was marx wrong about falling rate of profit?

[Bradford DeLong]

>This article suggests that Marx was wrong about the falling rate of 
>profit, particularly as applied to the U.S.   Refutation, anyone? mjs
>
>( 
><http://64.4.22.250/cgi-bin/linkrd?_lang=EN&lah=ec0b54b83d283dafeabfe1037978a21c&lat=1039106211&hm___action=http%3a%2f%2fwww%2eblonnet%2ecom%2fbusinessline%2f2001%2f07%2f07%2fstories%2f040720ma%2ehtm>http://www.blonnet.com/businessline/2001/07/07/stories/040720ma.htm 
>)
>
>  "Marx was interested in projecting the stage where capital 
>accumulation would cease. But he did not believe in diminishing 
>returns. He introduced a different hypothesis. Given broadly, a rate 
>of accumulation higher than the population growth rate would lead to 
>an increasing ratio of fixed capital to circulating capital. This is 
>because of the progressive substitution of machinery in place of 
>labour.     Both the capital-output ratio and the capital-labour 
>ratio would keep moving up.

Not if the price of machinery relative to the price of labor is going 
down--as it has for the past two hundred years. With a falling price 
over time of machinery, the rate of accumulation has to be higher 
than the labor force growth rate plus the rate at which the 
labor-time price of machinery is changing in order for Marx's 
predictions to have even a chance of coming true.

And, in fact, it hasn't. The physical capital-labor ratio keeps 
rising, apparently without bound. The value capital-labor ratio looks 
pretty constant...

Brad DeLong