History of Political Economy 36.1 (2004) 163-186
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"Zirkel vicieux" or Trend Fall?
The Course of the Profit Rate in Marx's Capital III
Karl Marx's theory of "the tendency of the rate of profit to fall" is one of the most controversial parts of his scientific oeuvre. The theory was published in 1894 as part 3 of Volume III of Das Kapital. There are two conflicting interpretations of this theory. The first says that the profit rate will vary (cyclically) around a falling trend; the second, that the profit rate will vary cyclically but not necessarily around a falling trend. Both interpretations may be combined with methodological qualifications as set out in the present article.
The two interpretations are relevant since at issue is Marx's general outlook on the dynamics of the capitalist system. It makes quite a difference whether the capitalist system is regarded as self-dissolving—which is the implication of the trend fall in the rate of profit—or as, in principle, a reproductive system, which the cyclical view implies.1 [End Page 163]
For several reasons the first interpretation was dominant until the last quarters of the twentieth century.2 It is not surprising, therefore, that this is the view presented in many textbooks on the history of economic thought. The advantage of this reading is that it "merely" requires emphasizing certain parts of the text and deemphasizing others.
Although it has its advantages, the first interpretation leaves us with a number of puzzles; but even greater difficulties arise with the second interpretation, since some passages of the text (that is, of any given edition of Capital III, excluding the manuscript) are blatantly inconsistent with it. Therefore, even if one has good grounds for the second interpretation (see section 1 below), some textual counterevidence remains.
From this perspective it is of interest to compare especially these textual inconsistencies in published versions of Capital III with Marx's manuscript text. Capital III appeared eleven years after Marx's death. Friedrich Engels edited the book from Marx's manuscripts dating from 1864–65, that is, from some time before the 1867 publication of Volume I. For the textual comparison, which is set out in section 2, we can make use of the German transcription of Marx's manuscript that was published in 1992.
The historian of thought usually has a position vis-à-vis the subject matter, and the present author is no exception. Whereas I consider the current Marxian paradigm to be fruitful for the analysis of capitalist economies, there is not much point in seeking consistency between Marx and the current Marxian paradigm.3 Many of Marx's writings are ambiguous and often also inconsistent; they are also methodologically complex, contributing to an at least apparent ambiguity.4 First, there is the normal inconsistency between the writings, and at times ambiguity within the writings, of someone who develops thoughts throughout his or her life. Second, Marx—as a confirmed critic of classical political economy—adopted the method of "internal critique" to develop his own thought (a method largely taken over from Hegel).5 This also applies to [End Page 164] the case at hand: the "law of the falling rate of profit" was, of course, a major theorem of classical political economy. All interpreters agree that Marx disputes the classical reasoning behind the law (i.e., Ricardo's); but did he accept the law itself?
A note: In what follows, unless otherwise indicated, whenever I refer to the "text" of Capital III, I mean the published versions of Capital III, excluding the published version of the manuscript. When I refer to the "manuscript," I refer to Marx's manuscript.
1. Two Interpretations: Trend Fall versus Cycle
In order to appreciate the comparison of the text of Capital III with Marx's manuscript in relation to the two rival readings (see section 2), I will, as a reminder and without much textual ado, briefly set out in this section a stylized presentation...