == ——— ... (2)
c "T v