Marxian Law of the Falling Tendency of Rate of Profit in Indian Manufacture Sector

Abstract

This paper, attempts to verify empirically the validity of Marx’s law of 'falling tendency of the rate of profit’ in the manufacturing sector in India during 1967-2007 following Marxian methodology. The work shows that the rate of profit in the manufacturing sector follows significant rising trend during the above period along with consistent increase in organic composition of capital as well as the rate of surplus value. The most important factor contributing the upward movement of the rate of profit in India is the increasing profit wage ratio signifying declining wage-share in value-added over the entire period. The rise in organic composition of capital is in fact over compensated by the increase in the rate of surplus value in the organized sector in India during the study period.