Das Kapital III — Kap. 11

Kap. 11

Lohnbewegungen und Produktionspreise: Durchschnitt, niedere und höhere Zusammensetzung

Competition has been shown levelling the rates of profit into one general rate, market value settling at one level that stands above some producers' individual values and below others', and capital migrating out of the poorly paying lines until the average is restored. With that rate and those prices of production taken as already given, one disturbance is now let in: wages rise, or fall, everywhere at once.

Die Durchschnittszusammensetzung des gesellschaftlichen Kapitals sei 80c + 20v und der Profit 20%. In diesem Fall ist die Rate des Mehrwerts 100%. Eine allgemeine Erhöhung des Arbeitslohns, alles andre gleichgesetzt, ist eine Erniedrigung der Rate des Mehrwerts. Für das Durchschnittskapital fallen Profit und Mehrwert zusammen. Der Arbeitslohn steige um 25%. Dieselbe Masse Arbeit, die es 20 kostete in Bewegung zu setzen, kostet es jetzt 25. Wir haben dann statt 80c + 20v + 20p einen Umschlagswert von 80c + 25v + 15p. Die vom variablen Kapital in Bewegung gesetzte Arbeit produziert nach wie vor eine Wertsumme von 40. Steigt v von 20 auf 25, so ist der Überschuß m resp. p nur noch = 15. Der Profit von 15 auf 105 ist = 14 2/7 %, und dies wäre die neue Rate des Durchschnittsprofits. Da der Produktionspreis der vom Durchschnittskapital produzierten Waren zusammenfällt mit ihrem Wert, so hätte sich der Produktionspreis dieser Waren nicht verändert; die Erhöhung des Arbeitslohns hätte daher wohl Erniedrigung des Profits, aber keinen Wert- und Preiswechsel der Waren mit sich geführt.

average capital: profit down, price unchanged

Say the social average capital is made up of 80c + 20v, and the profit is 20 per cent. In this case the rate of surplus-value is 100 per cent.

A general rise in wages, everything else held equal, is a fall in the rate of surplus-value. For the average capital, profit and surplus-value are the same magnitude.

Suppose wages rise by 25 per cent. The same amount of labour that used to cost 20 to set in motion now costs 25. We now get a turnover value — the value of what this capital turns out in one turnover period — of 80c + 25v + 15s, instead of 80c + 20v + 20s. The labour set in motion by the variable capital still produces a value sum of 40, just as before. When v rises from 20 to 25, the excess — s or p — is now only 15. A profit of 15 on 105 works out to 14 2/7 per cent, and this would be the new average rate of profit.

Since the price of production of commodities made by the average capital coincides with their value, the price of production of these commodities would not have changed. The wage rise would therefore have brought about a fall in profit, but no change in the value or the price of the commodities.

Früher, wo der Durchschnittsprofit = 20%, war der Produktionspreis der in einer Umschlagsperiode produzierten Waren gleich ihrem Kostpreis plus einem Profit von 20% auf diesen Kostpreis, also = k + kp´ = k + 20 k / 100; wo k variable Größe, verschieden nach dem Wert der Produktionsmittel, die in die Waren eingehn, und nach dem Maße des Verschleißes, den das in ihrer Produktion verwandte fixe Kapital an das Produkt abgibt. Jetzt betrüge der Produktionspreis k + 14 2/7k / 100.

the price-of-production formula, updated

Earlier, when the average rate of profit was 20 per cent, the price of production of the commodities made in one turnover period equalled their cost price plus a profit of 20 per cent on that cost price — that is, k + kp' = k + 20k/100, where k is that cost price, a variable magnitude, differing according to the value of the means of production that go into the commodities, and according to how much of the fixed capital used in producing them is worn away and passed on to the product. Now the price of production would come to k + 14 2/7 k/100.

Nehmen wir nun erst ein Kapital, dessen Zusammensetzung niedriger als die ursprüngliche des gesellschaftlichen Durchschnittskapitals 80c + 20v (die sich jetzt verwandelt hat in 76 4/21c + 23 17/21v); z.B. 50c + 50v. Hier betrug der Produktionspreis des Jahresprodukts, wenn wir der Vereinfachung halber annehmen, daß das ganze fixe Kapital in das jährliche Produkt als Verschleiß einging und daß die Umschlagszeit dieselbe ist wie in Fall I, vor der Erhöhung des Arbeitslohns 50c + 50v + 20p = 120. Eine Erhöhung des Arbeitslohns um 25% gibt für dasselbe Quantum in Bewegung gesetzter Arbeit eine Erhöhung des variablen Kapitals von 50 auf 62 1/2. Würde das jährliche Produkt zum frühern Produktionspreis von 120 verkauft, so ergäbe dies 50c + 62 1/2v + 7 1/2p, also eine Profitrate von 6 2/3 %. Die neue Durchschnittsprofitrate ist aber 14 2/7 %, und da wir alle andren Umstände als gleichbleibend annehmen, wird dies Kapital von 50c + 62 1/2v diesen Profit auch machen müssen. Ein Kapital von 112 1/2 macht aber zur Profitrate von 14 2/7 einen Profit von 16 1/14 <1. Auflage: rund 16 1/12 (Änderung in Anlehnung an das Manuskript von Marx)>. Der Produktionspreis der davon produzierten Waren ist also jetzt 50c + 62 1/2v + 16 1/14p <1. Auflage: 16 1/12p (Änderung in Anlehnung an das Manuskript von Marx)> = 128 8/14 <1. Auflage: 128 7/12 (Änderung in Anlehnung an das Manuskript von Marx)>. Infolge der Lohnsteigerung um 25% ist hier also der Produktionspreis desselben Quantums derselben Ware gestiegen von 120 auf 128 8/14 <1. Auflage: 128 7/12 (Änderung in Anlehnung an das Manuskript von Marx)> oder mehr als 7%.

lower composition: price rises

Now take first a capital whose composition is lower than the original social average of 80c + 20v (which has now turned into 76 4/21c + 23 17/21v, since the same labour costs 25 to set in motion instead of 20 and nothing in production has changed) — say, 50c + 50v. To keep things simple, assume the whole fixed capital passes into the annual product as wear, and that the turnover time is the same as in the first case. Before the wage rise, the price of production of the annual product here came to 50c + 50v + 20p = 120.

A rise in wages of 25 per cent, for the same quantity of labour set in motion, raises the variable capital from 50 to 62½. If the annual product still sold at the old price of production of 120, that would give 50c + 62½v + 7½p — a profit rate of only 6⅔ per cent. But the new average rate of profit is 14 2/7 per cent, and since we are holding every other circumstance equal, this capital of 50c + 62½v will have to make that rate of profit too. A capital of 112½, at a profit rate of 14 2/7 per cent, makes a profit of 16 1/14. The price of production of the commodities it produces is therefore now 50c + 62½v + 16 1/14p = 128 8/14.

So, because of the 25 per cent wage rise, the price of production of the same quantity of the same commodity has risen from 120 to 128 8/14 — more than 7 per cent.

Nehmen wir umgekehrt eine Produktionssphäre an von höherer Komposition als das Durchschnittskapital, z.B. 92c + 8v. Der ursprüngliche Durchschnittsprofit ist also auch hier = 20, und wenn wir wieder annehmen, daß das ganze fixe Kapital in das jährliche Produkt eingeht und die Umschlagszeit dieselbe ist wie in Fall I und II, so ist der Produktionspreis der Ware auch hier = 120.

setting up the higher-composition case

Now take, conversely, a sphere of production with a higher composition than the average capital — say, 92c + 8v. Here too the original average profit is 20, and if we again assume that the whole fixed capital passes into the annual product and that the turnover time is the same as in cases I and II, the price of production of the commodity here is also 120.

Infolge der Steigerung des Arbeitslohns um 25% wächst das variable Kapital für gleichbleibende Arbeitsmenge von 8 auf 10, der Kostpreis der Waren also von 100 auf 102, andrerseits ist die Durchschnittsprofitrate von 20% gefallen auf 14 2/7 %. Es verhält sich aber 100 : 14 2/7 = 102 : 14 4/7 <1. Auflage: (annähernd)>. Der Profit, der nun auf 102 fällt, ist also 14 4/7. Und daher verkauft sich das Gesamtprodukt zu k + kp´ = 102 + 14 4/7 = 116 4/7. Der Produktionspreis ist also gefallen von 120 auf 116 4/7 oder um 3 3/7 <1. Auflage: über 3 Prozent - (Änderung in Anlehnung an das Manuskript von Marx)>.

higher composition: price falls

Because of the 25 per cent rise in wages, the variable capital grows, for the same amount of labour, from 8 to 10 — so the cost price of the commodities rises from 100 to 102. On the other hand, the average rate of profit has fallen from 20 per cent to 14 2/7 per cent. Now, 100:14 2/7 = 102:14 4/7, so a cost price of 102 now yields a profit of 14 4/7. The whole product therefore sells at k + kp' = 102 + 14 4/7 = 116 4/7. The price of production has thus fallen from 120 to 116 4/7, a fall of 3 3/7.

Infolge der Erhöhung des Arbeitslohns um 25% ist also:

three results, one wage rise

So, as a result of the 25 per cent rise in wages:

1. mit Bezug auf das Kapital von gesellschaftlicher Durchschnittskomposition der Produktionspreis der Ware unverändert geblieben;

case I: price unchanged, profit down

(I) for capital of the social average composition, the price of production of the commodity has stayed unchanged;

2. mit Bezug auf das Kapital niederer Zusammensetzung der Produktionspreis der Ware gestiegen, obgleich nicht im selben Verhältnis wie der Profit gefallen;

case II: price up, profit down

(II) for capital of lower composition, the price of production of the commodity has risen, though not in the same proportion as the profit has fallen;

3. mit Bezug auf das Kapital höherer Zusammensetzung ist der Produktionspreis der Ware gefallen, obgleich auch nicht in demselben Verhältnis wie der Profit.

case III: price down, profit down

(III) for capital of higher composition, the price of production of the commodity has fallen, though again not in the same proportion as the profit.

Da der Produktionspreis der Waren des Durchschnittskapitals derselbe geblieben, gleich dem Wert des Produkts, ist auch die Summe der Produktionspreise der Produkte aller Kapitale dieselbe geblieben, gleich der Summe der vom Gesamtkapital produzierten Werte; die Erhöhung auf der einen, die Senkung auf der andern Seite gleichen sich aus für das Gesamtkapital zum Niveau des gesellschaftlichen Durchschnittskapitals.

total price still equals total value

Since the price of production of the commodities of the average capital has stayed the same, equal to the value of the product, the sum of the prices of production of the products of all capitals has also stayed the same, equal to the sum of the values produced by the total capital. The rise on one side and the fall on the other side balance out for the total capital, at the level of the social average capital — that is, at the level where the average capital's price of production is still equal to the value of its product.

Wenn der Produktionspreis der Waren in Beispiel II steigt, in III fällt, so zeigt schon diese entgegengesetzte Wirkung, die der Fall in der Mehrwertsrate oder das allgemeine Steigen des Arbeitslohns hervorbringt, daß es sich hier nicht um eine Entschädigung im Preise für die Erhöhung des Arbeitslohns handeln kann, da in III das Fallen des Produktionspreises den Kapitalisten unmöglich entschädigen kann für das Fallen des Profits und in II das Steigen des Preises den Fall des Profits nicht verhindert. Vielmehr ist beidemal, wo der Preis steigt und wo er fällt, der Profit derselbe wie im Durchschnittskapital, wo der Preis unverändert geblieben. Er ist für II wie für III derselbe, um 5 5/7 oder etwas über 25% gefallne Durchschnittsprofit. Es folgt daraus, daß, wenn der Preis in II nicht stiege und in III nicht fiele, II unter und III über dem neuen gefallnen Durchschnittsprofit verkaufen würde. Es ist an und für sich klar, daß, je nachdem 50, 25 oder 10 pro 100 des Kapitals in Arbeit ausgelegt wird, eine Lohnerhöhung sehr verschieden wirken muß auf den, der 1/10, und auf den, der 1/4 oder 1/2 seines Kapitals in Arbeitslohn auslegt. Die Erhöhung der Produktionspreise einerseits, ihre Senkung andrerseits, je nachdem das Kapital unter oder über der gesellschaftlichen Durchschnittszusammensetzung steht, wird nur bewirkt durch die Ausgleichung zum neuen gefallnen Durchschnittsprofit.

why this isn't compensation

If the price of production of the commodities rises in example II and falls in example III, this opposite effect alone — produced by the fall in the rate of surplus-value, that is, by the general rise in wages — already shows that what is happening here cannot be a compensation in price for the rise in wages. In III, the fall in the price of production cannot possibly compensate the capitalists for the fall in profit, and in II, the rise in price does not prevent the fall in profit.

Rather, in both cases — where the price rises and where it falls — the profit is the same as for the average capital, where the price stayed unchanged. It is the same for II as for III: the average rate of profit, now fallen by 5 5/7, a little over 25 per cent of what it was.

It follows that if the price in II did not rise and the price in III did not fall, II would be selling below, and III above, the new, fallen average profit.

It is clear enough that, according as 50, 25 or 10 in every 100 of a capital is laid out on labour, a wage rise must act very differently on the capitalist who lays out a tenth of his capital in wages, the one who lays out a quarter, and the one who lays out a half.

The rise in prices of production on one side, and their fall on the other, depending on whether the capital stands below or above the social average composition, is brought about only by the equalization to the new, fallen average profit.

Wie würde nun ein allgemeiner Fall des Arbeitslohns und ihm entsprechendes allgemeines Steigen der Profitrate und daher der Durchschnittsprofite wirken auf die Produktionspreise der Waren, die das Produkt von Kapitalen, welche nach entgegengesetzten Richtungen von der gesellschaftlichen Durchschnittszusammensetzung abweichen? Wir haben bloß die eben gegebne Ausführung umzudrehn, um das Resultat (das Ricardo nicht untersucht) zu erhalten.

reversing the argument: a wage fall

Now, how would a general fall in wages, and the corresponding general rise in the rate of profit and so in average profits, affect the prices of production of the commodities that are the product of capitals diverging from the social average composition in opposite directions? We need only turn round the account just given, to get the result — a result Ricardo did not examine.

I. Durchschnittskapital = 80c + 20v = 100; Mehrwertsrate = 100%; Produktionspreis = Warenwert = 80c + 20v + 20p = 120; Profitrate = 20%. Es falle der Arbeitslohn um ein Viertel, so wird dasselbe konstante Kapital in Bewegung gesetzt von 15v statt von 20v. Wir haben also Warenwert = 80c + 15v + 25p = 120. Das von v produzierte Quantum Arbeit bleibt unverändert, nur wird der dadurch geschaffne Neuwert anders verteilt zwischen Kapitalist und Arbeiter. Der Mehrwert ist gestiegen von 20 auf 25 und die Rate des Mehrwerts von 20/20 auf 25/15, also von 100% auf 166 2/3 %. Der Profit auf 95 ist jetzt = 25, also die Profitrate auf 100 = 26 6/19. Die neue prozentige Zusammensetzung des Kapitals ist jetzt 84 4/19c + 15 15/19v = 100.

average capital under falling wages

I. Average capital = 80c + 20v = 100; rate of surplus-value = 100 per cent; price of production = value of the commodity = 80c + 20v + 20p = 120; rate of profit = 20 per cent.

Let wages fall by a quarter. Then the same constant capital is set in motion by 15v instead of by 20v. So we have commodity value = 80c + 15v + 25p = 120. The quantity of labour that v sets in motion stays unchanged — only the new value it creates is now shared out differently between capitalist and worker. The surplus-value has risen from 20 to 25, and the rate of surplus-value from 20/20 to 25/15 — that is, from 100 per cent to 166⅔ per cent. The profit on 95 is now 25, so the rate of profit on 100 is 26 6/19 per cent. The new percentage composition of the capital is now 84 4/19c + 15 15/19v = 100.

II. Niedrigere Zusammensetzung. Ursprünglich 50c + 50v wie oben. Durch den Fall des Arbeitslohnes um 1/4 wird v auf 37 1/2 reduziert und damit das vorgeschoßne Gesamtkapital auf 50c + 37 1/2v = 87 1/2. Wenden wir hierauf die neue Profitrate von 26 6/19 % an, so: 100 : 26 6/19 = 87 1/2: 23 1/38. Dieselbe Warenmasse, die früher 120, kostet jetzt 87 1/2 + 23 1/38 = 110 10/19; Preisfall von beinahe 10.

lower composition, wages down

II. Lower composition. Originally 50c + 50v, as above. The fall in wages by a quarter reduces v to 37½, and with it the total capital advanced to 50c + 37½v = 87½. Applying the new rate of profit of 26 6/19 per cent to this: 100:26 6/19 = 87½:23 1/38. The same mass of commodities, which used to cost 120, now costs 87½ + 23 1/38 = 110 10/19 — a fall in price of almost 10.

III. Höhere Zusammensetzung. Ursprünglich 92c + 8v = 100. Der Fall des Arbeitslohns um 1/4 senkt 8v auf 6v, das Gesamtkapital auf 98. Hiernach 100 : 26 6/19 = 98 : 25 15/19. Der Produktionspreis der Ware, früher 100 + 20 = 120, ist jetzt, nach dem Fall des Arbeitslohnes, 98 + 25 15/19 = 123 15/19; also gestiegen fast um 4.

higher composition, wages down

III. Higher composition. Originally 92c + 8v = 100. The fall in wages by a quarter reduces 8v to 6v, and the total capital to 98. From this, 100:26 6/19 = 98:25 15/19. The price of production of the commodity, formerly 100 + 20 = 120, is now, after the fall in wages, 98 + 25 15/19 = 123 15/19 — a rise of almost 4.

Man sieht also, daß man nur dieselbe Entwicklung wie früher in umgekehrter Richtung zu verfolgen hat mit den erforderlichen Änderungen; daß ein allgemeiner Fall des Arbeitslohns zur Folge hat ein allgemeines Steigen des Mehrwerts, der Rate des Mehrwerts, und bei sonst gleichbleibenden Umständen der Profitrate, wenn auch in andrer Proportion ausgedrückt; einen Fall der Produktionspreise für die Warenprodukte von Kapitalen niederer, und steigender Produktionspreise für Warenprodukte von Kapitalen höherer Zusammensetzung. Gerade das umgekehrte Resultat von dem, das sich herausstellte bei allgemeinem Steigen des Arbeitslohns.³⁴ Es ist in beiden Fällen - Steigen wie Fallen des Arbeitslohns - vorausgesetzt, daß der Arbeitstag gleichbleibt, ebenso die Preise aller notwendigen Lebensmittel. Der Fall des Arbeitslohns ist hier also nur möglich, wenn der Lohn entweder vorher über dem normalen Preis der Arbeit stand oder unter ihn herabgedrückt wird. Wie die Sache modifiziert wird, wenn das Steigen oder Fallen des Arbeitslohns herrührt von einem Wechsel im Werte und daher im Produktionspreise der Waren, die gewöhnlich in den Konsum des Arbeiters eingehn, wird zum Teil weiter untersucht werden im Abschnitt über die Grundrente. Indes ist hier ein für allemal zu bemerken:

the mirror result, and its limits

So we can see that we only need to follow the same account as before in the opposite direction, with the necessary changes: a general fall in wages results in a general rise in surplus-value, in the rate of surplus-value, and — other circumstances remaining the same — in the rate of profit, though the rate of profit does not rise in the same proportion as the rate of surplus-value; a fall in the prices of production of the commodity-products of capitals of lower composition, and a rise in the prices of production of the commodity-products of capitals of higher composition. Exactly the opposite result to the one that came out for a general rise in wages.

In both cases — wages rising and wages falling — it is assumed throughout that the working day stays the same, and likewise the prices of all the necessary means of subsistence. A fall in wages is therefore only possible here if wages previously stood above the normal price of labour, or are now forced down below it.

How the matter is modified when the rise or fall in wages comes from a change in the value, and so in the price of production, of the commodities that usually go into the worker's consumption, will be examined further, in part, in the section on ground-rent. There is, however, one thing to note here once and for all:

Rührt Steigen oder Fallen des Arbeitslohns her vom Wertwechsel der notwendigen Lebensmittel, so kann nur eine Modifikation des oben Gesagten eintreten, soweit die Waren, deren Preisveränderung das variable Kapital erhöht oder erniedrigt, auch als konstituierende Elemente in das konstante Kapital eingehn und daher nicht bloß auf den Arbeitslohn wirken. Soweit sie aber nur das letztre tun, enthält die bisherige Entwicklung alles, was zu sagen ist.

one modification: also in constant capital

If a rise or fall in wages comes from a change in the value of the necessary means of subsistence, then only one modification to what has just been said can arise: to the extent that the commodities whose price change raises or lowers the variable capital also enter as constituent elements into the constant capital, and so do not act on wages alone. But in so far as they act on wages alone, the account already given contains everything that needs to be said.

In diesem ganzen Kapitel ist die Herstellung der allgemeinen Profitrate, des Durchschnittsprofits, und also auch die Verwandlung der Werte in Produktionspreise als gegebne Tatsache unterstellt. Es fragte sich nur, wie eine allgemeine Erhöhung oder Senkung des Arbeitslohns auf die als gegeben vorausgesetzten Produktionspreise der Waren wirkt. Es ist dies eine sehr sekundäre Frage, verglichen mit den übrigen in diesem Abschnitt behandelten wichtigen Punkten. Es ist aber die einzige hier einschlägige Frage, die Ricardo, und selbst noch einseitig und mangelhaft, wie man sehen wird <Siehe Band 26, 2. Teil, S. 181-194>, behandelt.

what this chapter takes as given

Throughout this whole chapter, the formation of the general rate of profit, of average profit, and so also the transformation of values into prices of production, has been assumed as a given fact. The only question was how a general rise or fall in wages acts on the prices of production of commodities that are themselves taken as already given. This is a very secondary question, compared with the other important points dealt with in this Part. But it is the only question relevant here that Ricardo deals with — and, as we shall see, only one-sidedly and inadequately at that.

Kap. 11

Wage Movements and Prices of Production: Average, Lower and Higher Composition

Let the average composition of the social capital be 80c + 20v, and profit 20 per cent. In this case the rate of surplus-value is 100 per cent. A general rise in wages, everything else being equal, means a fall in the rate of surplus-value. For the average capital, profit and surplus-value coincide. Say that wages rise by 25 per cent. The same amount of labour which previously cost 20 to set in motion now costs 25. We then have a turnover value of 80c + 25v + 15s, instead of 80c + 20v + 20s. The labour set in motion by the variable capital still produces a value sum of 40, as before. But if v rises from 20 to 25, the excess s or p is now only 15. A profit of 15 on 105 is 14 2/7 per cent, and this would be the new average rate of profit. Since the production price of commodities produced by the average capital coincides with their value, the production price of these commodities would not have changed. The increase in wages would therefore involve a decline in profit, but no change in the value of commodities or their price of production.

average capital: profit down, price unchanged

Say the social average capital is made up of 80c + 20v, and the profit is 20 per cent. In this case the rate of surplus-value is 100 per cent.

A general rise in wages, everything else held equal, is a fall in the rate of surplus-value. For the average capital, profit and surplus-value are the same magnitude.

Previously, when the average rate of profit was 20 per cent, the production price of the commodities produced in one turnover period was equal to their cost price plus a profit of 20 per cent on this, i.e. k + kp' = k + 20k/100; here k is a variable magnitude differing according to the value of the means of production that go into the commodities and according to the amount of depreciation that the fixed capital employed in their production surrenders to the product. After the rise in wages, the production price would now come to k + 14 2/7 k/100.

the price-of-production formula, updated

Let us first take a capital whose composition is lower than the original composition of the average social capital 80c + 20v (which has now been changed to 76 4/21c + 23 17/21v); for example, 50c + 50v. If we assume for the sake of simplification that the entire fixed capital goes into the annual product as depreciation and that the turnover time is the same as in case I, the production price of the annual product would have amounted, before the rise in wages, to 50c + 50v + 20p = 120. A wage rise of 25 per cent means a rise in variable capital from 50 to 62½, for the same amount of labour set in motion. If the annual product were sold at the former production price of 120, this would give us 50c + 62½v + 7½p, i.e. a profit rate of 6⅔ per cent. The new average rate of profit, however, is 14 2/7 per cent, and since we take all other circumstances as remaining the same, our capital of 50c + 62½v must also make this profit. A capital of 112½, at a profit rate of 14 2/7 per cent, makes a profit of 16 1/14. The production price of the commodities it produces is therefore now 50c + 62½v + 16 1/14p = 128 8/14. As a result of the wage rise of 25 per cent, the price of production of the same quantity of the same commodity has risen from 120 to 128 8/14, or by more than 7 per cent.

lower composition: price rises

So, because of the 25 per cent wage rise, the price of production of the same quantity of the same commodity has risen from 120 to 128 8/14 — more than 7 per cent.

Let us now take a sphere of production with a higher composition than the average capital, e.g. 92c + 8v. The original average profit here is also 20, and if we again assume that the entire fixed capital goes into the annual product, and that the turnover time is the same as in the first two cases, the production price of the commodities is also 120.

setting up the higher-composition case

As a result of the 25 per cent wage rise, the variable capital grows from 8 to 10, for the same amount of labour, and the cost price of the commodities therefore grows from 100 to 102, while the average profit rate of 20 per cent falls to 14 2/7 per cent. But 100:14 2/7 = 102:14 4/7. The profit that now accrues to 102 is therefore 14 4/7, and the total product is therefore sold at k + kp' = 102 + 14 4/7 = 116 4/7. The production price has thus fallen from 120 to 116 4/7, or by 3 3/7.

higher composition: price falls

The result of the wage rise of 25 per cent is thus as follows:

three results, one wage rise

So, as a result of the 25 per cent rise in wages:

(I) for capital of an average social composition, the commodity’s price of production remains unchanged;

case I: price unchanged, profit down

(I) for capital of the social average composition, the price of production of the commodity has stayed unchanged;

(II) for capital of a lower composition, the production price rises, though not in the same ratio as the profit has fallen;

case II: price up, profit down

(II) for capital of lower composition, the price of production of the commodity has risen, though not in the same proportion as the profit has fallen;

(III) for capital of a higher composition, the production price falls, though again not in the same ratio as the profit.

case III: price down, profit down

(III) for capital of higher composition, the price of production of the commodity has fallen, though again not in the same proportion as the profit.

Since the production price of commodities produced by the average capital has remained the same, namely equal to the value of the product, the sum of production prices for the products of all capitals has also remained the same, namely equal to the sum of values produced by the total capital; the rises on the one hand and the falls on the other balance out at the level of the socially average capital, taking this over the entire capital of the society.

total price still equals total value

If the production price for commodities in example II rises, while it falls in example III, this opposite effect which is produced by the fall in the rate of surplus-value or the general rise in wages already shows how there can be no corresponding compensation in prices for the rise in wages, since in example III the fall in the price of production can in no way compensate the capitalists for the fall in their profit, while in example II the rise in price still does not prevent a fall in profit. In each case, rather, both where the price rises and where it falls, profit is the same as for the average capital, whose prices remain unaffected. It is the same for both II and III, a fall in the average profit of 5 5/7 per cent, or somewhat over 25 per cent [of the original rate]. It follows from this that, if the price did not rise in example II and fall in example III, II would be sold at less than the new, lower, average profit, and III at more than this. It is immediately clear that according to whether 50, 25 or 10 out of every 100 units of capital are laid out on labour, a rise in wages will necessarily have very different effects on a capitalist who lays out a tenth of his capital on wages, one who lays out a quarter, and one who lays out a half. The rise in the price of production on the one hand and its fall on the other, according to whether the capital involved has a lower or higher composition than the social average, is accomplished only by the process of equalization at the new, lower, average rate of profit.

why this isn't compensation

It follows that if the price in II did not rise and the price in III did not fall, II would be selling below, and III above, the new, fallen average profit.

How then would the prices of production of commodities produced by capitals that diverge in contrary directions from the social average composition be affected by a general fall in wages, with a corresponding general rise in the rate of profit, and hence in average profits? We have simply to turn the above example round to obtain the result (a result which Ricardo does not investigate).

reversing the argument: a wage fall

I. Average capital 80c + 20v = 100; rate of surplus-value 100 per cent; production price = commodity value = 80c + 20v + 20p = 120; rate of profit 20 per cent. If wages fall by a quarter, the same constant capital will be set in motion by 15v instead of by 20v. We then have a commodity value of 80c + 15v + 25p = 120. The quantity of labour produced by v remains unaffected, except that the new value it creates is differently distributed between capitalist and worker. The surplus-value has risen from 20 to 25, and the rate of surplus-value from 20/20 to 25/15, i.e. from 100 per cent to 166⅔ per cent. The profit is now 25 on 95, and the profit rate therefore 26 6/19 per cent. The new percentage composition of capital is now 84 4/19c + 15 15/19v = 100.

average capital under falling wages

I. Average capital = 80c + 20v = 100; rate of surplus-value = 100 per cent; price of production = value of the commodity = 80c + 20v + 20p = 120; rate of profit = 20 per cent.

II. Below average composition. Originally 50c + 50v as above. The wage cut of a quarter reduces v to 37½, and the total capital advanced therefore to 50c + 37½v = 87½. If we apply to this the new rate of profit of 26 6/19 per cent, we get 100:26 6/19 = 87½:23 1/38. The same mass of commodities that previously cost 120 now costs 87½ + 23 1/38 = 110 10/19; a fall in price of almost 10.

lower composition, wages down

III. Above average composition. Originally 92c + 8v = 100. The wage cut of a quarter reduces 8v to 6v, and the total capital to 98. 100:26 6/19 = 98:25 15/19. The production price of the commodities, which was previously 100 + 20 = 120, is now, after the fall in wages, 98 + 25 15/19 = 123 15/19; i.e. a rise of almost 4.

higher composition, wages down

We can thus see how it is only necessary to pursue the same development as before in the reverse direction and make the requisite changes; the conclusion is that a general fall in wages leads to a general rise in surplus-value, in the rate of surplus-value, and with other things remaining equal, also in the profit rate, even if in a different proportion; it leads to a fall in production prices for the commodity products of capitals of lower than average composition and a rise in production prices for the commodity products of capitals of higher than average composition. Exactly the opposite result as that which arose from a general rise in wages. ³⁴ In both cases, that of a rise in wages and that of a fall, the working day is assumed to remain the same, and so are the prices of all necessary means of subsistence. A fall in wages is thus only possible here either if wages previously stood above the normal price of labour, or if they are now to be pushed below it. How the matter is affected if the rise or fall in wages derives from a change in the values and hence in the production prices of commodities that customarily go into the workers’ consumption will in part be further investigated below, in the section on ground-rent. The following points, however, have to be made here once and for all:

the mirror result, and its limits

If the rise or fall in wages results from a change in the value of the necessary means of subsistence, the only modification of the process analysed above occurs when the commodities whose price-changes serve to increase or lessen the variable capital also enter as constituent elements into the constant capital and hence do not simply affect wages. But in so far as they do only affect wages, the above argument contains all that has to be said.

one modification: also in constant capital

In this entire chapter, we have assumed that the establishment of a general rate of profit, an average profit, and thus also the transformation of values into production prices, is a given fact. All that has been asked is how a general rise or fall in wages affects the prices of production of commodities, prices we have assumed to be given in advance. This is a very secondary question compared with the other important points which have been dealt with in this Part. Yet it is the only question Ricardo deals with which is relevant here, and as we shall see he deals with it only in a one-sided and inadequate way.

what this chapter takes as given