 Marx’s analysis of the rate of profit seems to entail that labor-intensive industries will be more profitable than industries that rely to a greater extent on constant capital. But this conclusion is clearly empirically false (Böhm-Bawerk 1898), and moreover incompatible with Marx’s assumption of a competitive economy in which investments will adjust so as to equalize the rate of profit between industries (Arnold 1990: Ch. 3; Buchanan 1985: Ch. 3). Marx himself recognized this fact, and sought to address it in the third volume of Capital by dropping the assumption of volume 1 that value and price are equivalent, and showing instead how value can be transformed into price through some more complicated process. Whether Marx’s attempted solution to this “transformation problem” was successful, however, is a matter of great controversy (Arnold 1990: Ch. 3; Samuelson 1971; Kliman 2007).