Wednesday, 1 July 2015

Capital III, Chapter 9 - Part 9

If the rate of surplus value remains the same, the general rate of profit can change as a result of a change in the organic composition of capital. But, a change in the organic composition of capital, for example, the introduction of some new machine, is inevitably accompanied by some change in the rate of surplus value, that is likely to at least offset it. Moreover,

“... such technical changes must always show themselves in, and be attended by, a change in the value of the commodities, whose production would then require more or less labour than before.” (p 167)

So, the tendency for the rate of profit to fall, attendant upon such a rise in the organic composition, will be neutralised both by a reduction in the value of the constant capital – and possibly the variable capital too – as well as a rise in the rate of surplus value. Moreover, at a certain point, where this might reach its limit, the likelihood is that any surplus value, which then risked being over-accumulated, in this particular sphere, would already have been seeking opportunities for investment elsewhere. This is indeed the very principle behind the process, which leads to the establishment of an average rate of profit in the first place.

Long before it fell to some ill-defined minimum, it would have been looking for alternative, higher profit spheres in which to invest. That might be new types of commodities, new industries, or new geographical locations. The determining factor here is, in fact, not the tendency of the rate of profit to fall, but the long wave cycle, which determines the quantity of such alternative profitable spheres of investment.

And Marx points out,

“1) On the one hand, they are the laws of the general rate of profit. In view of the many different causes which make the rate of profit rise or fall one would think, after everything that has been said and done, that the general rate of profit must change every day. But a trend in one sphere of production compensates for that in another, their effects cross and paralyse one another. We shall later examine to which side these fluctuations ultimately gravitate. But they are slow... Since the general rate of profit is not only determined by the average rate of profit in each sphere, but also by the distribution of the total social capital among the different individual spheres, and since this distribution is continually changing, it becomes another constant cause of change in the general rate of profit. But it is a cause of change which mostly paralyses itself, owing to the uninterrupted and many-sided nature of this movement. 

2) Within each sphere, there is some room for play for a longer or shorter space of time, in which the rate of profit of this sphere may fluctuate, before this fluctuation consolidates sufficiently after rising or falling to gain time for influencing the general rate of profit and therefore assuming more than local importance. The laws of the rate of profit, as developed in Part I of this book, likewise remain applicable within these limits of space and time.” (p 169)

Once again, Marx's analysis here demonstrates how remote any tendency for the rate of profit to fall must be from the cause of capitalist crises, other than at best on a purely localised basis, i.e. in relation to some specific sphere.

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