Marx says,
“The portion of surplus product which is already produced directly in a form in which it can only serve as capital, and that portion of it which acquires this form as a result of foreign trade, grow more rapidly than the portion which must be exchanged against immediate labour.” (p 244)
For reasons I have set out elsewhere - Marx's Law of The Tendency For The Rate of Profit To Fall is defunct – this may no longer be true. It is only true where society is dominated by the production of material commodities, and where rising productivity, thereby, results in a rising proportion of raw material in the value of final output. In societies where, now, 80% of new value and surplus value production is generated in service industry, this role of rising productivity in raising the productive consumption of raw materials ceases to be determinant. Whilst it continues to operate in the sphere of material production, material production itself ceases to dominate, just as, in the past, agriculture gave way to the precedence of manufacturing.
In modern economies, for a large part of value production, raw material may play no role, or only a minor role. Increasingly, the capital is divided into fixed capital and variable-capital. Whilst an increased mass of fixed capital may play the same role of raising productivity, and thereby causing a decline in the employment of labour, relative to output, not only does this not involve an increase in the circulating constant capital, but it frequently goes hand in hand with an even bigger decline in the value of fixed capital, relative to output, and often a decline in the mass of fixed capital relative to output, alongside an absolute rise in the mass of labour employed, and so of the surplus value produced. It results also in a rise in the rate of surplus value, thereby causing a further rise in the mass of surplus value, and rate of profit. Only when this process of the increase in the mass of labour employed starts to cause relative labour shortages does it create the conditions for the rate of surplus value to fall, as wages rise, and profits are, thereby squeezed.
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