Meaning: This quote from Rudolf Hilferding, a prominent Marxist economist and political theorist, delves into the concept of the equalization of the rate of profit in capitalist economies. The idea of the equal rate of profit is a key element in Marxist economic theory and is integral to understanding the dynamics of capitalist competition and investment.

Hilferding's quote highlights the significance of the equal rate of profit in shaping the behavior of capitalists in the investment of capital. To fully grasp the meaning of this quote, it is essential to understand the context in which it was articulated. In Marxist economic theory, the equalization of the rate of profit refers to the tendency of competition to drive the rate of profit towards a uniform level across different sectors of the economy.

In a capitalist economy, competition among capitalists leads to the tendency for the rate of profit to be equalized across industries. This occurs as capitalists seek out the most profitable investments, which exerts pressure on the rate of profit to converge towards a uniform level. As a result, the equal rate of profit becomes the benchmark for capitalists when making investment decisions in new areas of production.

The equalization of the rate of profit has significant implications for the allocation of capital in a capitalist economy. Capitalists, driven by the pursuit of profit, are compelled to base their investment decisions on the prevailing rate of profit. This means that when considering investments in new branches of production, capitalists will calculate and compare potential returns based on the established equal rate of profit.

Hilferding's quote underscores the pivotal role of the equal rate of profit as the starting point for capitalists' calculations when investing in newly-created branches of production. This reflects the way in which capitalist competition and the equalization of the rate of profit influence the behavior of capitalists and the allocation of capital within the economic system.

Furthermore, the equalization of the rate of profit is not a static phenomenon, but rather a dynamic process shaped by the interplay of competition, technological change, and other factors. As new branches of production emerge and evolve, capitalists are constantly recalculating and reassessing their investment decisions in light of the prevailing equal rate of profit.

In conclusion, Rudolf Hilferding's quote encapsulates the profound impact of the equal rate of profit on the investment decisions of capitalists in a capitalist economy. It underscores the central role of competition and the equalization of the rate of profit in shaping the allocation of capital and the dynamics of economic growth. Understanding the significance of the equal rate of profit is crucial for comprehending the inner workings of capitalist economies and the behavior of economic agents within them.