Capital III, Chapter 12 - Part 1

Supplementary Remarks 

1) Causes Implying a Change in the Price of Production 

The price of production, of a commodity, can change as a result of just two factors; either a change in the general rate of profit, or a change in the actual value of the commodity itself.

The general rate of profit may change because the general rate of surplus value changes. If the general rate of surplus value rises, this may be because the value of labour-power has fallen, i.e. wage goods have become cheaper. Provided this fall in the value of wage goods does not, at the same time, result in a rise in the value of constant capital, we would have an increased volume of surplus value, relative to the advanced capital, and so, all other things being equal, the rate of profit would rise.

The same thing would apply if the rise in the general rate of surplus value was the result of a reduction in wages, but, as Marx describes in Chapter 11, a cut in wages is only possible if wages were already above the value of labour power, or else are reduced below it. The same effects apply in reverse if the rate of surplus value falls.

“If the change in the rate of surplus-value is not due to a depression of wages below normal, or their rise above normal — and movements of that kind are to be regarded merely as oscillations — it can only occur either through a rise, or fall, in the value of labour-power, the one being just as impossible as the other unless there is a change in the productivity of the labour producing means of subsistence, i.e., in the value of commodities consumed by the labourer.” (p 205)

The rate of profit can also rise if the rate of surplus value remains constant, but the advanced social capital is reduced, again assuming the rate of turnover etc. remain the same. Similarly, if the advanced social capital value rises, whilst the rate of surplus value remains the same, the rate of profit will fall. 

If the advanced social capital rises, because wages or the value of labour power rises, then the rate of profit will fall, for two reasons. Firstly, the rise in v means a corresponding fall in s, but, secondly, c + v has risen so that the ratio of s to c + v (the rate of profit) falls.

But, the advanced social capital may change whilst v remains constant. The same quantity of labour may mobilise a greater volume of constant capital if the productivity of labour rises.

“The mass of this part, technically considered, increases or decreases in proportion to the quantity of labour-power bought by the variable capital, and the mass of its value thus increases or decreases with the increase or decrease of its own mass. It also increases or decreases, therefore, proportionately to the mass of the value of the variable capital. If the same labour sets more constant capital in motion, it has become more productive. If the reverse, then less productive. Thus, there has been a change in the productivity of labour, and there must have occurred a change in the value of certain commodities.” (p 205)

However, the price of production may also change, even if the general rate of profit remains constant. In that case, the change must stem from a change in the actual value of the commodity itself, i.e. the labour-time required for its production must have changed.

Again, there are two ways this might arise. Either the value of c rises, more labour-time is required to produce the means of production required to produce this commodity, or else the productivity of the labour used in its production has changed, so that more or less labour is required to process a given quantity of means of production.

“The price of production of cotton yarn may fall, either because raw cotton is produced cheaper than before, or because the labour of spinning has become more productive due to improved machinery.” (p 206)

The number of combinations that may here cause a rise or fall in the price of production are, therefore, almost endless. The value of c may rise or fall and be compensated by or exacerbated by a rise or fall in v. The value of some elements of c may rise or fall, and be compensated or exacerbated by the rise or fall in the value of other elements of c and so on.

“All changes in the price of production of commodities are reduced, in the last analysis, to changes in value. But not all changes in the value of commodities need express themselves in changes in the price of production. The price of production is not determined by the value of any one commodity alone, but by the aggregate value of all commodities. A change in commodity A may therefore be balanced by an opposite change in commodity B, so that the general relation remains the same.” (p 206)

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