Wednesday, 17 June 2015

Capital III, Chapter 8 - Part 2

There will be different rates of surplus value between different countries. That means different rates of profit. Where the rate of surplus value is the same, but rate of profit differs, this is then obviously due to other causes such as the organic composition of capital. But, this is not relevant, as the question being considered is the development of an average rate of profit in a single country.

As was demonstrated, in the previous chapter, assuming a constant rate of surplus value, the changes in the rate of profit arise from two sources, 1) changes in the value of constant capital, and 2) changes in the rate of turnover of capital. However, because the mass of profit is the same as the mass of surplus value, changes in the value of constant capital do not change the mass of profit. Changes in the rate of turnover do not change the mass of profit either, but they do result in the release or tie up of existing invested capital. However, to the extent that capital is released or tied up, this could affect the volume of profit, because if tied up capital results in activity being reduced, less surplus value will be produced, and vice versa.

The conclusion then is that in different productive spheres, where different organic compositions of capital, and different rates of turnover exist, there must be different rates of profit, because the assumption is that there is a single rate of surplus value. In speaking of the organic composition, or rate of turnover of capital here, what is being referred to is the average in that sphere or industry.

Because wages, the working-day and the rate of surplus value are all held constant, any given value of variable capital acts as an index of the actual amount of labour-power employed. If variable capital rises from £1,000 to £2,000, this means twice as much labour-power is employed, which also then means twice as much surplus value is produced.

As described in Volume I, the composition of capital divides in two – the technical composition and the value composition. Of the two, it is the technical composition that is decisive. At any point it is technically determined by the level of technology and development of the productive forces. A given number of workers will be required to operate a given number of machines, and process a given amount of material in a specific period of time.

“This proportion forms the technical composition of capital and is the real basis of its organic composition.” (p 145)

But, there can be, between different industries, the same technical composition, but very different organic compositions. The same kinds of technical composition exists in industries using copper and iron, but because copper costs much more than iron the value relation between the constant capital and variable capital in the two industries is very different.

A difference in the value of constant capital then could be due to either a different technical composition or due to the difference in the value composition, i.e. it could be because more material is processed relatively in one sphere, or it could be that the material itself is more valuable. Both situations have to be analysed separately.

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