Marx sets out from the perspective that the machines are introduced into existing capitalist enterprises. It makes possible the same output with less labour, or, as Marx describes the preferred option, of greater output with the same amount of labour. Marx also frames his analysis in terms of the two separate funds described earlier.
“1. the funds of the capitalist who employs machinery and dismisses workers; 2. the funds of society, that is, of the consumers of the commodities produced by this capitalist.” (p 557)
Considering the first fund, its obvious that the same amount cannot continue to be advanced as wages. A part of this fund has gone to buy the machine. Another part must go to buy auxiliary materials, which previously were not required. For example, if a steam engine is bought, coal is required to fuel it, oil and grease to lubricate it etc. But, if the machine produces a greater level of output that also means that a greater amount of capital must be advanced to buy the increased quantity of raw materials to be processed. In fact, as I've set out elsewhere, this may not be actually true. If the machine enables the working period to be shortened, and the rate of turnover increased, the capital advanced for raw and auxiliary materials, as well as the value of wear and tear, will return to the firm more frequently. So, the amount of capital advanced for circulating capital may even fall, as a result of the introduction of the machine, resulting in a higher annual rate of profit. The capital laid out for raw and auxiliary materials, as opposed to advanced, will increase, and that will cause the rate of profit, as opposed to the annual rate of profit to fall.
The consequence of this is that a greater proportion of the capitalists' funds have now been advanced for constant capital, and a smaller proportion for variable-capital, and this change in proportion is permanent, because a smaller amount of labour will now always be required to process a given quantity of material.
“... (indeed, the decrease in variable capital relatively to constant will even continue at a faster rate as a result of the productive power of labour developing along with accumulation), even if his business on the new scale of production expands to such an extent that he can re-employ the total number of dismissed workers, and employ even more workers than before. ⟨The demand for labour in his business will grow with the accumulation of his capital, but to a much smaller degree than his capital accumulates, and his capital will in absolute terms never again require the same amount of labour as before. The immediate result, however, will be that a section of the workers is thrown on to the street.)” (p 557)
In individual cases, of course, that may not be the case. A firm that wins a large order, for example, may need an additional machine in order to fulfil it. If this machine is in addition to, rather than a replacement for existing machines, its introduction means that fewer additional workers are taken on than would otherwise have been the case, but nevertheless, additional workers are employed, rather than existing workers being laid off. It may also be the case that some projects are only viable on the basis of the introduction of some hugely labour-saving machine. Take the Channel Tunnel, for example. Without the huge tunnel boring machines that were developed, it would probably not have been economically viable to build the channel tunnel. The machines represent the labour of thousands of workers. But, none of those workers would actually have been employed. The boring machines, however, make the project viable, and the consequence then is that thousands more workers are employed, in all of the associated jobs related to the tunnel construction, as well as the subsequent operation of the railway etc.
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