Analysis of the Okishio Theorem

Abstract

The Okishio theorem is a classic theory of Japanese Marxism that denies the law of the decline of the general rate of profit proposed by Marx in the third volume of Capital. The theorem seriously affects the correct understanding of the mode of production and the economic crisis in capitalist countries today. Analyzing the original text of the Okishio theorem, this article finds that the theorem does not distinguish between paid and unpaid labor, and that its mathematical model is based on an incorrect understanding of Marx’s views and of the capitalist mode of production. The theorem’s mathematical proof process is itself untenable and even contradicts the numerical examples that Okishio gives. In fact, Okishio negates Marx’s view by effectively denying the existence of the capitalist mode of production. Unexpectedly, this article also finds that a decline in the general rate of profit will result even if all enterprises do not increase their organic composition of capital, but if only enterprises with a higher organic composition of capital expand their proportions in the economy.