Okishio's theorem, formulated by the Japanese economist Nobuo Okishio in 1961, addresses Karl Marx's law of the tendency of the rate of profit to fall. Holding the real wage constant, Okishio showed that if one capitalist adopts a new technique that cuts costs and raises that capitalist's own profit, the general rate of profit across the whole economy rises once the technique spreads, rather than falling as Marx had argued. Because it isolates the effect of pure cost-cutting innovation from any accompanying change in wages, the theorem became a central and controversial reference point in later debates over the validity of Marx's profit-rate argument.
Facts
StatementIf one capitalist raises profits by introducing a new cost-cutting technique, the general rate of profit in society goes up for all capitalists. 2 Classification
Statement FormCharacterization Theorem 1 Connections
Sources
1. Okishio's theorem (Wikipedia)
Wikipedia Okishio's theorem lead paragraph (w-bbfill-psymath4-0926)Quote, Wikipedia Okishio's theorem lead paragraph (w-bbfill-psymath4-0926)
1961, Okishio established
2. Okishio's theorem, Wikipedia
Introduction
Intuitively, it can be understood as saying that if one capitalist raises his profits by introducing a new technique that cuts his costs, the collective or general rate of profit in society goes up for all capitalists.
In Group: Economic Theory, Lead section
Okishio's theorem is a theorem formulated by Japanese economist Nobuo Okishio.
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