Thursday, 10 July 2014

The Law Of The Tendency For The Rate Of Profit To Fall - Part 23

Fall In the Value Of The Variable Capital (7)

The value of the variable capital might also fall relatively as a result of the working day being increased either extensively or intensively.

Absolute surplus value, as was seen in Capital I, can be achieved by either extending the working day, or making it more intensive. If five hours are required to produce the worker's means of subsistence, then in a ten hour day, they will produce five hours of surplus value, whereas in a twelve hour day they will produce seven hours of surplus value. But, if the intensity of labour can be increased, for example by improving techniques that reduce the amount of time a worker has to spend unproductively, moving from task to task, then the same amount of labour can be undertaken in a smaller amount of time. The same thing applies if a machine is speeded up, so that the worker has to work faster, or, for example, if a postman is given less time to complete their round, so they have to walk faster. On this basis, twelve hours of labour may be compressed into just ten hours. It counts as twelve hours unless this new intensity becomes normal.

This increase in intensity of labour is not the same as a rise in productivity, arising from the introduction of some new machine, though the two often go together. A new machine may require the worker to actually work less intensively or exert less effort than previously, whilst raising their productivity, precisely because the machine itself takes over some of the manual functions that the worker had to perform. On the other hand, a new machine with 36 spindles, that replaces four machines with nine spindles, although it still requires only one worker to mind one machine, requires that worker to mind 36 spindles whereas before they only minded nine.

Some means of extracting additional absolute surplus value imply increasing the constant capital relative to the variable capital, and thereby creating a tendency for the rate of profit to fall. If a worker has to work faster, they process a greater quantity of material and so the value of constant capital rises relative to the variable capital. However, by the same token, they produce more surplus value, and the rise in the rate of surplus value more than counteracts the tendency for the rate of profit to fall induced by the higher organic composition of capital.


c 1000 + v 1000 + s 1000. s' = 100%. r' = 50%.

The working day rises from 8 hours to 16 hours, so the worker processes twice as much material, and creates twice as much new value.

c 2000 + v 1000 + s 3000. s' = 300%, r' = 100%.

So, despite the fact that c doubles, relative to v, the rate of profit doubles as s' trebles. The decisive relation is not c/v in determining what happens to the rate of profit, but c to the new value created by labour, i.e. v+s. In other words, the determining relation is c/v+s. So, the organic composition could rise, but the rate of profit can also rise if the new value created by labour rises more. But, even if the new value created by labour only rises by the same proportion as c, the rate of profit will rise if s rises relative to v. Constant capital may rise in proportion to v, if v falls due to a wage cut, or if the value of labour-power falls, yet the quantity of new value produced by labour remains the same, or may even rise. Alternatively, v may remain constant, but fall relative to c, because, as in this case, the working day is extended or made more intensive. But, c/v+s would remain constant, whilst s/c+v rises.

Suppose the initial position is different, so that the rate of surplus value is lower or higher.

c 1000 + v 1800 + s 200. s' = 11.11%, r' = 7.14%

c 2000 + v 1800 + s 2200. s' = 122.22%, r' = 57.89%

So, the rate of profit rises by 710.78%


c 1000 + v 200 + s 1800. s' = 900%, r' = 150%

c 2000 + v 200 + s 3800. s' = 1900%, r' = 172.73

So, the rate of profit rises by 15.15%. The rate of profit rises more than 40 times as much, therefore, in conditions where the rate of surplus value is low, compared to where the rate of surplus value was already high.

Suppose, there are different organic compositions of capital.

c 100 + v 1000 + s 1000. s' = 100%, r' = 90.91%

c 200 + v 1000 + s 3000. s' = 300%, r' = 250%

The rate of profit rises by 175%

With a much higher composition.

c 10,000 + v 1,000 + s 1,000. s' = 100%, r' = 9.1%

c 20,000 + v 1,000 + s 3,000. s' = 300%, r' = 14.29%

The rate of profit rises by 57.03%

Finally, where the rate of profit is already high, and where the organic composition is already high, we have.

c 10,000 + v 200 + s 1800. s' = 900%, r' = 17.65%

c 20,000 + v 200 + s 3800. s' = 1900%, r' = 18.81%

The rate of profit rises by 6.57%.

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