Beyond the ‘trade war’: An alternative explanation for the underlying causes of US-China conflict from the perspective of the US economy

This paper theoretically and empirically analyzes whether Marxist crisis theories could explain the causes of the conflict between the US and China. For this purpose, it provides an analytical framework to describe the trend in profit rates and their determinants. In this context, the determinants of profit rates in the US were estimated for 1980-2019. As the results suggest, although there is an inverse relationship between the wage share and profit rates, the capacity utilization rate and capacity/capital ratio positively affect profit rates. Based on these findings, we contend that traditional Marxist crisis theories have the power to explain the macroeconomic causes behind the conflict between the US and China, which we describe as the reflection of a domestic crisis in the US.