As Marx describes in Theories of Surplus Value, during the period of primitive accumulation of capital, the process is one in which the means of production are concentrated and centralised, rather than undergoing an expansion. The rise in the technical composition of capital, during this period, is one that results simply from an increased social division of labour, and increasing division of labour within the workshop. It is not that more tools, or more materials are produced, or that more means of consumption are produced for the labourers. All of these already exist, but are merely brought together in a small number of locations, by capitalists. This cause of rising productivity, and a rising technical composition of capital continues, but a much greater influence on this rising technical composition, and rising productivity, is the effect of the introduction of additional fixed capital, and newer technologies. The latter goes hand in hand with the accumulation of capital, as the scale of output expands.
Its not, then, just that a manufactory employing 100 workers replaces ten handicraft workshops employing 10 workers each, or that an industrial factory employing 1,000 workers replaces ten manufactories each employing 100 workers. Not only are workshops replaced, but the number of manufactories also increases, so that, instead of 100 workers being employed, 500 workers are employed. The basis of this is that the size of the market itself expands, and so production must take place on a larger scale. This larger scale of production justifies the capitalist in advancing capital for the larger building, and in advancing more capital for the hire of additional workers. The scale of production makes it possible with this larger number of workers to have some of them devote their time to specific tasks, i.e. they become detail workers. This increased division of labour, even as these workers continue to use hand tools, means that a given quantity of labour now processes a greater quantity of material. The technical composition of the capital, thereby, rises.
Similarly, the market has to have increased to a minimum size to justify production on a sufficient scale that capitalists are led to advance the additional capital required to acquire a large factory, and to invest in machinery, as well as the materials to be processed by it. This accumulation of capital, which goes hand in hand with an increase in the technical composition of capital, is never about more technologically advanced capital simply replacing existing capital, and labour, with the level of output remaining constant. The absolute mass and value of capital advanced increases, including the mass of labour employed. It is only that the value of fixed capital, and of labour falls relative to the mass and value of output, as a consequence of rising social productivity. However, for the reasons described above, there are periods within the long wave cycle in which, as a result of previous technological development, there are ample supplies of labour-power, so that production can be expanded on the same technological basis – extensive accumulation. At other times, in order to overcome crises of overproduction, a technological revolution is required, and a period of intensive accumulation occurs. During such periods, associated with the latter parts of the crisis phase of the long wave, and the following stagnation phase, this intensive accumulation sees gross output rise more slowly compared to net output, as producers focus on producing a given amount with less labour. This is the basis, during such periods, for a growth in the net product/surplus value, and a rise in the rate of profit.
The nature of this intensive accumulation, as labour-saving, is not manifest, here, in an actual reduction in employment. Employment levels may fall, during crises of overproduction, and unemployment levels rise, but a rise in unemployment is not the same as a fall in employment. If the workforce is 20 million, and 19 million are employed, unemployment is 1 million. If the workforce rises to 22 million, and 20 million are employed, the level of employment has risen, but unemployment will have doubled from 1 million to 2 million. The fact that more labour in total is employed, means that the total amount of new value created rises, and along with it the amount of surplus value.
The rise in the rate of surplus value, due to falling wages, means that a further increase in the mass of surplus value occurs. Periods of intensive accumulation are marked by an increase in the absolute amount of capital employed, and in the absolute numbers employed, but a relative decrease in employment compared to output. Or put another way, output can rise faster without the previous levels of increase in employment, which led to the crisis of overproduction. Its not just that the new machines lead to labour being thrown out of employment, but that the additional workers entering the workforce find it harder to find employment. It is this which creates the relative surplus population, which causes wages to fall.
As Marx puts it,
“If it be said that 100 millions of people would be required in England to spin with the old spinning-wheel the cotton that is now spun with mules by 500,000 people, this does not mean that the mules took the place of those millions who never existed. It means only this, that many millions of workpeople would be required to replace the spinning machinery. If, on the other hand, we say, that in England the power-loom threw 800,000 weavers on the streets, we do not refer to existing machinery, that would have to be replaced by a definite number of workpeople, but to a number of weavers in existence who were actually replaced or displaced by the looms.”
(Capital I, Chapter 15)
If we look at the 1980's and 90's, new technologies, introduced during that time, replaced existing labour. Some of those displaced did not have the skills, or were in the wrong locations to take up alternative employment. They had to take on lower paid jobs where they were available. The children of some of these workers, when they came into the workforce, were better able to take up some of the newer jobs that had been created, but less labour is required for any given increase in output. This, in itself, holds back the growth of the market, and the economy, because a slower growth of employment, and of wages means a slower rise in demand for wage goods, and so of aggregate demand.
But, for the reason Marx suggests above, the new technology creates new markets for commodities, and so also creates the potential for additional accumulation of capital and employment of labour. Spinning cotton using mules reduced the value of yarn, and thereby of cloth and clothes. By reducing these prices it creates additional demand for yarn, cloth and clothes, expanding the market. More capital can then be employed in satisfying this demand, and more workers are employed – though relatively fewer than would have been required previously for this level of output. Additional capital is required to produce the additional cotton required for processing into yarn, which means more labour employed in that sphere. More profits are also produced, and these profits feed into additional consumption by capitalists, and additional capital accumulation.
Take the development of tunnel boring equipment. Without it, the construction of the Channel Tunnel would have been too costly, and so would not have been undertaken. By reducing the cost, the tunnel boring machine, which hypothetically replaces tens of thousands of workers that would have been required to dig the tunnel by hand, in fact, creates thousands of actual jobs, because it makes possible a construction that would otherwise not have happened, i.e. it creates an additional market, which did not exist. The same is true with genetic sequencing. The cost of decoding the first genome was $3 billion. That cost has fallen to around $100, for the reasons already alluded to. Now, at this cost, a vast new market has been created. People can cheaply have their DNA sequenced to trace their genealogy, to test for potential health risks and so on. Thousands of people are now employed in this industry, providing this service, and millions more will be employed in the health sciences industry producing individually tailored health solutions, cheaply, for every individual, based upon such sequencing, so as to prevent illnesses developing, and to more effectively treat any illness that does arise.
The new technologies, developed in the previous cycle, become the standard technology. Eventually, all of the old machines/technology is replaced. Further expansion can only occur by employing more of the new machines/technology along with additional labour. Growth in productivity slows. In other words, expansion of the technical composition of capital slows down. Capital accumulation now becomes extensive. This creates the conditions once more for labour supplies to begin to be used up. With or without Marx's Law of the Tendency for the Rate of Profit to Fall, therefore, crises of overproduction recur, as the limits on the production of absolute and relative surplus value impose themselves, and wages rise squeezing profits. Firms are, once again, forced to engage in innovation and technological development to overcome the shortage of labour, and crisis of overproduction. The real basis of crises of overproduction is changes in the value composition of capital. A rapid increase in the technical composition is the means by which the crisis is overcome as technological development raises productivity, and creates a relative surplus population, overcoming the overproduction of capital.
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