I've got a few thoughts, I'm dabbled in economics but not this theorem specifically. I may have missed some subtleties but here is what I've got now.
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Who cares? The TRPF (tendency of the rate of profit to fall) has been observed empirically, why would a theoretical refutation matter if it's at odds with reality.
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It looks like Okishio has done some semantic juggling here. He's basically redefined profit into something pretty close to GDP (the total of all profit of all capitalists). So he's basically claiming that productive innovation increases GDP (or the total of all profit of all capitalists, if you want to describe it exactly as he did). That seems true enough to me, innovation that increases productivity increases production and in a capitalist economy the benefits of that increase productivity go to the capitalists.
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Okishio has fixed wages, a fixed number of capitalists, and assumed the innovation is free. The first two are ridiculous but that third one is absurd. The whole point of TRPF is that repeated investment brings reduced profits over time, if you set the cost of investment/innovation to zero then it becomes meaningless. Marx not accounting for completely free innovations that come from nowhere can hardly be called a weakness in his theory.
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He’s basically saying that if a firm innovates, it provides a cost savings for themselves that increases the profit without having to squeeze workers, and that the savings for the customers down the supply chain from them also provide increased profits.
However, capitalist firms don’t innovate. So his cute little theory is bullshit.
I've never heard of the Okishio's Theorem until now, but I'm not sure your objection holds up to your own rewording. Capitalists would prefer not to innovate on their own dime, but there is competitive advantage to be had by improving production technology and reducing input cost and so on, so they offload that to the general population through things like DARPA and the Pentagon etc that fund R & D. So they get the innovation without actually having done it themselves.
Also, most "innovation" is figuring out how to do your books so you can pay workers less. There isn't much real innovation when it's much more efficient to just cut workers wages and barrel headfirst into catastrophe then use the collective as a sponge to soak up your mess.
True. Innovation on the public dime could also increase rate of profit, but capitalism also tends to drive public investment down even when it benefits them long term, so I feel like that is still a pretty big hole in the theory.
The premise of okishio is somewhat flawed from the get go. Suppose one firm create new efficient process, raising its rate of profit. Let’s say they make a shoe
from 2 yards of linen6 labor hours instead of 10. If the whole market remains in equilibrium with the same wages, the profit rates will rise for them. But that’s just the beginning! if their rates of profit higher than other shoemakers, they’ll go for the monopoly play, reducing prices to outcompete them in the market. Other shoemakers will also try to innovate to reduce labor expense or drive down wages. Either they will manage it and profit rate will equalize once again and close to what it was before. The reason for this closeness is that other capitalists will pour money in the most profitable venture available, until it’s also becomes similarly profitable. There is also a fact to consider that most overproduced products during this competition will drive the price into the ground.Maybe I’m explaining badly:( you can read tssi by kliman, if you’re inclined to look at it closely. He’s critique is not the only one, but he gives also nice rundown of other critiques at the end of the book (and why they’re wrong from his POV).
If you don’t like reading, you can listen on a podcast “from alpha to omega” somewhere in the end of the reading series. They’re considerably anti-ml, which maybe annoying but not too bad. But they’re knowledgeable and sometimes funny. =)
There is a second issue with Okishio's theorem. Basically, for it to hold, the competitors have to wait for equilibrium before introducing the method too, if they don't, then the math doesn't work anymore. Additionally, they assume that the innovation doesn't change either of the prices.
Indeed. The justification is that a theoretically perfect equilibrium is achieved that palliates the issue in the input of prices and that volume is unchanged, all of this before the technique is spread, which is of course not a realistic expectation. A remark has been made that for this to hold true generally capitalists would have to plan the economy, lol
