Does capital dream of chronic depression?

Abstract: The study asks what role Karl Marx’s theory of the law of the tendency of the rate of profit to fall has in explaining transformation, crises and secular stagnation in Sweden. Support is presented for the “law”, with Sweden exhibiting a long-term secular decline in the rate of profit throughout the late 19th and 20th century. For the period 1950-2016, there is a strong tendency towards “Marx-biased”, labour-saving and capital-using technical change, which is the underlying driver towards the fall in profitability. Periods of declining profitability is also found to be periods of relatively higher real GDP growth. It is argued that sharp competition and rapid productivity growth, quite counter-intuitively, leads to a decline in average profitability. One reason for this is the tendency towards increasing outlays on fixed capital and a diminishing wage-share to retain competitiveness, the side-effect being an erosion of the “demand-base” of the accumulation process; a tendency augmented by the “third industrial revolution” and the “neoliberal” political-economic regime. The so-called secular stagnation in the wake of the financial crisis of 2007/8 is argued to be an expression of these developments. Furthermore, analysing the Industrial Golden Age of the Swedish Model, and its metamorphosis into a more “neoliberal” political-economic regime in the late 20th / early 21st, the thesis claims that one significant driving force of this transformation has been the secular decline in profitability.