Capital III, Chapter 15 - Part 12

A number of contradictory forces are then at play here. On the one hand, each capital is led by competition to accumulate capital and expand its production in order to reduce its costs. But, this means that supply for each type of commodity expands to such a degree that demand is satisfied at the market value, and market prices fall below it making it increasingly difficult to realise the produced surplus value. The measures adopted by individual capitals to resolve that only exacerbate the problem. As each capital seeks to resolve the difficulty of realising profits, they seek to reduce their costs further. If they expand production to reduce unit costs, that simply exacerbates the over-supply; if they seek to reduce wages, that simply undermines potential demand.

But, also the fact of falling prices has effects too. If the prices of wage goods fall, that reduces the value of labour-power, which means capital can buy more with any quantity of variable capital. As Marx describes, in Theories of Surplus Value, following on from Adam Smith, what this really amounts to is the fact that a given quantity of dead labour, embodied in commodities (wage goods) buys a larger mass of living labour.  On the one hand, that means that the rate of surplus value rises, and also the mass of produced surplus value rises. But, only by increasing production further, and thereby exacerbating the problem of realising that surplus value.

The rate at which accumulation can occur depends on the mass of profit produced and the price of commodities, therefore. And, not just the commodities that comprise the productive-capital. If the prices of those commodities, consumed by capitalists, falls, they then have a greater proportion of their profits to invest.

“If a certain rate of profit is given, the mass of profit will always depend on the magnitude of the advanced capital. The accumulation, however, is then determined by that portion of this mass which is reconverted into capital. As for this portion, being equal to the profit minus the revenue consumed by the capitalists, it will depend not merely on the value of this mass, but also on the cheapness of the commodities which the capitalist can buy with it, commodities which pass partly into his consumption, his revenue, and partly into his constant capital.” (p 245)

But, given the prices of these commodities, it is not the rate of profit that is decisive for accumulation, but the mass of profit produced. Moreover, the mass of profit will be greatest where the mass of capital is greatest, and the mass of capital will be greatest where capital has been most developed, where productivity is high and where the organic composition of capital is high. In other words, the pace of capital accumulation will be greatest not where the organic composition of capital, and level of development, is low, but where it is high; where the factors that tend towards a falling rate of profit are high.

“In the first case the rate of profit = 10%, in the second = 20%. And yet more can be accumulated out of 100 than out of 20. And thus the river of capital rolls on (aside from its depreciation through increase of the productiveness), or its accumulation does, not in proportion to the rate of profit, but in proportion to the impetus it already possesses.” (p 245)

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