The Tendency of the Rate of Profit to Fall – An Assessment

The falling rate of profit is one of the most popular and controversial crisis theories in the political economy. The theory implies that the rate of profit tends to decline due to the increase in the organic composition of capital which will both produce regular crises and bring the end of capitalism in the long run. However, debates continue about the internal consistency of the theory and whether empirical studies support the theory. The purpose of our article is to examine the extent to which the theory can shed light on capitalist crises by critically reviewing the literature.