In fact, as Marx sets out, in Capital III, under capitalism, as against simple commodity production and exchange, because capitalists are concerned to maximise their annual rate of profit, and allocate capital to those spheres whereby they can achieve that, this results in supply in those spheres rising relative to demand and vice versa. This causes market prices in those spheres to fall, and vice versa. The equilibrating point becomes the price of production, and its by this means that an average annual rate of profit is formed. However, taking prices in aggregate, or taking prices in those spheres that represent the average composition, and turnover of capital, the same principal applies.
“If instead of considering only the daily fluctuations you analyze the movement of market prices for longer periods, as Mr. Tooke, for example, has done in his History of Prices, you will find that the fluctuations of market prices, their deviations from values, their ups and downs, paralyze and compensate each other; so that apart from the effect of monopolies and some other modifications I must now pass by, all descriptions of commodities are, on average, sold at their respective values or natural prices. The average periods during which the fluctuations of market prices compensate each other are different for different kinds of commodities, because with one kind it is easier to adapt supply to demand than with the other.” (p 52-3)
As I have set out, elsewhere, this is a determining factor in the periodicity of the long wave cycle. In Theories of Surplus Value, Chapter 9, Marx looks at the movement of agricultural prices over a 50 year period. The requirement to develop new lands does not only involve the clearing, drainage, irrigation and so on, of the land, but also the development of the surrounding infrastructure, transport and communication links etc. This applies, also, to mineral extraction. These are long-term capital investments, required before supply can be increased to meet demand.
“If then, speaking broadly, and embracing somewhat longer periods, all descriptions of commodities sell at their respective values, it is nonsense to suppose that profit, not in individual cases; but that the constant and usual profits of different trades spring from the prices of commodities, or selling them at a price over and above their value. The absurdity of this notion becomes evident if it is generalized. What a man would constantly win as a seller he would constantly lose as a purchaser.” (p 53)
But, this is what Weston's argument implied, that if wages rose, capitalists would simply raise prices accordingly.
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