Profit, Accumulation, and Crisis: Long-Term Movement of the Profit Rate in China, Japan, and the United States

Abstract

China has emerged as the center of global capital accumulation. But, there have been few studies on the movement of the profit rate in the Chinese economy. This article measures China’s economy-wide profit rate and its contributing factors from 1980 to 2015. The measurement is based on the construction of China’s business sector capital stock series, estimation of China’s labor income share, and the profit share of economic output. The movement of China’s profit rate is compared with the long-term movement of the profit rate in the United States and Japan. A comparative analysis of the three largest economies in the world helps to illustrate important developments of the global capitalist economy over the late twentieth and the early twenty-first century. This article finds that China’s profit rate is approaching a level that historically was associated with major crises in the United States and Japan. The decline of the profit rate is likely to continue in the coming years.