Furthermore, Marx's analysis, showing that the conditions that determine the tendency of rate of profit to decline are the conditions that accompany the increase in the mass of profits is developed on the basis of the consideration of the total social capital.
Marx is referring to the total social capital; he is
analyzing the development of capital as a totality.
Therefore, furthermore, the more capitalist production develops, the more
capital accumulates, the more it reproduces itself, the more it engages
wage labor, the greater the mass, and the lower the rate of profit.
This is cold consolation, and no compensation for the capitalists, since
the increment of the expansion of value– the rate of accumulation is
the be all and end all of value production. As a consequence, the
distribution of the mass becomes ever more critical– which is why Marx
asserts that competition does not cause the rate of profit to decline;
rather the decline in the rate of profit determines and intensifies
As, furthermore Marx says in Vol 3 of Capital ["The Law Itself"] “Previous economists, not knowing
how to explain the falling rate of profit, invoked the rising mass of
profit, the growth in its absolute amount, whether for the individual
capitalist or for the social capital as a whole, as a kind of
consolation, but this was also based on mere commonplaces and imagined
How does Marx explain the increase mass of profits?– By a massive
increase in capital deployed against, engaging, increased masses of
“When the percentage composition in the previous example was 60c +
40v, the surplus-value or profit on it was 40 and the rate of profit
therefore 40 per cent. Let us assume that at this level of composition
the total capital was 1 million. The total surplus-value and total
profit would then amount to 400,000. If the composition were later to
become 80c + 20v, the surplus- value or profit on each 100 would be 20
with the level of exploitation being the same. But the surplus-value or
profit grows in its absolute mass, as we have shown, despite this
decline in the rate of profit or the decline in the production of
surplus-value by each capital of 100 and this growth might be from
400,000 to 440,000 say. This is possible only if the total capital that corresponds to this new composition has grown to 2,200,000. The mass of the total capital set in motion has risen to 220 percent of
its initial value, whereas the rate of profit has fallen by 50 percent.
If the capital had simply doubled, then at the rate of profit of 20
percent it could only have produced the same amount of surplus value and
profit as the old capital of 1,000,000 did at 40 percent. Had it grown
by less than this it would have produced less surplus value or profit
than the capital of 1,000,000 did previously, although at its earlier
composition this would only have had to grow from 1,000,000 to 1,100,
000 in order for its surplus value to rise from 400,000 to 440,000.
“Here we can see asserting itself the law we developed earlier [
volume 1, chapter 25, 2] according to which the relative decline in the
variable capital, and thus the development of the social productivity of
labor, means that an ever greater amount of total capital is required
in order to set the same quantity of labour-power in motion and to
absorb the same amount of surplus labour…”
“A fall of 50 per cent in the rate of profit is a fall of a half. If
the mass of profit is to remain the same therefore, the capital must
And, furthermore, where does this massive increase in capital come from to generate
the massive profits? Where can it come from? With the means of
production organized as commodities, as values, it can only come from
the expansion of value; it
can only come from the expanded and/or intensified exploitation of
Hence, furthermore, at a certain point the accumulation of capital sooner or later reaches a
point where it must attempt to drive the wage below the value of
labor-power, below its costs of reproduction.
At its apotheosis,
capital is nothing but primitive accumulation all over again.
Marx isn't kidding when he says of the law of the tendency of the rate of profit to fall that that tendency is the most important law of capitalist reproduction. Furthermore.
April 26, 2014