This chapter explores the “inner and necessary connection between two apparently contradictory phenomena” (331)
—> the falling rate of profit, and
—> the accelerated accumulation of capital.
The essence of the argument is that a progressively rising organic composition of the social capital as a whole (its total material volume) occurs at the same time as a relative decline in the rate of profit. The engine of capital’s need to expand is hence located within the tendency for profit rates to decline.
Marx uses the following example to show how the rate of profit declines as constant capital grows. Note that wages remain the same throughout, and hence so does surplus value.
If c = 50, v = 100, then p’ = 100/150 = 66.6666%
If c = 100, v = 100, then p’ = 100/200 = 50%
If c = 200, v = 100, then p’ = 100/300 = 33.3333%
If c = 400, v = 100, then p’ = 100/500 = 20%
“The same rate of surplus value, therefore, and an unchanged level of exploitation of labour, is expressed in a falling rate of profit, as the value of the constant capital and hence the total capital grows with the constant capital’s material volume” (317).
More (in terms of quantity), cheaper products (which doesn’t necessarily reflect the commodity’s value) are produced due to innovation – seen in the introduction of more constant capital (whose introduction is forced upon the capitalist class by competition, as Marx adds in Chapter 15).
In order for capital to grow it must grow in a higher ratio than that in which the profit rate falls. Even by lengthening and intensifying the working day, that classic strategy to extract surplus value from labour-power, the bosses must have sufficient amounts of constant capital to mix with variable capital. The capitalist class must also employ more labour. This expresses a situation where the organic composition may grow (more commodities, more work), despite the fact that the rate of profit is simultaneously falling. (More on this in Chapter 14).
Marx, unsurprisingly, says this better than me: “the development in the social productivity of labour is expressed, with the advance of the capitalist mode of production, on the one hand in a progressive tendency for the rate of profit to fall and on the other hand in a constant growth in the absolute mass of the surplus-value or profit appropriated; so that, by and large, the relative decline in the variable capital and profit goes together with an absolute increase in both” (329).
The chapter also raises the growth of a surplus working population – or experienced by workers as the condition of unemployment – as a result of workers’ increasing productivity. (Also more on this in Chapter 14).