64-5421 MAGE, Shane Henry, 1933— THE "LAW OF THE FALLING TENDENCY OF THE RATE OF PROFIT": ITS PLACE IN THE MARXIAN THEORETICAL SYSTEM AND R VANCE TO THE U.S, ECONOMY, Columbia University, Ph.D., 1963 Economics, theory University Microfilms, Inc., Ann Arbor, MichiganTHE "LAW OF THE FALLING TENDENCY OF THE RATE OF PROFIT": IS PIACE IN THE MARXIAN THEORETICAL SYSTEM AND RELEVANCE 10 THE U.S. ECONOMY by Shane ‘Hage Submitted in partial fulfiliment of the requirements for the degree of Doctor of Philosophy in the Faculty of Political Science Colmibia University 1963ABSTRACT ‘TRE "LAW OF THE FALLING TENDENCY OF THE RATE OF PROFIT": ITS PLACE IN THE MARXIAN THEORETICAL SYSTEK AND RELEVANCE 10 THE U.S. ECONOMY by Shane Mage The concept of a falling rate of profit occupies a crucial position in Marx's theory of economie develop ment: it is, he declared, the economic mechanism whereby capitelism ultimately blocks its own growth and thus proves that it must give way to a higher social order. This "Lew" has in the past been criticized on two main grounds: It was alleged that Marx's theoretical derivation of a falling tendency of the rate of profit from a rising tendency of the "organic compésition of capital" (the capital-labor ratio) fails to show why the rate of profit cannot permanently be maintained through a rising tendency of the "rate of exploitation" (the relative share of the national income going to capital) and why the organic composition of capital should itself tend to increases It was argued, moreover, that the predictions of a falling rate of profit, and especially of a rising organic composition of capital, as formulated by Marx, have not been borne out by empirical data from the U.S. economy. The present study tests Yarxts "law" both on theoretical and empirical groundse