Technology, Distribution and the Rate of Profit in the US Economy: Understanding the Current Crisis


Deepankar Basu* and Ramaa Vasudevan**

August 11, 2011
Abstract: This paper offers a synoptic account of the state of the debate within Marxist scholars regarding the current structural crisis of capitalism, identifies two broad streams within the literature dealing, in turn, with aggregate demand and profitability problems, and proceeds to concentrate on an analysis of issues surrounding the profitability problem in two steps. First, evidence on profitability trends for the Nonfarm Nonfinancial Corporate Business, the Nonfinancial Corporate Business and the Corporate Business sectors in post-War U.S. are summarized. A broad range of profit rate measures are covered and data from both the U.S. Bureau of Economic Analysis (NIPA and Fixed Asset Tables) and the Federal Reserve (Flow of Funds Account) are used. Second, the underlying drivers of profitability, in terms of technology and distribution, are investigated. The profitability analysis is used to offer some hypotheses about the current structural crisis.
JEL Codes: B51, E11.

Keywords: profitability, technological change, income distribution, structural crisis.

Department of Economics, University of Massachusetts, Amherst; email: dbasu@econs.umass.edu
** Department of Economics, Colorado State University; email: Ramaa.Vasudevan@colostate.edu. Both of us would like to thank Duncan Foley and Thomas R. Michl for very helpful comments on an earlier draft of the paper. The usual disclaimers apply.

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