Theories of Surplus Value, Part III, Chapter 22 - Part 22

Marx then moves on to the question of variable-capital. Ramsay, he says, correctly identifies the role of machinery on labour. That is that, by raising productivity, it reduces the value of wage goods, and, thereby, reduces the value of labour-power. So, it reduces the portion of the working day required to reproduce labour-power, and so increases the rate and mass of surplus value. Secondly, by raising productivity, it creates a relative surplus population. That presses down on wages, particularly following periods of extensive accumulation, where supplies of labour have been used up, and wages have risen. So, again, it acts to raise the mass of surplus value. 

“... or, if the production process is considered as a whole, also the reduction of the part of the gross return which goes to replace wages.” (p 347) 

Therefore, where a fall in the value of constant capital results in a rise in the rate of profit, whilst the rate and mass of surplus value remains the same, a fall in the value of labour-power/wages results in a rise in the rate of profit directly, as a result of a rise in the rate and mass of surplus value. A fall in the value of constant capital causes the rate of profit to rise, because the ratio of s:(c + v) rises, as c falls. A fall in wages causes a rise in the rate of profit because s rises, and so s:(c + v) rises. However, because s rises as a result of a fall in v, the rate of profit rises also for this second reason that not only does s rise, but also (c + v) falls. 

Marx sets this out using the former example. So, Marx assumes that the farmer grows flax, and needs £40 to buy seed, £40 for other constant capital, but that wages, for the same quantity of labour, falls from £40 to £20. Because the same quantity of labour is employed, it produces the same amount of new value, i.e. £120. However, now only £20 has to be reproduced from it to pay wages. So, surplus value rises from £80 to £100, and the rate of s:v rises from 200% to 500%. 

The advanced capital has fallen from £120 to £100, as a result of the fall in the variable-capital. Previously, the rate of profit was 80:120 = 66.6%. Now, it is 80:100 = 80%. 

“In this case, not only has the rate of profit risen but the profit itself, because the rate of surplus-value has risen and consequently the surplus-value itself. This differentiates this case from the other, something which Ramsay does not grasp.” (p 348) 

It would only be the case that the rate of profit did not rise if there was a simultaneous rise in the value of the constant capital. So, if the constant capital rises to £130, the total advanced capital is £150, so the rate of profit is 100:150 = 66.6%. This would happen where the same rise in social productivity, which reduces the value of wage goods/labour-power, also means that the same quantity of labour processed more raw material. For example, here, if the workers sow more seed, and use more fertiliser, this greater quantity of constant capital processed results in the value of c rising. This is the basis of Marx's Law of The Tendency For The Rate of Profit To Fall. 

The other alternative, here, which is also discussed in Capital III, is that the price of the components of constant capital rises. However, as I discussed in relation to that scenario, in Capital III, its unlikely, given a general rise in social productivity, that the value of these commodities that comprise constant capital would be exempt from such a development. However, it might be the case that, as discussed in Capital III, Chapter 6, a rise in social productivity that leads to rapid capital accumulation, may cause the demand for raw materials to rise sharply, and that, if supply cannot be adequately increased, quickly, the market prices of that raw material may spike higher. 

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