The actual wage paid will vary, as a market price, which will result in the period of unpaid labour being greater or smaller, as a consequence of changes in the demand and supply of labour-power. If profits are high, capital will demand more labour-power, and, as the reserves of labour-power are used up, and shortages of labour-power begin to emerge, the wages will rise, even above the value of labour-power. Workers may then marry earlier, and have more children, more of those children will survive, increasing the supply of labour-power. But, as wages rise, and profits are squeezed, capital will expand less rapidly, reducing the increased demand for labour-power. And, to deal with labour shortages, and the resultant high wages, capital will introduce new labour-saving technologies, that create a relative surplus population, so that wages once more fall, and profits rise.
And here can be seen part of the basis of the long wave cycle too. Profits rise, the demand for labour-power rises, wages rise; workers marry earlier, and have more children more of whom survive, increasing the supply of labour-power, a dozen or so years hence, as these children enter the workforce; the higher wages start to squeeze profits, but the higher wages, and increased number of workers creates an increased demand for wage goods, which drives capital to expand further to meet that demand; this increasing demand, driving increasing extensive capital accumulation, with increasingly squeezed profits, as wages rise, causes interest rates to rise, as productive-capital must demand more money-capital from the money-market; it also leads to an overproduction of capital, where it has expanded so far, in relation to the available workers, on the basis of the existing technology, that no additional labour can be employed in conditions where it would produce additional surplus value. The length and intensity of the working day have already been pushed to their limit, women workers, and immigrants have been recruited to the workforce, but the demand for labour-power continues to outstrip the supply, so that wages rise to a level whereby no additional workers can be employed profitably. A crisis of overproduction, therefore, breaks out as each capital, still driven by rising demand, is forced by competition to try to maximise its market share.
Each capital seeks to introduce labour-saving technologies, to reduce the cost of wages, and obtain competitive advantage; some capitals go bust. The accumulation of capital slows down, rather than extensive accumulation, it becomes intensive accumulation, with new technologies introduced to produce the same level of output with fewer machines and workers, rather than to increase output, and the demand for labour-power is reduced, both as a result of the slower pace of capital accumulation, and the introduction of labour-saving technologies, at just the point where the additional labour supplies, from the new generation of workers enters the workforce, creating a relative surplus population, pushing wages down, and raising the rate of surplus value, creating the conditions for a rising mass and rate of profit, in the next upswing of the cycle.
In short, contrary to Smith's belief, capital will always be in a position to demand a period of unpaid labour, because the capital will only act as capital, where it makes a profit. If no profit can be made, from the advance of additional capital there is no point in advancing it. When those conditions cease to exist, a crisis of overproduction arises. Initially, this leads to a spike in interest rates, as firms seek money simply as currency to pay bills and stay afloat, and will pay almost any rate of interest to do so. But, in the aftermath of the crisis, the demand for money-capital collapses, and interest rates drop to their lowest level. The owners of money-capital simply use it for additional consumption, or for speculation, which is why asset prices rise in speculative bubbles during such periods. Those in receipt of profits, instead of investing it productively turn it into loanable money-capital, or simply into money to fund additional consumption and speculation. Where they do use it productively, it is to introduce new labour-saving technologies, to overcome the squeeze on profits caused by the rise in wages, induced by the shortage of labour, caused by the previous overproduction of capital.
But, workers do not have the luxury of these options. They must work or die, and so they are always thereby forced by necessity to provide capital with a period of unpaid labour. And, as was demonstrated earlier, the more the value of labour-power is reduced, by constantly rising social productivity, the greater the portion of the working-day that represents unpaid labour becomes. That is true even if workers real wages rise. If a worker works for 10 hours, and produces £10 of new value, say they require a kilo of grain to reproduce their labour-power, and the kilo of grain has a value of £5, or 5 hours labour, in that case they produce 5 hours, or £5 of surplus value. If productivity rises, so that it only requires 2 hours to produce the grain, so that it has a value of £2, the worker may be paid 2 kilos of grain as wages, equal to wages of £4. But, although the workers' real wage has doubled, the amount of paid labour they provide has fallen by 20%, and the amount of unpaid labour has risen by 20%. They now provide 6 hours of unpaid labour, compared to only 5 before.
Marx notes a further inconsistency in Ricardo's argument, in respect of the treatment of materialised and immediate or living labour. Ricardo says,
““Not only the labour applied immediately to commodities affects their value, but the labour also which is bestowed on the implements, tools, and buildings, with which such labour is assisted” (David Ricardo, On the Principles of Political Economy, and Taxation, London, 1821, p. 16).” (p 399)
In other words, in determining the value of commodities, Ricardo correctly notes that the quantity of labour required consists not just of the living labour required, in the immediate labour process, but also of the materialised labour contained in the materials etc. processed by the living labourer, in that process. But, Marx says, in that case, if both of these forms of labour, materialised and living, are treated without distinction, in determining the quantity of labour that forms the value of commodities, how can it be justified to determine the value of these different forms of labour differently, when it comes to their exchange one with the other in the form of the exchange of wage labour and capital?
“Why should it, in this case, invalidate the law of value, since the difference in itself, as shown in the case of commodities, has no effect on the determination of value? Ricardo does not answer this question, he does not even raise it.” (p 399)
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