Marx also touches on a point he sets out in Capital III, Chapter 15. There, he says that, with any given level of technology, and so rate of surplus value, the limitation on the mass of surplus value is the size of the labouring population, and the limit on the growth of that surplus value is the growth of that population. Likewise, given any size of labouring population, the mass of surplus value will be determined by the level of technology, and so the rate of surplus value, and the growth in that mass will then be governed by the rate of development of technology, and rise in the rate of surplus value. And, of course, these two constraints are in a dynamic tension with each other. If the level of technology is given, then, at some point, accumulation means that the existing supply of labour-power, from the labouring population begins to get used up. The growth of surplus value then slows down, for two reasons. Firstly, the supply of additional labour, as the source of surplus value slows down. Secondly, as that supply falls, relative to demand, wages rise, which reduces the produced surplus value.
It is this which then provides the incentive for capital to resolve the squeeze on profits, by revolutionising technology, so as to create a relative surplus population, to reduce wages, raise productivity and reduce the value of capital. But, the capitalist stands this dynamic on its head, making capital the determinant of population. Marx quotes Ricardo to that effect.
““Notwithstanding the tendency of wages to conform to their natural rate, their market rate may, in an improving society, for an indefinite period, be constantly above it; for no sooner may the impulse, which an increased capital gives to a new demand for labour be obeyed, than another increase of capital may produce the same effect; and thus, if the increase of capital be gradual and constant, the demand for labour may give a continued stimulus to an increase of people” (l.c., p. 88).” (p 540)
In other words, for Ricardo, it is the shortage of labour which raises wages to levels above the value of labour-power, which causes workers to have larger families, so that the supply of labour-power rises – which also leads to the increased demand for food and rising agricultural prices – but which then causes wages to fall again, so that capital expands, and so on. In this manner, as Marx describes, Ricardo's view of the falling rate of profit is one in which this rise in wages squeezes profits, but the rise in wages is never sufficient to cover the cost of the rising food prices, as cultivation moves to less fertile soils.
“From the capitalist standpoint, everything is seen upside down. The number of the labouring population and the degree of the productivity of labour determine both the reproduction of capital and the reproduction of the population. Here, on the contrary, it appears that capital determines [the size] of the population.” (p 540)
This rise in wages, for Ricardo, stems automatically from the accumulation of capital. So, he writes in Chapter IX,
““An accumulation of capital naturally produces an increased competition among the employers of labour, and a consequent rise in its price” (l.c., p. 178).” (p 541)
But, this fails to distinguish between extensive and intensive accumulation. In other words, Ricardo fails to recognise the existence of the dynamic tension referred to earlier. He fails to take into account, here, the way a shortage of labour-power, and higher wages, induces capital to revolutionise technology, so as to raise the rate of surplus value, and create a relative surplus population that causes wages to fall. So, as Marx says,
“Capital can be accumulated and the demand for labour can decrease absolutely or relatively.” (p 541)
So, with intensive accumulation, the demand for labour-power will always fall relatively, but whether it falls absolutely will depend upon the extent of the accumulation, and the technical composition of capital.
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