The other factor involved in determining the conjunctures of the long wave, and which also follows from what has been described, so far, is innovation. In the Summer phase, the pace of economic activity combined with a drying up of the available labour reserves causes wages to rise. The consequence is that the rate of surplus value tends to fall, dependent upon the extent to which productivity can be raised, so raising relative surplus value. The longer into the cycle, the less it is possible to raise productivity sufficiently, because the more existing technologies have already increased productivity to the limit of that technology. This is the situation Marx and Engels describe in Capital III, Chapters 6 and 15. The expansion of capital causes available supplies of labour to be used up, pushing up wages, and pushing down the rate of surplus value, in conditions where the expansion of production and increase in the rate of turnover has reduced profit margins. Crises of overproduction become more likely. That is only minor fluctuations are required so that the quantity of commodities thrown on to the market cannot be sold at their price of production, market prices fall, and may fall even below the cost of production, so that the capital consumed in their production is not reproduced.
“If the price of raw material rises, it may be impossible to make it good fully out of the price of the commodities after wages are deducted. Violent price fluctuations therefore cause interruptions, great collisions, even catastrophes, in the process of reproduction.”
(Capital III, Chapter 6)
“In both cases there would be a steep and sudden fall in the general rate of profit, but this time due to a change in the composition of capital not caused by the development of the productive forces, but rather by a rise in the money-value of the variable capital (because of increased wages) and the corresponding reduction in the proportion of surplus-labour to necessary labour.”
(Capital III, Chapter 15)
It is these conditions which become characteristic of the Autumn phase of the cycle, and result in repeated crises – in fact, it is this stage that Marx refers to as the crisis stage. Capital is increasingly led to confront labour via the provocation of strikes and imposition of lock-outs. There is less incentive for one capital to compete with another for labour-power, so the conditions begin to be established for the defeat of workers in the industrial struggle, unless they are able to look beyond it for solutions, through the establishment of their own co-operative enterprises. As Marx puts it in “Value, Price and Profit”,
“At the same time, and quite apart from the general servitude involved in the wages system, the working class ought not to exaggerate to themselves the ultimate working of these everyday struggles. They ought not to forget that they are fighting with effects, but not with the causes of those effects; that they are retarding the downward movement, but not changing its direction; that they are applying palliatives, not curing the malady. They ought, therefore, not to be exclusively absorbed in these unavoidable guerilla fights incessantly springing up from the never ceasing encroachments of capital or changes of the market. They ought to understand that, with all the miseries it imposes upon them, the present system simultaneously engenders the material conditions and the social forms necessary for an economical reconstruction of society.”
Unless the workers do this, and thereby build up their own economic and social power within society, as the material basis for their ideological and political supremacy, fought for by their own political party, and the development of their own state structures, the very working of the economic system, via the long wave, will undermine the workers. As economic activity declines, during the Autumn phase, not only will the resolve of capital to resist increase, but, as unemployment rises, competition between workers will increase both at an individual, sectional, regional and national level. In fact, it is this very latter factor that led to the ability of capital to line workers up along national lines in 1914, to slaughter each other.
As Engels puts it,
“The history of these Unions is a long series of defeats of the working-men, interrupted by a few isolated victories. All these efforts naturally cannot alter the economic law according to which wages are determined by the relation between supply and demand in the labour market. Hence the Unions remain powerless against all great forces which influence this relation. In a commercial crisis the Union itself must reduce wages or dissolve wholly; and in a time of considerable increase in the demand for labour, it cannot fix the rate of wages higher than would be reached spontaneously by the competition of the capitalists among themselves.”
(The Condition of The Working Class in England, p 243)
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