“And while it is modified in the individual spheres of production, the fundamental fact always remains that in the case of the total social capital the cost-price of the commodities produced by it is smaller than their value, or, in the case of the total mass of social commodities, smaller than their price of production, which is identical with their value.” (p 165)
The formula for the price of production can then be stated as equal to k + kp', where k is the cost of production and p' is the general rate of profit.
Marx says that the price of production in any sphere changes:-
“1) If the general rate of profit changes independently of this particular sphere, while the value of the commodities remains the same (the same quantities of congealed and living labour being consumed in their production as before).
2) If there is a change of value, either in this particular sphere in consequence of technical changes, or in consequence of a change in the value of those commodities which form the elements of its constant capital, while the general rate of profit remains unchanged.
3) Finally, if a combination of the two aforementioned circumstances takes place.” (p 166)
But, as set out previously, the price of production could rise, even if the value of the commodity falls, if the general rate of profit rises sufficiently, and vice versa. But, the processes that lead to the formation of a general rate of profit are many and varied. Mostly, they neutralise each other, and thereby can only be detected after very long periods. This is one reason why those theories that try to explain capitalist crises on the basis of the tendency for this rate of profit to fall are way off the mark. They are like a theory that describes the cause of of every aeroplane crash by blaming gravity.
“In spite of the great changes occurring continually, as we shall see, in the actual rates of profit within the individual spheres of production, any real change in the general rate of profit, unless brought about by way of an exception by extraordinary economic events, is the belated effect of a series of fluctuations extending over very long periods, fluctuations which require much time before consolidating and equalising one another to bring about a change in the general rate of profit. In all shorter periods (quite aside from fluctuations of market-prices), a change in the prices of production is, therefore, always traceable prima facie to actual changes in the value of commodities, i. e., to changes in the total amount of labour-time required for their production.” (p 166)
From the perspective of the total social capital, the sum of values equals the sum of prices. The fact of whether these prices are measured in terms of a money commodity, such as gold, or in terms of money tokens, where credit-money also circulates, is irrelevant precisely because values are measured also by the same medium. It matters not one jot whether the value of these money tokens is devalued, therefore, by half or any other figure because the measurement of values and prices changes in exactly the same proportion. So,
“... it is evident that from the point of view of the total social capital the value of the commodities produced by it (or, expressed in money, their price) = value of constant capital + value of variable capital + surplus-value. Assuming the degree of labour exploitation to be constant, the rate of profit cannot change so long as the mass of surplus-value remains the same, unless there is a change in either the value of the constant capital, the value of the variable capital, or the value of both, so that C changes, and thereby s/C, which represents the general rate of profit. In each case, therefore, a change in the general rate of profit implies a change in the value of commodities which form the elements of the constant or variable capital, or of both.” (p 166)
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