Thursday, 25 June 2015

Capital III, Chapter 9 - Part 4

What is important for Marx, at this stage, is not the resolution of some esoteric, mathematical problem, but the explication of an historical process in its simplest form. Having achieved that, it is then possible, at some future point, to elaborate it in its phenomenal form. But, in fact, on the basis of what has already been said, the difficulty of resolving the Transformation Problem, by some mathematical formulae can be seen. Not only does a resolution require a knowledge of the elasticity of demand for each commodity, but we know that as the magnitude of capital increases, so the organic composition tends to increase with it. Consequently, alongside the process that reduces prices and profits for yarn producers – the increase in supply – goes another process, whereby the organic composition of capital rises, and so the rate of profit is further reduced. Yet, this process itself is further complicated.

The process by which capital invaded the spinning of yarn went through a number of stages. Even at the level of manufacture, the organic composition rises, simply because co-operative labour is inherently more efficient, and so it processes more cotton. But, by the same token, this very process means that productivity rises, and so does the extraction of relative surplus value. So, the rate of profit is being continually pulled down by one cause, and yet driven up by another related cause.

Its no wonder that at this stage, Marx wanted to keep the explanation of this process at as simple a level as possible. So, Marx is speaking of an actual historical process rather than just a logical sequence when he writes,

“Accordingly, the rates of profit prevailing in the various branches of production are originally very different. These different rates of profit are equalized by competition to a single general rate of profit, which is the average of all these different rates of profit.” (p 158)

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