The Law of The Tendency For The Rate of Profit To Fall - Part 21

Fall In the Value Of The Variable Capital (5)

For the reasons set out in Parts 18 and 19, its clear that although the quantity of labour employed in any one industry sphere may reach some limit, no such limit exists for the employment of labour in general in the economy, precisely because, as Marx sets out, the surplus value produced does not have to simply keep being accumulated in the existing industries, as set out in Part 20. It branches out into the development of new industries with low organic compositions, and high rates of profit. It creates whole new needs for workers as consumers that transforms them as human beings and as providers of labour, because not only are their horizons for consumption, including for education, culture etc. widened, but in that very process the nature of their capacity to perform labour is also transformed.

“...likewise the discovery, creation and satisfaction of new needs arising from society itself; the cultivation of all the qualities of the social human being, production of the same in a form as rich as possible in needs, because rich in qualities and relations -- production of this being as the most total and universal possible social product, for, in order to take gratification in a many-sided way, he must be capable of many pleasures [genussfähig], hence cultured to a high degree -- is likewise a condition of production founded on capital.”

When the reality of capitalist production is taken into consideration, whereby there is technological change, which reduces the value of constant capital, which revolutionises production, and where there are increasing returns to scale, it can easily be seen how, the development of whole new industries and commodities that characterise the commencement of a new long wave boom, facilitates a rise in the rate of profit, and how this feeds through into increased accumulation. 

Just as the relative reduction of labour in any one sphere is accompanied by an absolute increase in the quantity of labour employed, as the total capital expands, so the ultimate reduction in employment in certain spheres goes along with the continual increase in the quantity of labour employed in the economy, and the continual increase in the mass of profits created by it.

But, in addition to the reduction in the quantity of labour employed, the value of the variable capital may fall for the other reasons previously outlined. I will examine those next.

Back To Part 20

Forward To Part 22