Henryk Grossmann’s Falling Rate of Profit Theory of Crisis: A Presentation and a Reply to Old and New Critics

Indian Development Review, Vol.4, No.1, pp. 69-91, 2006

23 Pages Posted: 4 Jan 2010

See all articles by Stavros Mavroudeas

Stavros Mavroudeas

University of Macedonia

Alexis Ioannides

Democritus University of Thrace

Date Written: January 3, 2006

Abstract

Henryk Grossmann was the first Marxist economist that proposed a theory of crisis based on the Marxian law of the falling rate of profit due to the increasing organic composition of capital. This view, while initially disappointingly minotirarian, has become very popular nowadays within Marxist Political Economy. At the same time Grossmann’s theory has been severely criticised by many economists (e.g. P.Sweezy, Howard & King etc.). In this essay, first, Grossmannn’s theory is presented. Then it is reformulated so as to be comparable to the Harrod-Domar tradition of growth models. Third, older and newer critiques are being reviewed critically. Finally, it concludes by arguing that Grossmann’s theory – despite certain deficiencies to a large extent justified by its pioneering character- has a valid methodological and analytical basis. As such it is a true founder of modern theories of the falling rate of profit theory of crisis.

Keywords: economic crisis, growth, Marxism, Grossman

JEL Classification: B, B5, B51

Suggested Citation

Mavroudeas, Stavros and Ioannides, Alexis, Henryk Grossmann’s Falling Rate of Profit Theory of Crisis: A Presentation and a Reply to Old and New Critics (January 3, 2006). Indian Development Review, Vol.4, No.1, pp. 69-91, 2006, Available at SSRN: https://ssrn.com/abstract=1530765

Stavros Mavroudeas (Contact Author)

University of Macedonia ( email )

Thessaloniki, 54006
Greece

Alexis Ioannides

Democritus University of Thrace ( email )

Vas. Sofias 12, Building 1, Production & Managemen
Office 303, 3rd floor
Xanthi, Xanthi 68100
Greece

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