The Question of the Uniform Average Rate of Profit and the Theory of the Incremental Rate of Profit: Evidence from Germany

The tendency of profit rate equalization has long been a subject of Marxist theoretical discussion and empirical research, with ambiguous results as to the confirmation of such a tendency. This article investigates certain preconditions that must be met, according to Marx, in order for this tendency to emerge. It then critically focuses on an influential approach of modern Marxist research, the theory of the “incremental rate of profit,” which attempts to conclusively address this issue. Based on Marx’s analysis, we argue that a (weak) tendency of profit rate equalization toward a uniform average (general) rate of profit is primarily manifested among sectors where the capitalist mode of production is more expanded. An empirical investigation concerning the German economy attempts to verify this theoretical argument. JEL Classification: B12, B14, B24, B51, C02