A CRITICAL DECONSTRUCTION OF THE OKISHIO THEOREM

As part of the literature denying Marx’s Law of Tendency of Rate of Profit to Fall, the Okishio theorem exerts extensive influence. This theorem uses rigorous mathematical methods in an attempt to prove that the introduction of advanced technology in the basic goods sector of capitalism leads inevit...

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Bibliographic Details
Published inWorld review of political economy Vol. 13; no. 2; pp. 154 - 191
Main Authors Zhang, Xian, Xue, Yufeng
Format Journal Article
LanguageEnglish
Published London Pluto Journals 01.07.2022
Subjects
Capitalism
Deconstruction
Economic theory
Game theory
Marxism
Political economy
Prices
Production
Production costs
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Summary:As part of the literature denying Marx’s Law of Tendency of Rate of Profit to Fall, the Okishio theorem exerts extensive influence. This theorem uses rigorous mathematical methods in an attempt to prove that the introduction of advanced technology in the basic goods sector of capitalism leads inevitably to an increase in the general rate of profit. In the literature criticizing the Okishio theorem, there are two main flaws identified. One is that the literature fails to investigate the validity of the production price, which forms the basis of the theorem. The other is that it does not examine the authenticity of the economic theory underlying the theorem. The analysis set forward here shows that the Okishio theorem’s “production price” amounts to a complete departure from Marx’s definition and is simply a product of the commodity circulation markup. The theorem follows the vulgar components of Smith’s theory of value and Ricardo’s theory of transformation. Okishio does not understand that the decline of the general rate of profit is precisely the compound result of individual capital pursuing excess profit, which represents the “prisoner’s dilemma” of capitalists.
ISSN:2042-891X
2042-8928
DOI:10.13169/worlrevipoliecon.13.2.0154