Theories of Surplus Value, Part II, Chapter 8 - Part 46

As he sets out, the mass of profit, at certain points of the cycle, is squeezed by rising wages, when the supply of labour-power becomes tight. It may be squeezed by other such forces, such as rising rents, interest and so on, but this has nothing to do with the long run tendency for the rate of profit to fall. Similarly, at certain points of the cycle, as he sets out in Capital III, Chapter 6, profits may be squeezed, because sharply rising raw material prices, cannot be recovered in the final market prices of commodities, but again this has nothing to do with the long term tendency.

On the contrary, the Law of the Tendency for the Rate of Profit to Fall actually comes into play as a consequence of the measures taken by capital to relieve the pressure on profits, caused by rising wages, raw material prices and so on, that also creates the conditions for crises of overproduction. Those measures involve the introduction of new labour-saving technologies that create a relative surplus population, and so pushes down wages, and new technologies that enable existing raw materials to be produced more cheaply and used more efficiently, so as to reduce the value of constant capital.

The concept, put forward by Rodbertus, is wrong, because, as Marx says, even Ricardo only talks about a relative fall in agricultural productivity compared to industrial productivity. As Anderson, who is the originator of Ricardo's theory of rent, set out, all land is capable of improvement, and, as industry and science develops, the greater the scope for that improvement, becomes.

Moreover, Rodbertus' concept of a fixed number of hectares is itself clearly wrong, because increased demand for food, in the 19th century, made it worthwhile opening up the North American prairies, and South American pampas. Today, increased demand for food has prompted investment in the development of large-scale industrial farms in Africa.

“Although the number of workers employed has grown, as has the rate at which they are exploited, the amount of capital expended on wages as a whole has fallen relatively, although it has risen absolutely; because the capital which as an advance—a product of the past—is set in motion by these workers and as a prerequisite of production forms an ever growing share of the total capital. Hence the rate of profit and rent taken together has fallen, although not only its volume (its absolute amount) has grown, but also the rate at which labour is being exploited has risen. This Herr Rodbertus cannot see, because for him constant capital is an invention of industry of which agriculture is ignorant.” (p 90) 

As I have set out elsewhere, the rate of profit that Marx is describing here is s/(c + v), which is the same as p/k, or the profit margin. 

"{Incidentally, when speaking of the law of the falling rate of profit in the course of the development of capitalist production, we mean by profit, the total sum of surplus-value which is seized in the first place by the industrial capitalist, [irrespective of] how he may have to share this later with the money-lending capitalist (in the form of interest) and the landlord (in the form of rent). Thus here the rate of profit is equal to surplus-value divided by the capital outlay."

(Theories of Surplus Value, Chapter 16)

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