Theories of Surplus Value, Part III, Chapter 23 - Part 24

Marx says, 

“The rate of surplus-value remains unchanged in both cases; it changes, however, if any change in the technological composition of capital takes place: it increases if the constant capital increases (because labour is then more productive) and declines when it falls (because labour is then less productive).” (p 385) 

But, this is not completely accurate because it depends on whether this rise in the organic composition is in those spheres producing wage goods. Its only where a rise in the organic composition, as a result of rising productivity, reduces the value of wage goods that it can reduce the value of labour-power, and, thereby, raise the rate of surplus value. A rise in productivity in other spheres producing constant capital for the producers of wage goods would also, thereby, reduce the value of wage goods, and so raise the rate of surplus value indirectly. 

“If there is any change in the value of variable capital independent of the organic composition, it can only occur because of a fall or a rise in the price of means of subsistence that are not produced in the sphere of production under consideration but enter into it as commodities from outside.” (p 385) 

In other words, the change in the organic composition arises not because of any change in the technical composition in this sphere, but from a change in the value of labour-power. Marx could have added, here, that it might result from a rise in wages above the value of labour-power. 

“If the value of variable capital falls, it nevertheless represents the same amount of living labour as before. The same quantity of labour merely costs less. If therefore the scale of production remains the same (since the value of constant capital is unchanged), then the part of the total capital used for the purchase of labour is diminished. Less capital needs to be laid out in order to pay the same number of workers. Thus, in this case, if the scale of production remains the same, the amount of capital laid out diminishes. The rate of profit increases, and this for two reasons. The [amount of] surplus-value has increased; the ratio of living labour to materialised labour has remained the same, but the increased surplus-value correlates with a smaller total capital. If, on the other hand, the capital freed is again invested, then this amounts to accumulation.” (p 385) 

So, if 100 workers work a 10 hour day, processing 100,000 kilos of cotton, and their wages amount to say, £1,000, equivalent to, say, 500 hours of labour, the fact that wages fall to, say, £800 or 400 hours of labour, does not change the fact that they continue to provide 1,000 hours of labour, representing £2,000 of new value. The amount of labour they provide is determined by the technical composition of capital. If, now, the value of their labour-power falls to £800, it simply means that they now produce £1200 of surplus value, rather than £1,000. It means that, also, £200 of variable-capital that previously had to be advanced to cover wages is released. It can be consumed as revenue, or it can be accumulated as additional capital. 

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