Social Scientist. v 5, no. 60 (July 1977) p. 58.

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Falling Tendency of Profit Rate

SUHAS CHATTOPADHYAY in his article ^Falling Tendency of the Rate of Profit in Indian Manufacturing Industries35 (Social Scientist 54-55) claims that his findings "seem to invalidate some of the major theoretical arguments which are advanced in tortuous attempts to dismiss the law as a mere chimaera.'91

I cannot agree with his conclusion. Apart from the shortcomings of the data mentioned by Chattopadhyay which make his conclusions quite doubtful, his own serious methodological imperfections make it impossible to arrive at any meaningful statement regarding the Marxian ^law.'9 He is correct in saying that the Marxian quantity "profit35 is the same as the quantity ^surplus value". Strangely enough, bethinks that the 4ata utilized by him ^roughly correspond with the Marxist categories necessary for the calculation of the organic composition of capital rate of surplus value and rate of profit."2 Marx is formulating the law at an abstract level. For confronting his model with concrete reality a number of modifications have to be made:

1 Marx in his model assumes that the period of turnover of total constant capital is one. But it is obviously not so in the real world. For calculating the rate of profit Chattopadhyay considers only the circulating part of constant capital, adding an allowance for depreciation. However, since depreciation constitutes only a fraction of total fixed capital^ it does not correspond to Marx's conception. Further, the rate of profit is also affected by a change in the period of turnover of fixed capital, both of which are not taken into account by Chattopadhyay.

2 It is generally agreed that there takes place a concealed resource transfer from countries like India to the developed countries, partly through underpricing of exports and overpricing of imports. In other words, probably some of the prices received by Indian films are less than their ^value" in Marxian terms and the prices paid for some elements of constant and variable capital are greater than their ^value".

3 In the capitalist economy we observe various faux frais3, that

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