Date(s) - 02/25/2019
12:00 pm - 1:00 pm
Andrew G. Clark Building
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The Brown Bag Seminar Series offers current ECON graduate students the opportunity to present ongoing research or to workshop new ideas. The seminars are held on Mondays from 12:00-1:00pm in Clark C307 and are open to everyone.
February 25th’s presenter is ECON PhD. graduate student Adam Walke. The title of his presentation is: “Capital Export as a Response to the Falling Rate of Profit: A Comparison of Marx and Mill.”
Abstract: Karl Marx and John Stuart Mill represent opposing political and economic traditions. Yet they share many of the same insights into the workings of the economy. This paper focuses on one area of overlap between them: factors counteracting the decline in the rate of profit. Classical political economists developed a number of competing theories to explain why the rate of profit seemed to exhibit a secular tendency to decline. Mill, like David Ricardo, traced the source of this tendency to the scarcity of fertile land in proportion to capital and labor, whereas Marx sought the root of the problem in mechanization and costlier raw materials. Although they gave different reasons for the downward trend in the rate of profit, Marx and Mill agreed that the following factors could bolster profits in capital-rich European countries: (1) technological improvements, (2) raw material imports, and (3) capital exports. In particular, capital invested in cheap, abundant, and productive foreign land was expected to yield a higher rate of return than capital invested in domestic enterprises. Foreign investment and the acquisition of foreign lands were thus seen as providing a direct antidote to the scarcity of land and costliness of raw materials suppressing profits in Europe. For this reason, Mill and other economists argued that governments should facilitate the export of capital to colonies where it would be mainly employed in producing raw materials for European consumption. The notion that boosting the rate of profit depended on providing an outlet for Europe’s excess supply of capital became one of the chief economic rationalizations for policies adopted by imperialist powers to promote and protect investments abroad. Ironically, both advocates of imperialism and Marxist anti-imperialists argued that the export of capital to colonies and other foreign lands was essential to the resiliency of the rate of profit and the continued vitality of capitalism.