Theories of Surplus Value, Part I, Chapter 4 - Part 83

Marx makes an important point. As he sets out in Capital III, Chapter 6, technological development, which leads to a rising organic composition of capital, is not represented by a relative increase in the mass or value of the fixed capital, but the opposite. The rise in the organic composition of capital sees the decline in the relative mass mass and value of both fixed capital and variable capital compared to output. What rises in mass, and less so in value, is the circulating constant capital, i.e. the raw materials processed.

Suppose a machine costs £16,000. It has 4 spindles. A worker, in 10 hours, adds a further £1,000 of value. The machine loses £1,000 of wear and tear. The total value of output is then £1,000 (wear and tear) + £1,000 (material) + £1,000 new value produced by labour = £3,000. Of this, each component represents 33.3%.

If a new machine is introduced with 12 spindles, which likewise loses £1,000 in wear and tear, it processes four times as much cotton. So:- £1,000 (wear and tear) + £4,000 (cotton) + £1,000 (labour) = £6,000. Now fixed capital has fallen to just 16.6%, labour 16.6%, whilst cotton has risen to 66.6% of the total value of output. It is this which leads to the rising organic composition of capital, and tendency for the rate of profit to fall, not an increase in the relative value of fixed capital.

In fact, as Marx sets out, the same technological change is likely to cause a fall in the value of the fixed capital itself, even in absolute terms, as well as an increase in its effectiveness. It is both of these aspects which bring about a moral depreciation of the existing fixed capital.

“Although the absolute magnitude of its reproduction—or its wear and tear—grows with the absolute size of the fixed capital, as a rule its proportional magnitude falls, in so far as its period of turnover, its duration, as a rule increases in proportion to its size. This proves among other things that the quantity of labour reproducing machinery or fixed capital is not at all proportional to the labour which originally produced these machines (conditions of production remaining the same), since only the annual wear and tear has to be replaced. If the productivity of labour rises—as it constantly does in this branch of production—the quantity of labour required for the reproduction of this part of the constant capital diminishes still more.” (p 243)

That doesn't apply to the auxiliary materials used by the machinery, such as coal for power, or oil for lubrication, because these are produced in industries entirely separate from machine building, and where such technological change does not occur so as to so markedly reduce the value of these commodities. However, the amount and value of these commodities used in production is relatively minor.

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