Like the direct producer, the capitalist must use part of the gross product to replace, on a like for like basis, the constant capital. In order to reproduce labour-power, on the same scale, they must also hand back to the workers that part of the gross product that constitutes the labour fund (variable-capital). It is only because they have directly appropriated the surplus product, produced by the workers, that it appears that a part of it, which they decide to accumulate, rather than consume unproductively, appears as saving on their part, whereas, in reality, it is enforced saving on the part of the workers.
The relation of this surplus product to that part of the gross product which must replace the consumed constant capital and variable-capital is the rate of profit. The rate of profit, and more specifically the mass of profit, is the determinant of accumulation.
Jones says,
““All other things being equal, the power of a nation to save from its profits varies with the rate of profits: is great when they are high, less when low; but as the rate of profits decline, all other things do not remain equal. The quantities of capital employed relatively to the numbers of the population may increase” [p. 50].” (p 417)
Marx notes,
“What Jones does not understand is how, as a result of the “may” increase, the rate of profits sinks because “the quantities of capital employed relatively to the numbers of the population have increased”. But he approaches close to the correct view.” (p 417)
Marx is referencing his law of the tendency for the rate of profit to fall, here. As more, and better, fixed capital is is employed, productivity rises. This rise in productivity is manifest in a rise in the quantity of material processed by a given quantity of labour, i.e. a rise in the technical composition of capital. Even as the rise in productivity causes the unit value of raw materials to fall, the increase in the mass of raw material (which includes intermediate production) processed, more than offsets this fall in the value composition so that the organic composition rises. As the value of c rises, relative to v + s, even though s may rise absolutely, it falls relative to c + v, so that the rate of profit falls.
Jones continues,
““Inducements and facilities to accumulate may increase… a low rate of profits is ordinarily accompanied by a rapid rate of accumulation, relatively to the numbers of the people, as in England, and a high rate of profit by a slower rate of accumulation, relatively to the numbers of […] people, as in Poland, Russia, India, etc…” (pp. 50-51).” (p 417)
This is a development of the point made by Adam Smith that wherever wages are low, the price of labour is high, by which he means that low wages discourage labour-saving investments that raise productivity. And, as Marx points out, where labour is scarce, as it was in the United States, this causes wages to rise, which provides an inducement for capital to invest in labour-saving technology. Marx refers to a similar situation in respect to the effect of the Factory Acts, and to the rise in agricultural wages, between 1849-59, which caused a squeeze on agricultural profits, and provided an inducement for large scale investment in labour-saving agricultural equipment.
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