Theories of Surplus Value, Part II, Chapter 12 - Part 21

Marx sets out a further table on the assumption that the price of cotton, and method of production stays the same.

	Constant capital £'s	Variable capital £'s	Surplus- value £'s	Rate of surplus-value %	Rate of profit %	Product kilos of yarn	Price per kilo of yarn £'s
II	75= 1,500 kilos of cotton	25 (18.75 workers)	£12.50	50	12.50	1,500	£0.075

Here, in each kilo, £0.05 represents cotton and £0.025 represents new value created by labour. Of this new value, two-thirds represents wages and one-third surplus value. That gives a rate of profit of 12.5%.

In the final scenario, the value of the variable capital remains constant, but the price of cotton rises by a third.

	Constant capital £'s	Variable capital £'s	Surplus- value £'s	Rate of surplus- value %	Rate of profit %	Product kilos of yarn	Price per Kilo of yarn £'s
III	£84.21= 1,263.158 kilos of cotton	15.789 = (15.789 workers)	15.789	100	15.789	1,263.158	0.092

In this case, given the same technical composition of capital, this higher price of cotton means that £100 of capital buys less cotton and less labour-power. In order to maintain the same technical composition 1263.158 kilos of cotton is processed by 15.789 workers. That is £84.21 of cotton, and £15.789 in wages. Because wages have remained constant, per worker, the rate of surplus value remains 100%, giving £15.789 of surplus value. The rate of profit is then 15.789%.

Marx summarises each of these cases in a single table.

	Constant capital £'s	Variable capital £'s	Surplus -value £'s	Rate of surplus-value %	Rate of profit %	Product kilos of yarn	Price per kilo. of yarn £'s	Profit £'s
I	80=1,600 kilos cotton	20=20 workers	20.000	100	20.000	1,600.000	0.075	0.0083
II	75= 1,500 kilos cotton	£25= 18.75 workers	12.500	50	12.500	1,500.000	0.075	0.0083
III	£84.21= 1,263.158 kilos of cotton	£15.789 =15.789 workers	15.789	100	15.789	1,263.158	0.092	0.0125
IV	80= 1,200 kilos of cotton	20= 15 workers	10.000	50	10.000	1,200.000	0.092	0.0125

“The price of the product has changed in III and IV, because the value of constant capital has changed. On the other hand, a change in the value of variable capital does not bring about a change in price because the absolute quantity of immediate labour remains the same and is only differently apportioned between necessary labour and surplus-labour.” (p 287) 

The table indicates what has been set out previously, which is that the profit can fall for various reasons, even where the organic composition of capital remains constant. In II, it falls because wages rise, and so, although the price of the product remains constant, the rate of surplus value falls, the amount of surplus value falls, and so the rate of profit falls.

In III, the price of the product rises from £0.075 to £0.092, because the price of cotton rises. The amount of profit per kilo remains the same, but the amount of surplus value falls because less labour is employed. A greater proportion of the cost of a kilo of yarn consists of cotton. Although the rate of surplus value remains the same, less labour is employed, so a smaller amount of surplus value is produce, which results in a lower rate of profit.

In IV, the price of yarn rises because the price of cotton rises. As the price of cotton and of wages rise by the same proportion, there is no change in the organic composition of capital. But, less labour and cotton are employed. The mass of surplus value falls because less labour is employed, and also because the rate of surplus value falls due to higher wages. As a result, the rate of profit falls because 1) the mass of surplus value falls, because less labour is employed, 2) the rate of surplus value falls, because wages rise, 3) the value of constant capital rises.

“Hence it follows that variations in the value of commodities which enter into constant or variable capital—when the method of production, or the physical composition of capital, remains the same, in other words, when the ratio of immediate and accumulated labour remains constant—do not bring about a change in the organic composition of the capital if they affect variable and constant capital in the same proportion, as in IV (where for instance cotton becomes dearer to the same degree as the wheat which is consumed by the workers). The rate of profit falls here (while the value of constant and variable capital increases), firstly because the rate of surplus-value falls due to the rise in wages, and secondly, because the number of workers decreases.” (p 288)

If the change in price affects only the constant capital, the effect is the same as a rise in the organic composition of capital, Marx says. In other words, even if the mass of surplus value remained the same, as a result of increasing the capital, so as to employ the same quantity of labour and materials, the ratio of the surplus value to constant capital would fall, so the rate of profit would fall. If it affects only the variable capital, less workers and material can be employed, and so the mass of surplus value would fall. But, even if the mass of capital is increased, so that the same mass of labour and materials are employed, a greater portion of the new value created by labour goes to reproducing labour-power, and less goes to surplus value, as the rate of surplus value falls. So, this surplus value falls relative to both c and v, causing the rate of profit again to fall.

One final variant would be for the prices of both constant and variable capital to change, but in different proportions, or the price of one could fall whilst the other rose, and vice versa. But, these would only represent a combination of the effects already discussed.

“I would make the following further observation on the influence of the variation of value upon the organic composition of capital: With capitals in different branches of production—with an otherwise equal physical composition—it is possible that the higher value of the machinery or of the material used, may bring about a difference. For instance, if the cotton, silk, linen and wool [industries] had exactly the same physical composition, the mere difference in the cost of the material used would create such a variation.” (p 289) 

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