Theories of Surplus Value, Part II, Chapter 15 - Part 12

With the improvement of technology, there is no reason why not only the value of raw materials should not fall faster than the increase in their productive consumption, but also why their productive consumption should not rise by a smaller proportion than the increase in output. For example, not only did rises in productivity reduce the value of coal, but improvements in steam engine technology meant that less coal was productively consumed by steam engines to produce a given quantity of energy. The fall in c relating to the productive consumption of coal, everywhere that steam engines were used, therefore, not only resulted from a fall in the value of coal, but also from a relative fall in the quantity of coal consumed for a given level of output. The same applies to oil, gas and electricity consumption in modern economies, as well as to all other raw materials, both in terms of their use, and the substitution of alternative materials.

Moreover, in economies where 80% of new value, and surplus value production comes from service industries, rather than material production industries, this link between rising productivity and rising material consumption, in production, is broken, because the amount of raw material processed in these service industries is minor. Going back to Marx’s example, if the same £100 of capital is advanced, the fall in the value of flax means that more constant capital can be processed, and if productivity in spinning remains constant, more labour will be employed. If the rate of surplus value remains constant, therefore, the mass of surplus value would rise. 

“More workers could be employed with the same capital of 100, despite the rise in wages and the fall in the rate of surplus-value. Despite the fall in the rate of surplus-value, the amount of surplus-value, and hence the profit, would increase, because the number of workers had increased, For the above ratio of 20c + 45v gives us the following proportions with a capital outlay of 100: 

Constant capital £'s	Variable capital £'s	Surplus-value £'s	Value of the product £'s	Capital advanced £'s	Rate of Profit% %
30.77	69.23	23.08	123.08	100	23.08

“The relation between the rate of surplus-value and the number of workers becomes very important here. Ricardo never considers it.” (p 383-4) 

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