Inter-industry Competition and Formation of Average Profit Rate as a Precondition for Reindustrialization

Abstract

The subject of the paper is the phenomenon of de-industrialization (Dutch disease) and the raw materials export orientation of Russia. The purpose of the work is a fundamental analysis or explanation of the nature of the phenomena from the standpoint of Marx’s «Capital». The method of (mathematical) description of directly observed phenomena (descriptive, exoteric method) used in the works on this subject is supplemented by internal method to clarify the relationship of phenomena (explicative, esoteric method). Key findings include the following points: (1) de-industrialization and raw material export-orientation result from the differences in the rates of profit (2) formation of the average rate of profit is an objective law of market economy, (3 )the mechanism to level off the general rate of profit is the inter-industry competition, (4) according to this law the rates of profit in export-oriented extractive industries would inevitably fall (drop of «oil prices» with constant exports and stable or increasing «oil prices» with shrinking exports), (5) under this law the rates of profit in high-tech (export) industries (weapons, nuclear, etc.) should increase.