On the basis of unchanged wages, Marx also assumes that the rate of surplus value remains unchanged. Using his assumption that the amount of required living labour rises by 60%, Marx says the producers need 24 days labour, whereas previously they required 15. The workers work a 12 hour day, comprised 10 hours of necessary labour and 2 hours surplus labour.
The 24 workers provide 240 hours of necessary labour and 48 hours of surplus labour, where previously they provided 150 hours of necessary labour and 30 hours of surplus labour. As a result, revenue rises in these industries, because more labour-power is employed, and with the same rate of surplus value, the mass of surplus value thereby also rises. The coal producer, thereby hands over more linen to the producers of iron, wood and machines, who then use it to pay out the wages of these additional workers, and to cover the resulting additional surplus value.
As set out above, Marx's assumption that the amount of additional labour is only 60% is wrong, but this does not change the basic principle being described.
If the rise in value of iron, wood, and machines results from a rise in their own constant capital, then the same thing applies. Either the value of these have risen because of a fall in the productivity in the living labour used in their production, or else because the value of constant capital, which they in turn employ, has risen. Ultimately, the explanation for the rise in value must reside in a fall in productivity, and this means more labour is employed, and it is for the payment of this labour that the additional revenue is directed.
If wages remain constant, they only fall in relation to iron, timber and machinery, but wages are not spent on these capital goods. It would only be if the value of the constant capital rose so as to have an appreciable effect on the prices of wage goods that this would mean that wages would have fallen in real terms.
So far, Marx has only considered the effect on surplus value, and not the rate of profit. For the reasons discussed above, in those industries where productivity has fallen, so that more labour is employed, the amount of surplus value will have risen. If the rate of surplus value remains the same, and the mass of labour employed rises, the mass of surplus value must, by definition, also rise.
However, the rate of profit overall must fall, because the value of constant capital in all those industries which use that output, will have risen. In other words, if the cost of constant capital for the coal producers rises from £10,000 to £16,000, then assuming that the £20,000 of new value is divided £16,000 wages, £4,000 surplus value, the rate of profit falls from 4/26 (10c+16v) = 15.38% to 4/32 (16c + 16v) = 12.5%.
But, if in some of these industries, such as coal, their own productivity falls, so that more labour is employed, this would cause their own mass of surplus value to rise. If this rise in surplus value was greater than the rise in the value of their constant capital, these industries would see their rate of profit rise.
“An increase in the value of the constant capital (arising from lowered productivity in the branches of labour which supply it) raises the value of the product into which it enters as constant capital, and reduces the part of the product (in kind) which replaces the newly-added labour, thus making it less productive in so far as this is reckoned in its own product.” (p 195)
In other words, as described above, if the price of constant capital, used in coal production, rises, this will raise the value of coal. But, more coal will now have to be set aside to cover the replacement of this constant capital. It may not be that more coal is directly exchanged for this constant capital – though it may be as described above, where lower productivity means that more workers are employed in the iron, wood, and machine industries, and these additional workers buy coal with their wages – but even where coal is exchanged for say linen, a portion of this linen would then have to be exchanged for constant capital.
In reality, as shown earlier, coal would continue to be sold to the consumer sector, but a portion of the proceeds of this sale would then be used by coal producers to pay for constant capital, rather than being used as revenue to buy consumer goods.