“It is evident, however, that this actual depreciation of the old capital could not occur without a struggle, and that the additional capital ΔC could not assume the functions of capital without a struggle. The rate of profit would not fall under the effect of competition due to over-production of capital. It would rather be the reverse; it would be the competitive struggle which would begin because the fallen rate of profit and over-production of capital originate from the same conditions. The part of ΔC in the hands of old functioning capitalists would be allowed to remain more or less idle to prevent a depreciation of their own original capital and not to narrow its place in the field of production. Or they would employ it, even at a momentary loss, to shift the need of keeping additional capital idle on newcomers and on their competitors in general.
That portion of ΔC which is in new hands would seek to assume a place for itself at the expense of the old capital, and would accomplish this in part by forcing a portion of the old capital to lie idle. It would compel the old capital to give up its old place and withdraw to join completely or partially unemployed additional capital.” (p 252-3)
Its important to reiterate here that this falling rate of profit has nothing to do with any long term tendency to do so, resulting from a rise in the organic composition of capital. Quite the contrary, this overproduction of capital, and consequent fall in the rate of profit can result even where the organic composition remains constant or even falling. It arises due to a rising mass of profits, which causes over-exuberance, and increased demand for productive-capital pushing up its price. In the Spring phase of the Long Wave, a high and rising rate and mass of profit encourages such accumulation, alongside a rise in the organic composition. But, the latter is a reflection of rising productivity, which creates relative surplus population. That, together with the continued existence of a large reserve army, from the previous Winter phase, of stagnation, means that any such overproduction is quickly overcome.
In the Summer phase, of the Long Wave, high rates and masses of profits continue, but begin to slow down, as productivity growth slows. But, it is in the Autumn phase, when the crises of overproduction are most acute. Then available supplies of labour-power have been used up, whilst productivity growth has slowed, to prevent a solution via the creation of a relative surplus population. The latter also restricts the extraction of additional relative surplus value. The slow down in technological development, here, means that the expansion of capital is extensive rather than intensive. That is, it takes place on the basis of the existing technical composition of capital.
Its in this phase that the big confrontations between capital and labour occur, such as the Paris Commune, the 1917 Russian Revolution, and the other European revolutions of the time, as well as the 1926 General Strike in Britain, and later the large scale confrontations of the 1970's and early 1980's. It is in the period after this, during the stagnation of the Winter phase, that reaction sets in, capital develops new technological solutions, that raise productivity and create new types of use value, raising both produced and realised surplus value, that the base for the new cycle is formed.
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