Here, Marx does not deal with these variations, set out in Capital III, Chapter 6, but simply sets out the case where the previously realised money-capital can no longer be metamorphosed into the required quantity of raw material, as a result of the rise in its value, due to the crop failure.
“More must be expended on raw material, less remains for labour, and it is not possible to absorb the same quantity of labour as before. Firstly this is physically impossible, because of the deficiency in raw material. Secondly, it is impossible because a greater portion of the value of the product has to be converted into raw material, thus leaving less for conversion into variable capital. Reproduction cannot be repeated on the same scale. A part of fixed capital stands idle and a part of the workers is thrown out on the streets. The rate of profit falls because the value of constant capital has risen as against that of variable capital and less variable capital is employed. The fixed charges—interest, rent—which were based on the anticipation of a constant rate of profit and exploitation of labour, remain the same and in part cannot be paid. Hence crisis. Crisis of labour and crisis of capital.” (p 515-6)
Even if this does not result in a crisis, it still represents a disturbance in the process of reproduction. The proportion of the capital which must be reproduced in the value of output rises. (This applies also where such conditions might apply to the total social capital, although the general rise in social productivity more frequently results in the opposite situation, i.e. the value of materials, wear and tear of fixed capital, falls rather than rises). The consequence is that the organic composition of capital rises, as a consequence of a rise in its value composition.
This rise in the organic composition is reflected in a fall in the rate of profit, whilst the value of the output rises, reflecting the rise in the value of constant capital.
“If this product enters into other spheres of production as a means of production, the rise in its price will result in the same disturbance in reproduction in these spheres. If it enters into general consumption as a means of subsistence, it either enters also into the consumption of the workers or not.” (p 516)
So, if the price of cotton rises, this raises the value of constant capital, for the yarn producer. Unless the yarn producer advances additional capital, they must buy less cotton, and labour-power, and scale back production. But, having done so, the proportion of the value of cotton in that output rises relative to variable-capital. Their rate of profit falls. But, the value of a kilo of yarn still rises, reflecting the higher value of cotton. If workers buy yarn, they face this higher price, which, in turn, causes the value of labour-power to rise, which causes surplus value to fall, generally.
The majority of yarn, however, will be bought by weavers, which means that, for them, it represents a higher material cost, which increases the value of their own constant capital relative to variable-capital, and thereby causing a fall in their own rate of profit. But, it also thereby causes the value of cloth to rise. In so far as workers buy cloth, it causes the value of their labour-power to rise, and so on.
The effect of the rise in the value of cotton, yarn, cloth, clothes in so far as it affects the value of labour-power, is different to its effect on constant capital. The rise in value of materials causes the value of constant capital to rise, and thereby the rate of profit to fall. But, this rise in the value of constant capital causes a corresponding rise in the value of output.
A rise in the value of those commodities, in so far as they constitute wage goods, and so cause a rise in the value of labour-power, however, has no such effect in causing the value of commodities to rise. A rise in the value of labour-power has no effect on the amount of new value created by that labour; it only affects the division of this new value between wages and surplus value. The rise in the value of wage goods, therefore, by causing the value of labour-power to rise, causes the mass of surplus value to fall, and so the rate of profit to fall, but has no effect on the new value produced by labour, or, therefore, on the value of commodities.
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