A Study Of Okishio Theorem By Marx’s Perception

Based on his original theory of labor twoness, Marx distinguished constantcapital from variable capital, and differentiated between surplus value and profit. Hethoroughly analyzed the formation of average profit rate and the transformation fromvalue to production price, and further put forward an rule that average profit ratewhich only exists in capitalism tend to fall. However, Nobuo Okishio made acontroversy over that. He introduced the simple reproduction of equilibrium formulainto the transformation study and thus built a system to determine average profit rate.He also demonstrated with his unique iterative method that the system would beobtained if the transformation problem was fully researched.The intrinsic impetus to pursue surplus value and the extrinsic pressure out ofcompetition compel capitalist to adopt new techniques to increase the laborproductivity and cut down the production cost. Obviously, the criterions ofproductivity and cost are the same. However, Nobuo Okishio suggests thatproductivity criterion is different from cost criterion with which capitalist introducesnew techniques in accordance with his theory that systematic investigationdetermines average profit rate. With the theory that average profit rate determiningsystem, Nobuo Okishio examined the impact on average profit rate which wasbrought about by new technical accordance with cost criterion, and made aconclusion which was against Marx that the new technical introduced by capitalistcan not decrease average profit rate, unless there was enough increase in real wage.Unfortunately, as a result of using mathematic method to study economicrelation, Nobuo Okishio makes mistakes in transformation problem, because he failsto realize that the formation of average profit rate means same capital requires sameprofit, which negatively affects the redistribution of surplus value among all sectors.The mistakes further disturb his accurate judgment of the important character ofcapitalism to the perspective of introducing new techniques. Therefore, two key points Nobuo Okishio used to criticize Marx’s theory are not justified. Moreover,Okishio’s theorem should not come into existence any longer. The law of profit ratein capitalistic economy is impossibly the same as that is demonstratedmathematically by Nobuo Okishio. In capitalistic society, the decrease of averageprofit rate means the improvement of labor productivity which indicates the resultsof organic composition of capital. The increase in real wage partially hinder surplusvalue rate from rising, and the increase of surplus value rate prevent profit rate fromdecreasing. Therefore, to some extent, the increase in real wage only weakens theforce which prohibits profit rate from falling. However, we can’t say that the increasein real wage results in the decline of average profit rate.