[OPE-L:3221] RE: Equal Profit Rates

Paul Cockshott (wpc@cs.strath.ac.uk)
Wed, 2 Oct 1996 01:59:10 -0700 (PDT)

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>Paul writes: "What should be at issue is how useful his [Okishio's] theory is
>as a predictor of what actually happens in capitalist economies. To assess
>this one
>has to judge the extent to which the preconditions of the theory actuall exist
>in the real world, what testable predictions it makes about actual economies,
>the extent to which the available historical evidence is compatible with its
>I think this seriously misunderstands the nature of the Okishio theorem. It
>is not a "theory." It makes NO predictions concerning the tendency of the
>rate of profit, even an equalized rate of profit. There is therefore nothing
>to be tested empirically. Roemer is very clear about this, and quite right.
>It is an "impossibility" theorem. It claims that no Okishio-viable technical
>change can, by itself, lead to a fall in the equalized rate of profit (though
>sometimes the word "equilibrium" is used instead of "equalized"). It thus
>makes a claim concerning the CAUSES of any possible fall in the profit rate,
>and a claim concerning the INFLUENCE OF TECHNICAL CHANGE on the profit rate.
>If the theorem is true, then no amount of data could falsify it. If it is
>false, then no data are needed.

It is then not a potential theory of scientific political economy, but a
proposition of mathematics, so why be concerned with it.
Paul Cockshott