The document discusses actions taken to neutralize the downward trend in profit rates in the world capitalist system. It outlines several factors that Marx identified as helping to offset falling profit rates, including more intense exploitation of labor through longer work hours and lower wages. It also discusses how expanding global markets, increasing labor productivity through technology, and periods of crisis have allowed profit rates to be maintained or increased for periods of time, though the downward trend ultimately reasserts itself over the long run.

1. 1
ACTIONS ADOPTED TO NEUTRALIZE DOWNWARD TREND IN THE
PROFIT RATE OF THE WORLD CAPITALIST SYSTEM
Fernando Alcoforado *
Figure 1 presented in the article A inexorável tendência de queda da taxa de lucro no
sistema capitalista mundial (The inexorable trend of fall of profit rate in the world
capitalist system), that we publish on the website <http://fernando.alcoforado.zip.net>,
shows that the profit rate in the United States, Germany and Japan had a downward
trend from 1950 to 2000. If we assume that this trend is not reversed, for example, to
the United States, the largest world economy, the profit rate in this country that was
24% in 1950 and 13% in 2000 will achieve a profit rate equal to zero in 2059. The same
will also happen to Japan, Germany and the entire world economy. Figure 2 also
presented in the article cited above shows that the rate of profit to the historical cost of
the fixed capital of US corporations was 32% in 1947 and 13% in 2007. Assuming that
this trend will be maintained in the coming years, the profit rate of US corporations will
reach zero in 2048. It follows, therefore, that the world capitalist system would be
unfeasible between 2048 and 2059. In other words, the world capitalist system would
have negative profit rates in the mid-twenty-first century.
Given the inexorable trend of the profit rate to decline in the world capitalist system,
they have been implemented neutralizing actions to its reversal. Karl Marx explained in
The Capital that neutralizing actions to get the fall of the profit rate would come into
operation. It is for this reason that Marx describes the fall of the profit rate as a trend
decline. The first neutralizing trend of falling profit rates explained by Marx is a more
intense exploitation of labor, an increase in relative Surplus Value. This has happened
on a massive scale since the 1990s with the expansion of neoliberalism in the world. In
Britain, the manufacturing industry achieves the same level of production with one
million workers less. This reflects the pressure on the working class, not only in Britain
but throughout the world. The share of labor in national income has declined in all
major capitalist economies of the OECD - Organization for Economic Cooperation and
Development since 1980. The gap has been particularly large in the United States,
where productivity grew 83% between 1973 and 2007, while average real wages
increased by only 5%.
The share of national income going to wages has fallen to its lowest levels since these
records began to be made after the Second World War. Moreover, the working time has
been prolonged. The workweek was increased everywhere in the world in recent years.
The working class is being pressured by the introduction of part-time work, the
production "just-in-time" that allows losing the minimum with the backlog of inventory
and raw materials, by short contracts, and other regressive measures to extract even
more unpaid labor of the working class. If there is an increase in the rate of Surplus
Value, it then serves to increase the profit rate [See the article A crise capitalista e a
queda tendencial da taxa de lucro (The capitalist crisis and the trend decline in the
profit rate) available on the website <http://www.diarioliberdade.org/mundo/laboral-
economia/42024-a-crise-capitalista-e-a-queda-tendencial-da-taxa-de-lucro.html>].
The fall of wages below their value is one of the factors used to offset a falling profit
rate. Again this has become a particularly important feature in the peripheral and semi-
peripheral capitalist countries where labor is exploited without limits. The exploitation
of women's work and children is part of this process. Marx also refers to the cheapening
of constant capital (k) as a key factor in the neutralization process of the downward

2. 2
trend in the profit rate of the capitalist system. If the profit rate tends to fall with a larger
proportion invested in constant capital in relation to variable capital, then a cheapening
of constant capital will serve to also offset the falling profit rate.
The increase in labor productivity serves to cheapen the constant capital transferred to
the product in the transaction, despite the constant increase in its volume. Thus, the
same influence that tends to cause the decrease in the profit rate would serve to
moderate this trend. The value of the constant capital would depend on which of these
two trends is the strongest. If labor productivity doubles, so the value of constant capital
is reduced by half. If productivity is lower than the increase in the value of constant
capital, there will be a drop in the profit rate. So it´s necessary to check the net effect of
these conflicting forces. In practice, in the last 30 years we have seen a dramatic fall in
the value of the components of constant capital, especially with the advancement of new
technologies. The falling prices of computer chips, for example, cheapened the
computers that are part of the constant capital used widely in the economy. China has
been a source of cheap goods flooding the world market. These cheap goods in the form
of constant capital helped to increase the profit rate in the last three decades.
The relative excess of the economically active population is another factor neutralizing
the fall in profit rates. We can see the growing mass unemployment worldwide that has
now become a permanent feature. This served to lower wage levels and lower the cost
of labor and increase the surplus labor time, that is, the gain for the capitalists. The
reduction in "labor costs" is the main feature in recent years, while the capitalists sought
to increase their profits. Foreign trade is also a way to cheapen the elements of constant
capital and to introduce cheap goods abroad, which once again serves to reduce the cost
of the labor force. Capital investment in foreign countries where the organic
composition of capital is lower also yields a higher profit rate and an increase in the
average profit rate of those who engage in foreign trade.
Capital invested in foreign trade can provide higher profit rate because it competes with
goods that are produced by other countries with lower production facilities so that the
most developed country sells its goods above their value even though cheaper than the
competing countries says Marx in The Capital. The advantage is the same for the
capitalists who introduce new machinery that allows them to sell products for a price
below their competitors taking a surplus profit. The expansion of the world market
("globalization") led to a massive increase in investment, production and sales. There
was a massive increase in the export of capital. The collapse of the Soviet Union and
restoration of capitalism in Russia, Eastern Europe and China provided to capitalism
new markets and areas of exploration. This allowed about two billion people enter the
capitalist world market.
The liberalization of the market for peripheral and semi-peripheral capitalist countries,
including the privatization of basic public services, also opened possibilities for new
investments, and they have increased the profit rate during this period. In other words,
we are only dealing with a trend that manifests itself in the history of capitalist
development. The law of profit rate decline operates therefore simply as a tendency,
whose effect is decisive only under special circumstances and for long periods, says
Marx in The Capital. Thus, there may be long periods, even decades, in which the
tendency of the profit rate to fall is canceled by the above-mentioned neutralizing
trends. These can stop the whole process and even reverse it, but not indefinitely.

3. 3
Eventually, this downward trend will reassert itself and act as a barrier to the
development of capitalism.
It is worth noting that the successive crises affecting the capitalist system may open new
prospects for change and counteract the downward trend of the profit rate. By taking
some capitalists to ruin, the crisis may allow a recovery of profits of other capitalists.
The means of production of ruined capitalists can be purchased by other capitalists at
liquidation prices, the value of raw materials will fall and unemployment will force
workers to accept lower wages. The production would return to profitability and capital
accumulation it would restart. According to this view, there is a cyclical movement of
the profit rate traversed by acute restructuring crises, and not an inevitable and steady
decline in the long run. The development of capitalism is not only cyclical, but also
implies changes in time.
An important aspect concerns the process by which some capitals grow at the expense
of others, which Marx called "concentration and centralization" of capital, a fact that
leads eventually to that a few capitalists play a dominant role in certain parts of the
system. Its activity is intertwined with those capitals, large and small, that surround
them. If major capitals are ruined, disturbs the operation of the other destroying their
markets by eliminating their access to raw materials and components. This can bankrupt
companies that were profitable, with those unprofitable, a collapse that feeds back and
place the risk of creating "black holes" in the heart of the system.
This occurred in 1929 in the great crisis of the world capitalist system during the years
between the two world wars and in 2008 with the crisis that erupted in the United
States. The failure of some companies, far from leading to the end of the crisis, after a
few years, deepened its impact. As a result, capital cities around the world addressed the
governments of their countries in search of protection. Beyond their political
differences, this is the point that is common among the New Deal in the United States,
the Nazi period in Germany, the populist regimes that emerged in Latin America or the
final acceptance of state intervention Keynesian as the economic orthodoxy England
wartime and, most recently after the outbreak of the 2008 crisis in the United States.
Such interdependence among states and big capital has been the norm all over the world
capitalist system during the first three decades after World War II to the contemporary
era.
Prevent the onset of the crisis to develop in the direction of an absolute collapse, but
also blocks the ability of some capitals to restore their profit rates at the expense of
others. This is what is happening in the world capitalist system after the global crisis of
2008. This was not a big problem in the first decades after 1945, given that the
combined impact of the crisis between the wars and related to the Second World War
had caused a wreck massive of old capital (according to some estimates, a third of the
total was destroyed by the economic crisis of 1929 and the 2nd World War). The
accumulation of capital was thus able to restart with higher profit rates than the pre-war
period, and these rates remained stable or fluctuated slowly. Capitalism could enjoy
what often is called its "golden age" in the 1950s, however, when profits began to fall
from the 1960s, the system was faced with the impossibility of a sufficient restructuring
to restore these rates. National governments intervened to prevent the threat of big
breaks. But in doing so, they prevented the restructuring would be enough to overcome
the pressures that had caused the threat of bankruptcy.

4. 4
* Fernando Alcoforado, member of the Bahia Academy of Education, engineer and doctor of Territorial
Planning and Regional Development from the University of Barcelona, a university professor and
consultant in strategic planning, business planning, regional planning and planning of energy systems, is
the author of Globalização (Editora Nobel, São Paulo, 1997), De Collor a FHC- O Brasil e a Nova
(Des)ordem Mundial (Editora Nobel, São Paulo, 1998), Um Projeto para o Brasil (Editora Nobel, São
Paulo, 2000), Os condicionantes do desenvolvimento do Estado da Bahia (Tese de doutorado.
Universidade de Barcelona, http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e
Desenvolvimento (Editora Nobel, São Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX
e Objetivos Estratégicos na Era Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of
the Economic and Social Development-The Case of the State of Bahia (VDM Verlag Dr. Muller
Aktiengesellschaft & Co. KG, Saarbrücken, Germany, 2010), Aquecimento Global e Catástrofe
Planetária (P&A Gráfica e Editora, Salvador, 2010), Amazônia Sustentável- Para o progresso do Brasil e
combate ao aquecimento global (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2011),
Os Fatores Condicionantes do Desenvolvimento Econômico e Social (Editora CRV, Curitiba, 2012) and
Energia no Mundo e no Brasil- Energia e Mudança Climática Catastrófica no Século XXI (Editora CRV,
Curitiba, 2015).