Monday, 24 August 2015

Capital III, Chapter 13 - Part 11

“It requires no more than a passing remark at this point to indicate that, given a certain labouring population, the mass of surplus-value, hence the absolute mass of profit, must grow if the rate of surplus-value increases, be it through a lengthening or intensification of the working-day, or through a drop in the value of wages due to an increase in the productiveness of labour, and that it must do so in spite of the relative decrease of variable capital in respect to constant.

The same development of the productiveness of social labour, the same laws which express themselves in a relative decrease of variable as compared to total capital, and in the thereby facilitated accumulation, while this accumulation in its turn becomes a starting-point for the further development of the productiveness and for a further relative decrease of variable capital — this same development manifests itself, aside from temporary fluctuations, in a progressive increase of the total employed labour-power and a progressive increase of the absolute mass of surplus-value, and hence of profit.” (p 219-20)

As stated earlier, this law, developed by Marx, is very important for understanding the later development of capital, as it exists today, because Marx points out later,

“The rate of profit, i.e., the relative increment of capital, is above all important to all new offshoots of capital seeking to find an independent place for themselves. And as soon as formation of capital were to fall into the hands of a few established big capitals, for which the mass of profit compensates for the falling rate of profit, the vital flame of production would be altogether extinguished. It would die out.” (Chapter 15, p 259)

This fall in the rate of profit, whose causes simultaneously result in an increase in the mass of profit, appears to represent a contradiction. If we take a fraction of the total social capital, whose composition is equal to the average, then its clear that for this fraction of capital, a fall in the rate of profit is equally an absolute fall in the amount of profit. A capital made up of 80 c + 20 v + 20 s, will have absolutely less profit than were the capital made up 60 c + 40 v + 40 s. But, the whole point as to why this apparent contradiction is no contradiction at all, is that the total social capital continually expands. In percentage terms, a capital of £60 bn c + £40 bn v + £40 bn s, is the same as one made up £6 bn c + £4 bn V + £4 bn s, just as one made up £80 bn c + £20 bn v + £20 bn s, is the same as one made up £8 bn c + £2 bn s + £2bn s.

Yet, its clear that although in percentage terms, the economy with the higher organic composition of capital will produce less profit, the larger economy with the higher organic composition will still produce more profit in absolute terms than the smaller economy with a lower organic composition, i.e. £20 bn of profit as opposed to £4 bn of profit.

This conclusion is the same as that developed in Capital I, that as productivity rises, which brings about increased accumulation, which in turn brings about increased productivity, so capital must, other things being equal, expand by increasing amounts in order to employ the same quantity of labour-power.

“Consequently, the possibility of a relative surplus of labouring people develops proportionately to the advances made by capitalist production not because the productiveness of social labour decreases, but because it increases. It does not therefore arise out of an absolute disproportion between labour and the means of subsistence, or the means for the production of these means of subsistence, but out of a disproportion occasioned by capitalist exploitation of labour, a disproportion between the progressive growth of capital and its relatively shrinking need for an increasing population.” (p 222)

However, as was described in Capital I, and as can be seen empirically, other than during specific periods of stagnation, no such permanent rise in the surplus population arises, because all other things are not equal. The increase in productivity raises the rate of surplus value, and reduces the value of means of production so that accumulation proceeds on the basis of increasing absolute quantities of capital being employed. The same processes lead to the development of new industries with low organic compositions and high rates of profit, which thereby grow rapidly and quickly provide employment for large numbers of workers etc.

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