But, Marx does not derive catastrophist theories from this, in the way, for example, the Luddites did. The fact that the released capital may not be immediately employed in some other sphere does not mean that it will not be used in some other sphere. The actual production of surplus value and the rate of profit has risen, as a result of the introduction of the windmill, even though – indeed as a result of the fact that – the value of flour, and consequently the value of total output, for this society, has declined. That again emphasises the correct view of Ricardo, as against Smith, that it is the net income, and net product that is most important, not the gross income or gross product.
If the flour producing workers are thrown on the street, become paupers etc., as unemployment rises, this is a crisis for workers not capital. Far from it being a crisis for capital, it is part of the process by which capital creates a relative surplus population, and thereby presses down on wages – particularly where a previous relative shortage of labour-power had enabled wages to rise above the value of labour-power, and squeeze profits – so as again to increase surplus value. It was that recognition by Ricardo that, as Marx said previously, led to “much howling against him on the part of the philanthropic philistines.” (p 548)
And, it is precisely because such conditions do not constitute a crisis for capitalism, that Marx does the opposite to drawing a catastrophist conclusion from it. A period in which such new technological developments are being introduced widely, across the economy, may well be a period of stagnation, precisely because the technology is labour-saving, and the saved labour is not immediately re-employed, and because this released capital is not immediately re-employed, which is why, during such periods, the rate of interest falls – whereas, in actual periods of crisis, as Marx says, the rate of interest reaches its peak. These periods of stagnation follow the period of crisis for capital. They are periods when surplus value rises, and where the annual rate of profit rises, and thereby creates the conditions of the next upswing. The capital that is released can be used either to extend production in existing areas, or to open new areas of production, so that instead of the result being less labour employed, the result is that more labour is employed. It is only relative to the total capital and the total output that less labour is employed. In other words, absolutely more labour is employed, whilst relatively less labour is employed.
“One thing only is certain, that ten men of the new generation who should take the place of these ten men in order to turn the mill, must now be absorbed in other employment; and so the relative population has increased (independently of the average increase of population) in that the mill is now driven [by a natural agent] and the ten men who would otherwise have had to turn it are employed in producing some other commodity. The invention of machinery and the employment of natural agents thus set free capital and men (workers) and create together with freed capital freed hands (free hands, as Steuart calls them), whether [for] newly created spheres of production or [for] the old ones which are expanded and operated on a larger scale.
The miller with his freed capital will build new mills or will lend out his capital if he cannot use it himself as a capitalist.” (p 554)
In other words, in addition to frictional unemployment, where labour and capital has no real difficulty in moving from one place to another, other than short-term practicalities, there may be structural unemployment, where large amounts of capital and labour may be released from existing spheres, but where it cannot be allocated to some new activity, because of more significant obstacles. I have discussed this, in relation to the Long Wave, in my book, Marx and Engels' Theories of Crisis. What I have described there is that, in order for released capital, in a range of existing industries, to move to some new sphere, these alternative industries must exist, or be capable of development, and that in itself is a function of technological development. For example, when the first great depression of 1873-90 arose, it was not possible for released capital and labour to be allocated to motor vehicle production, because, although the internal combustion engine was under development, in that period, motor vehicles themselves only arose at the end of it, as this new technology was developed. 
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