The People's Marx, Abridged Popular Edition of the the Three Volumes of Capital, Borchardt 1921
(Extracted from vol. III. part 1. Ch. 13-15 German ed.)
The continuous relative decrease of the number of labourers employed, must have a peculiar effect on the rate (or percentage) of profit.
The aim of machinery (as also of the technical discoveries of former times) is to save labour. The same quantity of commodities - or a larger one - is produced by less labourers. Living labour becomes more productive and more fertile. The Alpha and Omega of economic progress is the increase of productiveness.
But this means that the same number of workmen work-up an ever increasing mass of raw materials and utilise an ever increasing number of implements of labour. For instance, when the workman, with the help of the machine, is able to produce 10 times as much cotton yarn in the same time as he formerly did, he consumes also 10 times as much cotton, to say nothing of the immense and costly machine, which is far more valuable than the simple tool formerly in use. In other words, every economic progress - but in by far the largest measure the progress due to machinery - increases the quantity of constant capital consumed by a given number of labourers. But at the same time such progress diminishes, as a necessary consequence, the percentage of profit, as is clearly illustrated by the following table.
In order to simplify the calculation, we have everywhere assumed the rate of surplus-value to amount to 100% In other words, we assume that labour, over and above the restitution of wages, yields a surplus-value for capital which is exactly as large as the wages paid. For instance, if the variable capital, i. e. wages (represented by v) equal and consequently the surplus-value (represented by s) like-wise equals 100, the percentage of this surplus of 100 s will be quite different, according as to whether c (the constant capital constituted by raw material, implements of labour etc.) be large or small.
If for 100 v we take
50c, |
the |
total |
Capital |
will |
be |
150, |
of |
which |
the |
100s = 66.67% |
100c |
" |
" |
" |
" |
" |
200, |
" |
" |
" |
100s = 50% |
200c |
" |
" |
" |
" |
" |
300, |
" |
" |
" |
100s = 33.33% |
300c |
" |
" |
" |
" |
" |
400, |
" |
" |
" |
100s = 25% |
400c |
" |
" |
" |
" |
" |
500, |
" |
" |
" |
100s = 20% |
Consequently it is always the same quantity of surplus-value, which, with every increase of the total capital, yields a smaller rate of profit. The result of technical progress - a result which manifests itself most clearly with the introduction, and with every subsequent improvement of, machinery - is thus to gradually augment the constant capital in proportion to the variable capital, and therefore to reduce gradually the rate of profit. The same number of workmen and the same amount of labour power consume a constantly increasing quantity of implements of labour, of machines, of raw and auxiliary materials, i. e. a constant capital of continuously increasing value.
A progressive cheapening of the product corresponds to this increasing value of the constant capital. Every single fraction of the product, regarded by itself, contains a smaller amount of labour than is the case in more primitive stages of production. The constant tendency of the general rate of profit to decrease is thus only a manifestation, peculiar to the capitalist mode of production, of the constant development of the productive power of labour. This does not mean that the rate of profit cannot temporarily decrease also for other reasons; but it may be regarded as a self-evident necessity, appertaining to the essence of capitalist production, that as the latter progresses, the general average rate of surplus value must find expression in a general decrease of the rate of profit. As the quantity of applied living labour constantly decreases in proportion to the quantity of the means of production set in motion by it, that part of living labour which is unpaid and incorporated in surplus-value, must likewise decrease in proportion to the value of the applied total capital.
This law of the progressive decrease of the rate of profit in no wise excludes the fact that the absolute quantity of labour set in motion and exploited by capital - and consequently also the absolute quantity of surplus-labour appropriated by capital - increases. For instance, if in any given country the number of labourers employed - and consequently the amount of wages paid for such labour - should increase from 2 to 3 millions, the quantity of surplus-labour and surplus-value likewise increases by one half. But if the productive power of labour simultaneously increases in such a manner that the means of production (i. e. the constant capital) consumed by it increase from 4 to 15 millions, the increased quantity of surplus value would none the less be smaller than before in proportion to the total capital
We would have
in the first case: 4 c + 2 v 6; 2s 33 l/3% profit,
in the second case:15 c + 3 v = 18;3s 16 2/3% profit.
Whereas the quantity of surplus value has increased by one half, the rate of profit has fallen by one half. Thus the absolute amount of profit, its totality, has increased to the extent of 50% in spite of an enormous decrease in the proportion of this amount of profit to the total capital advanced - or in spite of the enormous decrease in the general rate of profit. The number of labourers employed by capital, hence the amount of labour and surplus-labour performed by them, and consequently the amount of surplus-value, can thus increase progressively, in spite of the progressive decrease of the rate of profit. But not only is this phenomenon possible, it is inevitable, on the basis of capitalist production (if we except temporary fluctuations).
As we shall show in the next chapter, capitalist production requires - precisely on account of the decrease of the rate of profit - constant expansion; the labour process must take place on constantly increasing scale, and consequently the capital advanced must constantly increase, in every individual factory or workshop. We can thus understand, as far as the individual capitalist is concerned, that his sway extends over an ever increasing number of workmen, and that the quantity of surplus-value appropriated by him increases simultaneously with, and in spite of, the decrease in the rate of profit. The same reasons which lead to the concentration of vast masses of workmen under the command of a single capitalist, lead also to the increase of the quantity of applied fixed capital and raw and auxiliary materials, in ever greater proportion to the amount of living labour employed.
The law according to which the fall in the rate of profit due to the development of productive labour is accompanied by an increase in the total quantity of profit, finds likewise its expression in the fact that the fall in the price of commodities is accompanied by a relative increase of the amount of profit contained in such commodities, and realised by their sale.
As the development of productive power results in setting in motion a constantly increasing quantity of means of production by a constantly decreasing quantity of labour, each fraction of the total product, i. e. each individual commodity contains less labour and its price decreases. But the total number of commodities produced augments accordingly. Viewed superficially, we thus witness a decrease of the amount of profit realised on the individual commodity, a decrease of its price, and an increase of the amount of profit realised on the increased total amount of commodities produced by the total capital, either of society or of the individual capitalist. This phenomenon is then taken to signify that the capitalist of his own free will realises less profit -on the individual commodity, but indemnifies himself by means of the larger total quantity of commodities produced by him.
When we contemplate the immense development of productive power, even during the last 30 years (previous to J867); and especially when we contemplate the immense amount of fixed capital applied over and above machinery proper, it appears astonishing that the rate of profit has not decreased more and with greater rapidity than is, as a matter of fact, the case. Opposing forces must be at work, of which the following are the most important.
The capitalist naturally seeks to counterbalance the decrease of the rate of profit by an increased exploitation of labour power. More must be extracted from the individual workman, consequently more value must be yielded by him, by means of a prolongation of the working-day and an increased strain upon his working-power. In the previous chapter we saw how this is effected by means of machinery. But it is evident that limits, and not very wide ones, are set to this process. Two workmen, working daily 12 hours, cannot supply the same amount of surplus-value as 24 workmen working two hours each, even if they could live on fresh air and received no wages. By such means, the decrease of the rate of profit can he checked, but not suppressed.
Another means of intensifying the exploitation of labour, and thereby of increasing the amount of surplus-value extracted from each individual workman, the total number of workmen being reduced, is to force down wages to a point below the value of labour power. As a matter of fact, this is one of the chief causes which tend to check the decrease of the rate of profit.
There comes further the circumstance that the value of the constant capital does not increase as rapidly as its quantity. For instance, the quantity of cotton which a single European spinner works-up in a modern factory, has immensely increased in proportion to the amount formerly worked-up by a European spinner by means of the spinning-wheel. But the value of the cotton thus worked-up has not increased in the same proportion. The same holds of machines and other fixed capital.
But the most important means of checking the decrease of the rate of profit, and of thus escaping ruin, consists in the unceasing increase of capital. If economic progress causes the rate of profit to decrease from 20 to 10% is, it is true, impossible to prevent 100 capital from yielding henceforth but 10 surplus-value. But the individual capitalist can make good his loss by doubling the amount of his capital. As he now applies everywhere 200 instead of 100, the amount of his profit remains the same. He can even increase his profit, should he still further augment his capital.
The constant increase and accumulation of capital plays, therefore, an important part. We will now turn our attention to this phenomenon.