ABSTRACT
Marx defined the rate of profit as the ratio of surplus-value to constant plus variable capital. This can be expressed as the ratio of the rate of surplus-value to the organic composition of capital plus one (see Chapter 4). Given this conception of the rate of profit, it follows that, as the level of constant capital increases, the organic composition of capital rises and, ceteris paribus, there is a fall in the rate of profit. Marx asserts that:
it has been shown to be a law of the capitalist mode of production that its development does in fact involve a relative decline in the relation of variable capital to constant, and hence also to the total capital set in motion. This simply means that the same number of workers or the same quantity of labour-power that ismade available by a variable capital of a given value, as a result of the specific methods of production that develop within capitalist production, sets in motion, works-up, and productively consumes, within the same period, an ever-growing mass of means of labour, machinery and fixed capital of all kinds, and raw and ancillary materials – in other words, the same number of workers operate with a constant capital of ever-growing scale.
