Law of the Tendency of the Rate of Profit to Fall, an objective economic law of capitalism, according to which, as capitalist production develops, a tendency appears for the average (general) rate of profit to fall. This is explained by the fact that several conflicting factors affect average profit simultaneously. On the one hand, the rise in the organic composition of capital and slowing-down of the turnover of capital cause the rate of profit to fall. On the other hand, some factors hinder and at times totally block the fall of the general rate of profit. Factors counteracting the fall of the rate of profit include a higher degree of exploitation of the workers, a drop in wages below the value of the labour power, the cheapening of the elements of constant capital, which holds back the rise of the organic composition of capital, and developing foreign trade, which makes it possible to reduce the cost of both the elements of constant capital and the means of subsistence embodying variable capital. Another important factor arresting the fall of the rate of profit is the formation of joint-stock companies and, under present-day circumstances, the sway of monopoly capital, which maintains the rate of profit at a high level with the help of monopoly price. As a result, the rate of profit does not fall in proportion to the rise of the organic composition of capital, and sometimes there is no fall at all. The fall of the rate of profit is a trend clearly manifested only under certain circumstances and over long periods of time. The operation of the law of the tendency of the rate of profit to fall leads to a further sharpening of the contradictions of capitalism. In a bid to compensate for the fall of the rate of profit by increasing its mass, capitalists step up the exploitation of the proletariat, thereby lowering the people’s effective demand and extending production output far beyond its limits. This breeds economic crises of overproduction and exacerbates antagonistic contradictions between the proletariat and the bourgeoisie. Contention is also sharpening within the class of capitalists for the distribution of the total mass of profit. In an 199 attempt to raise the rate of profit, capitalists invest in the economically less developed countries, where the level of mechanisation is much lower and the organic composition of capital is also lower, so the rate of profit is higher than in the developed capitalist countries. Profit made in this case is brought to the developed countries and helps to raise the average (general) rate of profit there. AH this sharpens the contradictions between the exploited economically less developed countries, and the industrially developed capitalist ones. In this way, the given law reflects the intrinsic contradictoriness of the capitalist mode of production.