This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. ASSA Annual Meeting
  3. 2021
  4. Preliminary Program
  5. Profits, Class, and Income Distribution
« Back to Results

Profits, Class, and Income Distribution

Paper Session

Monday, Jan. 4, 2021 10:00 AM - 12:00 PM (EST)

Hosted By: Union for Radical Political Economics
  • Chair: Gilbert Skillman, Wesleyan University

The Empirical Relevance of Okishio's Theorem

Shan Gu
,
Tsinghua University

Abstract

Okishio's Theorem is proved to be theoretically robust in various respects |
is it empirically relevant? This has been a question that still awaits a rigor-
ous answer since Shaikh's (1978) critique of Okishio's criterion for the choice
of technique. Our investigation of the post-WWII U.S. economy using an au-
toregressive distributed lag approach nds that, when controlling for the real
wage rate as is suggested in Okishio's Theorem, the steadily increasing organic
composition of capital, as an indicator of technical change, has a signi cantly
positive long-run e ect on both the general rate of pro t and the pro t margin.
This result provides empirical support for Okishio's Theorem and implies that
Shaikh's criterion highly overlaps with Okishio's | the possibility that capi-
talists might choose new production techniques that would increase the pro t
margin but lower the rate of pro t is not systematically observed.

Production of Commodities by Means of Commodities and Labor

Gilbert Skillman
,
Wesleyan University

Abstract

This paper embeds the Marxian distinction between labor power and labor expended in a Sraffian model of price determination in order to study the distinct implications of Marxian and (neo-)Ricardian theories of profit rate determination. A key implication of the augmented model is that the rate of profit is not determined solely by technical conditions of production and the real wage rate, but also depends on the average rate of exploitation. The analysis also distinguishes “short-run” and “long-run” effects of increasing exploitation on the equilibrium profit rate, where the latter reflects negative feedback effects of exploitation on average labor productivity and thus on the steady-state rate of profit.

Understanding China’s New “Dual Circulation” Development Strategy in the Face of Reverse Globalization: A Marxian Input-Output Analysis

Lijun Su
,
Nankai University

Abstract

The Chinese government has proposed a new development model called the “Dual Circulation.” We argue that this economic strategic shift, on the one hand, is a response to the upsurge of trade protectionism in recent years, on the other hand, is an acceleration of China’s long-planned upgrade of its economy. To gauge the external economic risk that China is faced with, we carry out an input-output analysis that measures the consequences of a potential US-China trade decoupling based on the world input-output relations of 2014. It is found that if the Unite States and China were to completely halt and transfer their bilateral merchandise trade to elsewhere, the Chinese economy would lose 2.5 percentage points in its growth rate and over ten million jobs while the United States would gain 1.3 percentage points in growth and some 700 thousand jobs. This huge risk facing China stems from the asymmetric trade relationship between the US and China, which, we argue, is an important reason why China switches to a “Dual Circulation” development strategy.

How Does Globalization Affect Equilibriums in Labor-Capital Game? An Empirical-Historical Analysis

Tetsuya Tamura
,
Ritsumeikan University

Abstract

Current studies indicate that globalization contributed to unequal income distribution due to decreasing labor share. Developing Wright’s game theoretic framework for class analysis, we have examined how globalization affects labor share in dynamic process of labor-capital relationship. In our model, initial equilibrium in labor-capital game can be cooperative and mutually beneficial for both players—capitals gain high profit (payoff) with high labor productivity due to labors’ efforts and labors gain high wage (payoff) via collective bargaining with organized labor as we can see in the golden age of capitalism. However, the possibility in replacing current domestic employments to overseas by globalization strengthens capital power due to its threat effects and shifts the equilibrium. From the perspective, we empirically examined panel data set in 18 OECD developed countries from 1975-2017. Our regression results show that globalization negatively affect to labor share, whereas union density positively affect to it. Furthermore, we found increased negative effects of globalization and decreased positive effects of union density on labor share in a current quarter century compared with the past quarter century. The results come from the facts that FDI and offshoring intensity had been expanded from mid 1980s, causing qualitative change in globalization. From the analysis, we conclude that globalization as well as declining union density had contributed to decrease labor share, and qualitative change in globalization had promoted the trend with intensified threat effect by FDI or offshoring.
JEL Classifications
  • D3 - Distribution
  • B5 - Current Heterodox Approaches