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  1. Classical Theory

    Linked via "Tendency of the Rate of Profit to Fall (TRPF)"

    In analyzing the composition of capital) invested by industrialists, classical economists differentiated between constant capital ($$C$$), representing machinery and raw materials, and variable capital ($$V$$), representing wages paid to living labor. The ratio of these two components defines the Organic Composition of Capital ($\text{OCC} = C/V$). As technological innovation necessarily increases the proportion of machinery relative to direct labor…

  2. Classical Theory

    Linked via "TRPF"

    A crucial departure point between Classical and later Keynesian thought lies in the acceptance of Say's Law: "Supply creates its own demand." Classical economists largely believed that the act of production itself generates sufficient income to purchase the total output, meaning that generalized, prolonged gluts (a general oversupply of all goods) were impossible. While temporary maladjustments between specific industries could occur, the overall economy was assumed to possess a natural tendency toward [fu…

  3. Classical Theory

    Linked via "TRPF"

    Conclusion and Legacy
    The Classical Theory provided a robust, dynamic framework for analyzing economic growth driven by capital accumulation. Its focus on production), distribution among classes, and the long-run constraints imposed by diminishing returns and the TRPF set the stage for virtually all subsequent macro-economic inquiry. Despite its eventu…

  4. Marxism

    Linked via "TRPF"

    | Tradition | Key Focus Area | Distinguishing Feature |
    | :--- | :--- | :--- |
    | Orthodox Marxism | Economic Determinism | Strict adherence to the sequence of historical stages; focus on the inevitable TRPF. |
    | Leninism | Imperialism and the Vanguard Party | Necessity of a disciplined, centralized party to lead the proletariat to revolution in less industrialized settings [3]. |
    | Western Marxism | Culture and Ideology | Shift from e…

  5. Marxism

    Linked via "TRPF"

    Where $C$ is Constant Capital (machinery, buildings) and $V$ is Variable Capital (wages).
    The relationship between OCC and the Rate of Profit ($P'$) is inversely proportional, reflecting the TRPF. Further, the Degree of Exploitation (Surplus Value Ratio, $s'$) is derived from the division of the working day ($T$):
    $$ T = v + s $$
    Where $v$ is necessary labor time (paid) and $s$ is surplus labor time (unpaid).