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A central question about business cycles has always been “Why do they go up and why do they go down?” This article uses a Marxian profit rate analysis to explore the first part of this question, the dynamics of business cycle expansions, using the relatively detailed data available on the post-World War II US economy. Each cyclical expansion is divided into two phases, early expansion and late expansion, determined by the behavior of the profit rate. Early expansion is characterized by a strong recovery in the profit rate, whereas late expansion witnesses the decline of the profit rate after it reaches its peak at the end of the early expansion. We show that the Marxian profit rate is a particularly useful analytical tool to empirically study the dynamics of recoveries and capital accumulation, as well as the fragilities that the same recovery process breeds.JEL Classifications: B51, E32 [ABSTRACT FROM AUTHOR]

The Weisskopfian approach has dominated empirical studies of the US rate of profit for the last thirty-five years. Forty-five years earlier, Michal Kalecki developed a different frame suitable for empirical profit rate studies, which had the potential to give different, but complementary, insight into the profit rate analysis based on the Weisskopfian approach. This paper first presents a development of the Kaleckian frame. It then applies this frame to the US economy and presents some preliminary empirical results. [ABSTRACT FROM AUTHOR]

A significant number of left political economists hold that the U.S. Great Recession and subsequent lethargic performance are a crisis of over-capacity that resulted from over-investment. Kotz (2011, 2013) has recently attempted to provide empirical support for this position. Despite sharing an understanding of the crisis very similar to his, the authors find in this paper that a careful examination of his evidence does not support considering this to be a crisis of over-investment. [ABSTRACT FROM AUTHOR]

A significant number of left political economists hold that the U.S. Great Recession and subsequent lethargic performance are a crisis of over-capacity that resulted from over-investment. Kotz (2011, 2013) has recently attempted to provide empirical support for this position. Despite sharing an understanding of the crisis very similar to his, the authors find in this paper that a careful examination of his evidence does not support considering this to be a crisis of over-investment. [ABSTRACT FROM AUTHOR]

This paper looks at the most recent aggregate profit rate data for the United States. It then makes five arguments. First, the new data reinforce the rejection of "neoliberalism as successful capitalist restructuring that could possibly restore or surpass the pre 1970s rate of profit." Second, when the new data are viewed together with the rest of the post-WWII data, it reinforces the appearance of the fall in the rate of profit as a one-step fall between an earlier and a later period. Third, this result argues against understanding the fall in the rate of profit in terms of an increasing organic composition of capital. Fourth, the one-step fall understanding is consistent with understanding profit rate dynamics in terms of the change of economic regimes between the "Keynesian compromise" period and the neoliberal period. These first four results are all consistent with, though certainly not broad enough to claim to be a proof of all of, the recently reformulated social structures of accumulation theory by Kotz and Wolfson. Finally, when the new data are considered together with several now widely held general beliefs about the near-term performance of the U.S. economy, this paper makes arguments about some likely characteristics of the behavior of the aggregate profit rate over the next business cycle. [ABSTRACT FROM AUTHOR]

In 1979, Tom Weisskopf found that the crucial late-expansion period of the business cycle, in which the output continues to expand but the profit rate begins to fall, was best explained for his 1949-1975 U.S. data as a result of increasing real wage gains higher than real productivity gains. This led to a profit share decrease that was the primary cause of the cyclical decline in the profit rate. In this work, we extend Weisskopf's analysis through 2001 and find an important change. Although the fall in the profit share continued to be the key to the fall in the profit rate, unfavorable shifts under neoliberalism in price ratios replaced his earlier (real) wage squeeze. This result is consistent with and supports the generally accepted economic stylized fact of decreased power of workers under neoliberalism. [ABSTRACT FROM AUTHOR]