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Theorem

Okishio's Theorem

Game Theory

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
Statement
If one capitalist raises profits by introducing a new cost-cutting technique, the general rate of profit in society goes up for all capitalists. 2
Proof Year
1961 1
Classification
Statement Form
Characterization Theorem 1
Connections

Has Statement Form

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
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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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