The Long-Run Rate of Profit in an Economy with Natural Resource Scarcity

According to Knut Wicksell, two important factors which prevent the rate of profit from declining towards zero in an economy with positive saving are labor growth and technical progress. This paper analyzes the effect of these factors and the economy’s saving propensity on the long-run rate of profit in an economy with a scarce non-renewable natural resource. The existence of natural resource scarcity depresses the long-run rate of profit. However, the sensitivity of this rate of profit to labor growth and technical progress is the same for economies without and with natural resource scarcity.