Theories of Surplus Value, Part II, Chapter 8 - Part 9

It is only the effect of the modified prices of that constant capital, in different spheres, that arises, as Marx says above. Overall, for those spheres that suffer as a result of a higher cost of their constant capital, others benefit from a lower cost of theirs, and so on.

“Finally, the commodity may neither be an element in any constant capital, nor form a necessary item in the workers’ means of subsistence (for those commodities which the worker can choose to buy or abstain from buying, he consumes as a consumer in general and not as a worker) but it may be one of the consumer goods, an article for individual consumption in general. If, as such, it is consumed by the industrial capitalist himself, then the rise in its price in no way affects the amount of surplus-value or the rate of surplus-value. Now if the capitalist wanted to maintain his previous standard of consumption, then that part of profit (surplus-value) which he uses for individual consumption would rise in relation to that which he sinks into industrial reproduction. The latter would decrease.” ( p 25-6)

This follows on from Marx's further analysis in Capital III, set out after his discussion on the formation of an average rate of profit, and prices of production. In other words, on the basis of his discussion of the division of the profit after it has been realised. Likewise, as Marx describes in Capital III, on the basis of this further analysis, the rate of accumulation of capital cannot ultimately be determined by the rate of profit, because it is also conditioned by these other elements.

So, the rate of profit may fall, but the amount available for accumulation may rise, because

1. The rate of interest falls
2. Rents fall
3. Taxes fall
4. Productivity rises reducing the value of capitalists personal consumption needs 

Moreover, as Marx sets out here, accumulation may increase precisely because of a fall rather than a rise in the rate of profit.

“Improvements, inventions, greater economy in the means of production, etc. are introduced not at times when prices rise above their average level, but when they fall below it, i.e., when profit falls below its normal rate.” (p 26 – 7)

This brings out the distinction I have described elsewhere between intensive and extensive accumulation of capital, particularly in relation to different phases of the long wave. At those points of the long wave when the rate and mass of profit is high, capital accumulation will tend to be extensive. There is little incentive to devote resources to innovation or experimentation. More of the same technology is simply rolled out to meet rising demand. It is only as Marx describes here, when that process has progressed, when supply has risen and commodity prices have fallen – especially as this goes along with rising wages, to squeeze profit margins – that there is an incentive to innovate, experiment and to introduce new technologies that replace labour, and reduce costs of production.

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