Theories of Surplus Value, Part III, Chapter 20 - Part 144

The industrial capitalists sought to repeal the Corn Laws, because, in doing so, it would mean that the cost of providing the food required by their workers was reduced, so that they could pay them less in money wages. They did not do so so that they could keep paying the workers the same money wages, so that their workers could buy more food, or use the savings to buy additional commodities. Money wages may rise above or fall below the value of labour-power, where such temporary phenomenon raise or lower the value of the wage goods required for the reproduction of labour-power, but such fluctuations cancel each other out. Any more permanent change in the value of wage goods changes the value of labour-power, and consequently the level of wages, and rate of surplus value. 

However, whilst money wages, and the rate of surplus value may remain constant, in such conditions, the same is not true for the rate of profit. If the price of cotton falls sharply, due to a bumper harvest, this reduces the value of the constant capital of the spinner. If the spinner continues to produce on the same scale, the value of their output will fall. For example, suppose they buy 1,000 kilos of cotton, at a price of £100, and employ 10 workers to process it, at a wage of £10 each (£100), and they produce surplus value of £20. The rate of surplus value is 20%, and rate of profit 10%. If the output is 1,000 kilos of yarn, it has a value of £220, or £0.22 per kilo. If the spinner now buys the cotton for £50, their costs are: 

£50 c + £100 v = £150. 

The surplus value is still £20, so that the value of output falls to £170, or £0.17 per kilo. The yarn sold to the weaver then similarly reduces their costs, which reduces the value of the cloth they produce, which reduces the costs of the clothes producers. The cost of clothes bought by workers falls, but Marx assumes this is a temporary phenomenon so that workers' money wages remain the same, enabling them to temporarily increase their consumption. 

Going back to the spinner, therefore, the money wages they pay to their workers remains £100, and as these workers still produce £120 of new value, by their labour, £20 of surplus value is produced. So, the amount and rate of surplus value remains constant. However, as a result of the fall in the price of cotton, to £50, the total capital advanced by the spinner has fallen from £200 to £150, so that now the rate of profit rises from 10% to 13.3%. 

Marx points out that, if the spinner uses the fall in the value of cotton, and release of capital, thereby, to increase output, not only the rate of profit, but also the mass of profit can rise. So, the spinner can now buy twice as much cotton for £100, as they could before. But, to process it, they require twice as many workers. So: 

£100 c + £200 v + £40 s. 

The rate of surplus value remains 20%, but the mass of surplus value now doubles, because twice as much labour is employed. The reverse is true where the price of cotton rises. This is the same situation that Marx discusses in Capital III, Chapter 6. In other words, a sharp rise in material prices causes the rate of profit to fall. Moreover, if the rise in material prices is sufficient, the capitalist may have to cut back the scale of their operation, employing less material and less labour to process it. In that case, the amount of surplus value falls, because less labour is employed. 

“The result would be the same if, owing to a bad harvest, there were not enough cotton available to absorb the same amount of living labour as formerly.” (p 219) 

That is the same situation that Marx describes in Capital III, Chapter 6, where the US Civil War caused the supplies of cotton to the UK cotton mills to be cut off. So, labour had to be laid off, leading to a breakdown in the circuit of capital, and an economic crisis. 

“Thus, when the rate of surplus-value, that is, when the value of labour, remains unchanged, a change in the value of constant capital must produce a change in the rate of profit and may be accompanied by a change in the total amount of profit.” (p 220) 

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