Moreover, as Marx sets out, this rise in social productivity that enables spinning wheels to be replaced by a smaller number of much more productive, and relatively cheaper spinning machines, also means that the other elements of productive capital – raw materials and labour-power – become cheaper too. Its not just that the higher wages resulting from a shortage of labour is reversed, as workers are replaced by machines, but that rising productivity reduces the value of wage goods too, reducing the value of labour-power, so that, for those workers still employed, although nominal wages might fall, their real wage, i.e. their standard of living rises.
That was seen clearly during the stagnation period of the 1930's, for example, particularly for workers in all of the new, and growing industries in the Midlands and South-East, producing motor cars, consumer electrics and so on. It does not rise by as much as the rise in productivity/fall in wage goods prices, which is why the rate of surplus value, and mass of profits rises. But, in addition to that, this rise in productivity reduces the value of raw and auxiliary materials, again, thereby, reducing production costs, and raising the rate of profit.
“...if simultaneously, one worker produces as much cotton as 100 workers did previously and one worker produces a spinning-machine whereas previously he produced only a spindle, then the ratio of value remains the same, that is, the labour expended in the spinning, [in the production of] the cotton and the spinning-machine remains the same as that expended previously in spinning, the cotton and the spindle.”
(Theories of Surplus Value, Chapter 23)
And, as I have set out, elsewhere, it may also be the case that the new machines are not only relatively cheaper than the machines they replace, but may be absolutely cheaper too, as a consequence of technological development, as well as rising social productivity, cheapening their production. As I have set out before, in the 1980's, as personal computers were developed, made possible by the development of the microchip, they had the equivalent computing power as many of the mainframe computers used by business, in the preceding period, that relied upon the use of electric valves, and transistors, and which occupied entire rooms of buildings, consuming large amounts of electricity not just for their operation, but to power the air conditioning required to keep them cool, and so on. Those mainframe computers cost around £2 million, and yet, the personal computers that were introduced, at that time, with an equivalent amount of power, could be bought for less than £1,000.
In the same way, when petrol driven tractors were introduced, they were much more efficient and productive than the old steam driven tractors they replaced. But, the new tractors were also absolutely cheaper than the steam driven tractors to produce, which required huge amounts of iron and steel, expensive boilers and so on, as well as being much more expensive to run using large amounts of coal, rather than petrol. The same is true today, with the use of glass fibre optic cable in telecommunications. It can carry millions of times more information than the copper cables it replaces, but it also costs only a fraction of what copper cable costs to produce.
The consequence, as Marx sets out, in Theories of Surplus Value, Chapter 23, and in Capital III, Chapter 6, is that the proportion of output value accounted for by fixed capital, and wear and tear, falls, as does the share attributable to labour, i.e. the new value created. In so far as material production dominates the economy, it is the quantity of raw material processed that increases proportionally to both fixed capital and labour, and, to the extent that its unit value does not fall proportionate to the proportional increase in the quantity processed, its value rises as a proportion of total output value, and is the cause of the Law of the Tendency for the Rate of Profit to Fall, as described by Marx.
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