48 SOCIAL SCIENTIST will resort to mechanization and other labour-saving devices. Both these developments serve to push wages down and restore the rate of profit. "The mechanisms of the process of capitalist production removes the very obstacles that it temporarily creates The price of labour falls again to a level corresponding with the needs of the self-expansion of capital.9^ Clearly Marx is here dealing wilh ^the short run5 and not with a fundamental law or tendency of capitalist production. The tenor of his discussion suggests that the process (of a temporary decline in the rate of profit) is self correcting, and father quickly at that. The decline in the profit rate associated with a spurt in wages brought about by a momentarily high rate of accumulation can spell the end of the upswing phase of a short term business cycle, but certainly not an economic crisis of capitalism. The tendency for the rate of profit to decline, on account of the growth in the organic composition of capital not sufficiently compensated by the growth of labour productivity is however, an altogether different matter. Such a tendency to decline expresses a fundamental contradiction inherent in the capitalist development of productive forces. HTW does this ^law9 of the tendency for the rate of profit to fall operate? Many have interpreted the law to mean a ^secular decline" of the rate of profit. That is to say, the rate of profit would show a gradual and continuous decline over historical time. On the basis of such an interpretation, attempts have been made to verify or to ^disprove' the law empirically, by computing rates of profit on capital at various points in time over a sufficiently long period. Apart from the validity or otherwise of such an interpretation of the law, the pitfalls involved in computing from business data something closely resembling the Marxian conception of the average rate of profit on social capital as a whole arc many. This fact in itself would suggest that one has to be extremely wary of treating the results of such excercises as ^proof or otherwise of the law. More importantly, however, the interpretation itself seems questionable. A careful reading of Marx's discussion of the law suggests rather that the tendency for the rate of profit to decline expresses itself in and is in turn stemmed and reversed through periodic economic crises. The picture that suggests itself may be roughly outlined as follows. When a process of long term capitalist expansion has been in progress for some time, productive forces are developing rapidly, through mechanisation, that is, increasing organic composition of capital. The investments in new and more ^capital intensive^ methods of production required for this process are made by capitalists for atleast three reasons: (i) Capitalist competition necessitates it; (ii) With gradual depletion of the initially large reserve army of labour, wages begin to rise, thus inducing capaltalists to mechanise, (iil) The conditions of realization of surplus Vcilue—that is of selling commodities produced at or around their prices of production—are favourable, and are expected by