Wednesday, 30 September 2015

Capital III, Chapter 15 - Part 21

So, we have two contradictory forces at work here. On the one hand, the rise in productivity increases the mass of surplus value, which acts to increase the mass of capital. On the other hand, that same rise in productivity acts to cheapen, newly produced capital, and to depreciate the existing capital, thereby reducing the total capital value.

“These two elements embraced by the process of accumulation, however, are not to be regarded merely as existing side by side in repose, as Ricardo does. They contain a contradiction which manifests itself in contradictory tendencies and phenomena. These antagonistic agencies counteract each other simultaneously.” (p 248-9)

It is this antagonism or rather series of antagonisms, that arise out of these contradictions, that provide the real meaning to Marx’s words, at the start of the chapter, about the breeding of crises. On the one hand, as capital expands the demand for labour rises, which eventually leads to rising wages and a squeeze on profit margins. That creates greater potential for crises of overproduction. This leads eventually to capital seeking to introduce labour saving technology. This is accompanied by a rising organic composition of capital, rising productivity and, therefore, a fall in the relative amount of labour-power employed, i.e. the conditions for the law of falling profits to operate. Meanwhile, higher wages encourages an increase in the working population. So, a relative over-population is produced. As capital expands, especially into new lines of production, this relative over-population is absorbed, but, in times stagnation, it is not, and causes a rise in the reserve army of labour, which reduces wages, and raises the rate of surplus value.

The corollary of the tendency for the rate of profit to fall is that the mass of capitals grows. The same process depreciates the existing capital, which acts to raise the rate of profit and to facilitate even greater accumulation, because any mass of surplus value buys a greater quantity of now cheaper productive-capital.

The above factors act to increase accumulation, but as part of that increased accumulation, the organic composition of capital rises, thereby tending to reduce the rate of profit.

“These different influences may at one time operate predominantly side by side in space, and at another succeed each other in time. From time to time the conflict of antagonistic agencies finds vent in crises. The crises are always but momentary and forcible solutions of the existing contradictions. They are violent eruptions which for a time restore the disturbed equilibrium.” (p 249)

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