If the technical composition of capital remains the same, but the price of the constant capital rises, Marx says, it “brings about the same variation in the composition of capital as if the value of constant capital had remained the same, but a greater amount of capital of unchanged value (thus also a greater capital value) had been employed, in proportion to the capital laid out in labour.” (p 282) Superficially, this is true, but in reality the latter condition could only apply if the level of productivity had risen, so that a given mass of labour processed a larger mass of material. It would imply a rise in the technical composition, and consequently organic composition of capital.
For example, if we take (2),
60 c (40) + 40 v (40) + 40 s = 140, and 120 units of output, that gives a price per unit of £1.166.
However, if the 60 c was the result of no change in the price of c, but an increase in the quantity of material processed, it would give,
60 c (60) + 40 v (40) + 40 s = 140, and 180 units of output, with a price per unit of £0.778. Where initially 50 units of labour processed 50 units of materials into 150 units of output, now 40 units of labour would process 60 units of material into 180 units of output, representing a rise in productivity from 1:1 to 1.5:1, or 50%.
What is the same is that,
“The consequence is necessarily a fall in profit.” (p 282)
In both cases, the rate of profit falls from 50 s/(50 c + 50 v) = 50% to 40 s/(60 c + 40 v) = 40%.
“Conversely, a change in the value of the variable capital—in this case a rise—increases the proportion of variable to constant capital and therefore also the percentage of variable capital, or its proportional share in the total capital. Nevertheless, the rate of profit falls here, instead of rising, for the method of production has remained the same.” (p 282)
In other words, the ratio of c:v has fallen, but this causes a lower rather than higher rate of profit, which is what would be expected when a lower ratio of c:v reflects a lower organic composition of capital. The reason is that it is not the organic composition that has fallen, here, but only the value composition. The consequence of the higher wages is that less labour is able to be set in motion, and so produces less surplus value. But, also, a larger portion of the new value produced goes to reproduce the variable capital, and less goes to surplus value, i.e. the rate of surplus value falls.
Marx says,
“The variable capital has increased in proportion to constant capital and hence also in proportion to total capital, although the amount of labour employed in proportion to the amount of constant capital has decreased. The surplus-value consequently falls and with it the rate of profit. Previously, the rate of surplus-value remained the same, while the rate of profit fell, because the variable capital fell in proportion to the constant capital and hence in proportion to the total capital, or the surplus-value fell because the number of workers decreased, its multiplier decreased, while the rate remained the same. This time the rate of profit falls because the variable capital rises in proportion to the constant capital, hence also to the total capital; this rise in variable capital is, however, accompanied by a fall in the amount of labour employed (of labour employed by the same capital), in other words, the surplus-value falls, because its decreasing rate is bound up with the decreasing amount of labour employed. The paid labour has increased in proportion to the constant capital, but the total quantity of labour employed has decreased.” (p 283)
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