““Mr. Ricardo,” he says, “[…seems to…] consider the whole produce as divided between wages and profits, forgetting the part necessary for replacing fixed capital” (p. 174, note).” (p 104)
Ramsey means constant capital when he says fixed capital here. Ramsey is not quite right, because, as Marx says, Ricardo always deducts the consumed constant capital, in these references, so as to concentrate on the new value created.
“Nevertheless, on the main issue Ramsay is right. Because Ricardo does not make any further examination at all of the constant part of capital, and pays no attention to it, he makes gross errors and in particular confuses profit with surplus-value, besides errors in investigating oscillations in the rate of profit and so on.” (p 104)
Marx quotes Ramsey further on this point, and compares him with Ricardo, to draw out important lessons in relation to the reduction in the value of the fixed and circulating constant capital, concerning the rate of profit, and how it affects individual capitalists, as opposed to capital in general.
Ramsey says,
““In what manner is a comparison to be instituted between the product and the stock expended upon it? With regard to a whole nation … it is evident that all the various elements of the stock expended must he reproduced in some employment or another, otherwise the industry of the country could not go on as formerly. The raw material of manufactures, the implements used in them, as also in agriculture, the extensive machinery engaged in the former, the buildings necessary for fabricating or storing the produce, must all be parts of the total return of a country, as well as of the advances of its master-capitalists. Therefore, the quantity of the former may he compared with that of the latter, each article being supposed placed as it were beside that of a similar kind” (l.c., pp. 137–39). (p 105)
This is a repetition of Marx's point, set out in Capital III, that social reproduction requires that the physical elements of constant capital be replaced in kind, at least in effectiveness, i.e. two machines may be replaced with just one, provided the one machine does, at least, the same work as the previous two.
Of course, as Ramsey goes on, each individual capitalist does not physically reproduce the consumed elements of their own constant capital from their own output, in the way, for example, a farmer replaces seeds, or a coal mine replaces the coal, used in its steam engines, with the coal it mines. Rather that constant capital is physically reproduced out of the commodities produced by other capitals, and bought from them with an equivalent amount of exchange value recovered in the value of the commodity.
“Profit […] must rise or fall exactly as the proportion of the gross produce, or of its value, required to replace necessary advances, falls or rises […] the rate of profit must depend immediately upon two circumstances; first, the proportion of the whole produce which’ goes to the labourers; secondly, the proportion which must be set apart for replacing, either in kind or by exchange, the fixed capital” (l.c., pp. 146–48, passim).” (p 105)
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