Social Sciences in China (Chinese Edition)

No.6, 2020

 

The Critical Deconstruction of the Okishio Theorem

(Abstract)

 

Zhang Xian and Xue Yufeng

 

In the literature that rejects Marx’s theory of the falling rate of profit, the Okishio Theorem has used a strict mathematical method to prove that the introduction of advanced technology in the basic products of the capitalist sectors will inevitably increase the general profit rate. The theorem has thus been very influential. The literature that criticizes the Okishio Theorem has two defects: it does not investigate the validity of the theory of production prices as a basis for proving the theorem, and it does not thoroughly investigate the truth or falsity of the basis for the economic theory implied in the theorem. An analysis shows that the price of production in the Okishio Theorem completely deviates from Marx’s definition, being the product of price increases in commodity circulation. The theorem follows the vulgar elements of Smith’s value theory and Ricardo’s value transformation theory. Okishio fails to understand that the falling rate of profit is precisely the compound result of capital’s sole pursuit of excess profit; it is the “prisoner’s dilemma” of the capitalists.