Why is the Rate of Profit Still So Low?

The general concept of a wage-profit frontier provides a theoretical framework for studying the issues of technical change and income distribution. It can also be given empirical content as a vehicle for understanding movements in the rate of profit over time. This chapter first links up the more familiar wage-rate profit-rate frontier to the more empirically tractable wage-share profit-rate frontier in the context of a discussion of technical change and the rate of profit. The theory of technical change developed motivates an empirical model of the wage-share profit-rate frontier which is used to analyse movements in the rate of profit in US manufacturing industries from 1949 to 1987. Recent movements since about 1970 provide support for an old thesis that capital-using, labour-saving technical changes can, under some circumstances, reduce the rate of profit.