Prévost then tries a different approach. He writes,
““Soils of inferior quality … are only put into cultivation if they yield profits as high as—or even higher than—the profit yielded by industrial capitals. Under these conditions, the price of corn or of other agricultural products often remains very high despite the newly cultivated land. These high prices press on the working population, since rises in wages do not correspond exactly to rises in the prices of the goods used by workers. They are more or less a burden to the whole population, since nearly all commodities are affected by the rise in wages and in the prices of essential goods. This general pressure, linked with the increasing mortality brought about by too large a population, results in a decline in the number of wage-workers and, consequently, in a rise in wages and a decline in agricultural profits. Further development now proceeds in the opposite direction to that taken previously. Capitals are withdrawn from the inferior soils and reinvested in industry. But the population principle soon begins to operate once again. As soon as poverty has been ended, the number of workers increases, their wages decline, and profits rise as a consequence. Such fluctuations follow one another repeatedly without bringing about a change in the average rate of profit. Profit may decline or rise for other reasons or as a result of these causes; it may alternately go up and down, and yet it may not be possible to attribute the average rise or fall to the necessity for cultivating new soils. The population is the regulator which establishes the natural order and keeps profit within certain limits” (op. cit., pp. 194-96).” (p 108-9)
Marx says that this is confused, but consistent with the population principle. However, according to Ricardo, additional investment in agriculture, only takes place on the basis of rising agricultural prices, which creates rising agricultural profits. What Prévost describes, however, is a condition where constantly rising agricultural prices leads to rising wages and falling industrial profit. The consequence of the latter is a reduced level of capital accumulation, which leads to a surplus working population, a fall in wages, and thereby to a decline in population.
“According to the Ricardian-Malthusian view, the population would grow more slowly. But Prévost’s basis is: that the process would depress wages below their average level, this fall in wages and the poverty of the workers causes the price of corn to fall and hence profits to rise again.” (p 109)
Prévost’s exposition is important, Marx says, because it shows that the Ricardian-Malthusian view can explain fluctuations in the rate of profit, but cannot explain the long-term tendency for the rate of profit to fall. For example, “upon reaching a certain level the rise in corn prices and the drop in profit would force wages below their level, bringing about a violent decrease in the population, and therefore a fall in the prices of corn and other necessaries, and this would lead again to a rise in profits.” (p 109)
Similarly, Smith's argument that capital accumulates faster than the growth of the working population explains periods of overproduction of capital, which results in rising wages squeezing profits, but capital always responds to such situations by switching from a regime of extensive accumulation to one of intensive accumulation, whereby labour saving technologies are introduced, which raise productivity, reduce the value of labour-power, and constant capital, creates a relative surplus population, which reduces wages, and thereby increases the rate of surplus value, whilst reducing the rate of profit/profit margin, at the same time as raising the annual rate of profit, and creating the conditions for the next expansion.
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