<p>I'm not sure what the "fuss" is.  Is TRPF really so heavily disputed?  In a sense, profits are just a kind of arbitrage, and so the reasoning behind TRPF is similar to the reasoning around zero-arbitrage assumptions (profit-maxing agents under perfect competition with free entry/exit and full information will drive supply up and prices down until the profit gap closes). </p>

<p>Obviously, these assumptions make for boring problems; the real world is far from boring, so profits happen and can be sustained for a really long time in some cases.  I think the diversity of viewpoints you're seeing are more explanations for the varying degrees of failure of TRPF in real markets, than they are explanations of empirical evidence of TRPF.</p>

CC BY-SA 4.0
2019-11-01T19:49:00.267Z
2019-11-01T19:49:00.267Z
heh
<p><a href="https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to_fall" rel="nofollow noreferrer">https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to_fall</a></p>

<p>The tendency of the rate of profit to fall (TRPF) is a hypothesis in economics and political economy, most famously expounded by Karl Marx in chapter 13 of Capital, Volume III.[1] Economists as diverse as Adam Smith,[2] John Stuart Mill,[3] David Ricardo[4] and Stanley Jevons[5] referred explicitly to the TRPF as an empirical phenomenon that demanded further theoretical explanation, yet they each differed as to the reasons why the TRPF should necessarily occur.[6]</p>

<hr>

<p>Now, I have some years trained as an economist; but, find the whole fuss around the TRPF somewhat strange. Marx lived in a time of a non-fiat economy. The inherent value of one kopiejek or what have you was based on how much bread it could exchange. Nowadays money is defined to be a unit of account maintained by trust in the FED. Hence, inflation targeting. </p>

<p>So, did Marx really miss the memo about credit? Can someone help me better understand where am I getting this concept wrong as so many think this is the cornerstone of Marxian economics. </p>

<value><marxism><credit>
Tendency of the rate of profit to fall
Wallows
# Tendency of the rate of profit to fall

(Asked by: username_0 on 2019-11-01)

<https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to_fall>

The tendency of the rate of profit to fall (TRPF) is a hypothesis in economics and political economy, most famously expounded by Karl Marx in chapter 13 of Capital, Volume III.[1] Economists as diverse as Adam Smith,[2] John Stuart Mill,[3] David Ricardo[4] and Stanley Jevons[5] referred explicitly to the TRPF as an empirical phenomenon that demanded further theoretical explanation, yet they each differed as to the reasons why the TRPF should necessarily occur.[6]

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Now, I have some years trained as an economist; but, find the whole fuss around the TRPF somewhat strange. Marx lived in a time of a non-fiat economy. The inherent value of one kopiejek or what have you was based on how much bread it could exchange. Nowadays money is defined to be a unit of account maintained by trust in the FED. Hence, inflation targeting.

So, did Marx really miss the memo about credit? Can someone help me better understand where am I getting this concept wrong as so many think this is the cornerstone of Marxian economics.

**Tags:** value, marxism, credit

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## 1 answers

### Answer by username_1 on 2019-11-01. Score: 1

I'm not sure what the "fuss" is. Is TRPF really so heavily disputed? In a sense, profits are just a kind of arbitrage, and so the reasoning behind TRPF is similar to the reasoning around zero-arbitrage assumptions (profit-maxing agents under perfect competition with free entry/exit and full information will drive supply up and prices down until the profit gap closes).

Obviously, these assumptions make for boring problems; the real world is far from boring, so profits happen and can be sustained for a really long time in some cases. I think the diversity of viewpoints you're seeing are more explanations for the varying degrees of failure of TRPF in real markets, than they are explanations of empirical evidence of TRPF.


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