Sure, Marx made it clear that the classical economists had no adequate
answer as to why/their/ most important 'law' was present, but he himself
was quite clear that the rate of profit tended to fall because of uneven
rates of productivity change. Here's an excerpt from my essay, 'the
general and the specific in Marx's theory of crisis', Ch. 8 of my
collection, /Following Marx/ (2009):
--
It is important to understand that the problem in the FROP-scenario is
not at all that Marx failed to recognise the importance of an assumption
about productivity in the production of means of production. Indeed, he
was far more aware of this critical point than many subsequent
disciples. Writing in the /Grundrisse/ (where the basic elements of his
FROP argument were first developed), Marx argued that the composition of
capital would remain the same if 'productivity increases at the same
time not only in the given branch of production, but also in its
conditions.' On the other hand, a rise in the constant component of
capital emerges 'if the objective conditions of production. . . remain
unchanged in value'.[1] <#_ftn1> In short, Marx's very argument for the
growth in the composition of capital explicitly rested upon the uneven
development of productivity:
If the force of production increased simultaneously in the production of
the different conditions of production, raw material, means of
production and means of subsistence, and in the [ of production]
determined [ them], then their growth would bring about no change in the
relation between the different component parts of the capital.[2] <#_ftn2>
He returned to this same question several years later in his /Economic
Manuscripts of 1861-63./ There, he did extended calculations for the
rate of profit, demonstrating the effect of increases in productivity in
the sector producing means of production. Productivity increases in
cotton weaving involve increases in raw materials per worker; assuming
productivity in the production of yarn constant, there is an increase in
the value composition of capital (C/V), and if the rate of surplus value
remains unchanged, the effect is that the rate of profit falls: 'In I
b), where the productivity of weaving increases threefold and wages
remain the same, but the yarn, etc., retains its old price, we have a
fall in the rate of profit. In this case the rate of profit falls from
50% to 25%'.[3] <#_ftn3> Further, Marx indicated that, where the rate of
surplus value rose as the result of productivity increases, the rate of
profit also fell (but in this case only to 36%): 'We have equally a fall
in the /rate of profit/ under III, where wages fall in the same
proportion as the productivity of labour [rises]. But raw materials,
etc., remain the same here as before the threefold increase in the
productivity of labour, as under I a).'
In contrast, in the two cases where Marx considered equal productivity
increases in the production of the input (yarn) to those occurring in
weaving, there was /no/ fall in the profit rate. Where the rate of
surplus value was constant, the rate of profit remained the same,
whereas in the case where necessary labour falls 'in the same proportion
as the productivity of labour grows', the rate of profit rises to
80%.[4] <#_ftn4> In short, the /only/ case that corresponds to the FROP
story introduced in Chapter 13 of Volume III of /Capital/ is where
productivity in the sector producing material inputs is assumed
constant. Marx concluded in his 1861-63 Manuscript that it would appear
'that the rate of profit cannot /fall/ unless' (1) the value of
labour-power rises ('Ricardo's assertion') or (2) 'there is a rise in
the /value of constant capital in relation to variable/. And the latter
would appear to be restricted to cases where the productive power of
labour does not rise /equally/ and /simultaneously/ in all the branches
of production which contribute to produce the commodity'.[5] <#_ftn5>
Again, the same point about uniform productivity changes is made in the
very exposition of FROP in Chapter 13 of /Capital/ III. Marx clearly
indicated there that the rate of profit would tend to fall despite a
higher rate of surplus value 'outside of a few cases (for instance, /if
the productiveness of labour uniformly cheapens all elements of the
constant, and the variable, capital/)'.[6] <#_ftn6> Of course, the
probability of achieving equal and simultaneous increases in
productivity for all sectors approaches zero, and among the many
contingencies we can imagine (which Marx did not explore above) is a
threefold increase in productivity in the sector producing means of
production but none in the using sectors. But Marx's specification of
this condition in which the rate of profit would not fall was
deliberate: not only did he repeatedly acknowledge the importance for
FROP of lagging productivity in Department I but he also offered an
unequivocal explanation as to why a uniform increase in productivity
would be limited to 'isolated cases'.
------------------------------------------------------------------------
[1] <#_ftnref1>Marx, 1973: 773, 771.
[2] <#_ftnref2>Marx, 1973: 770.
[3] <#_ftnref3>Marx, 1994:29.
[4] <#_ftnref4>Marx, 1994: 26-29.
[5] <#_ftnref5>Marx, 1994: 33-4.
[6] <#_ftnref6>Marx, 1959: 222. Emphasis added.
--
---------------------
Michael A. Lebowitz
Professor Emeritus
Economics Department
Simon Fraser University
8888 University Drive
Burnaby, B.C., Canada V5A 1S6
Home: Phone 604-689-9510
Cell: 778-230-6137
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