There was a little aha moment when reading Kali Akuno et al, specifically this part:
Marx demonstrated that as capitalist production develops and advances, competition and the need to secure greater productivity from workers drives the adoption of more productive, labor-saving technology and techniques that replace workers with machines. When labor-saving techniques are introduced, more of each dollar of capital expended in production is invested in machinery and other tools of production, while less is used to hire workers. But the increase in productivity does not cause new value to be created. According to Marx it is workers’ living labor that adds all value to commodities (whether goods or services), and the exchange value of a commodity in the marketplace is determined by the socially necessary (average) labor time required to produce it. Every average hour of labor required to produce a specific commodity yields the same amount of value, independent of any variations in productivity from technological advances.
Since technological innovation decreases the socially necessary (average) labor time required, it decreases the value of the commodity. The same amount of value is spread out among more items, so the increase in productivity causes the values of individual items to decline. As things can be produced more cheaply, and because they can be produced more cheaply, their prices tend to fall. Due to competition, companies must lower their prices when production costs decline. If they don’t, they risk a significant loss of market share or even bankruptcy when competitors cut their prices in response to reduced production costs. As a result, the amount of surplus value (profit) created per dollar of capital invested, the rate of profit, necessarily falls as well. The reality is that productivity increases under capitalism produce a tendency for the general rate of profit to fall.
Since the 1960s and more intensely since the 1990’s, we have witnessed capital’s steady incorporation of automation, computerization, and digitization into the commodities production process. The mass introduction of containerization, computer numeric control (CNC) production, and digitization have displaced millions of workers from the global labor market. And with the introduction of the internet and cell phone technology, etc., there are hardly any people left on Earth who aren’t being directly impacted by this rapid technological change
But capital’s ability to reproduce itself and expand, depends on the accumulation of surplus value, a portion of which must be reinvested in means of production and labor. In more stable periods of capital accumulation, the crisis of realizing profits which is endemic to capitalism is moderated. But the general tendency of decline in the rate of profit, or accumulation of surplus value, forces efforts to bridge the gap between needed and actual rate of profit through extreme measures. Some of the extreme measures capital employs to reproduce itself include the deployment of vicious social control strategies like neoliberalism, which call for austerity and the privatization of social goods, or fascism which calls for political terror. Both of these strategies are designed to discipline labor and make it more compliant, drive down wages, and enable the plunder of natural resources more intensely and efficiently in order to restore profitability.
and even more specifically, the part where he wrote "Since technological innovation decreases the socially necessary (average) labor time required, it decreases the value of the commodity. The same amount of value is spread out among more items, so the increase in productivity causes the values of individual items to decline."
Amazing! It feels good when it a concept clicks.
The part I was missing was the direct and non-negotiable link between labor and value, which I suppose is pretty important concept in Marxism.
The tendency is proven, but it is frustrated by capitalists in ways that undermine the foundations of capitalism. Centralization of capital via joining companies together is one of the ways capital fights the tendency, but this also results in the death of competition and a much larger ratio of workers to capitalists, making disparity more contradictory and increasing the chances of success for revolution.
Also...not every worker stays employed after the merger. There is a general tendency to pay workers less to try to increase profits in your own little corner of the economy, whether that's by laying people off or paying them as little as possible. But when everyone does that, in aggregate, across the whole economy, and also takes advantage of inelasticity of demand to jack up prices of things that people need to survive, the people get put in an increasingly precarious and proletarianized position, even if in the past some could have hacked it as a petit bourgeois. This sort of behavior can only increase profits so much and it results in crises for the working class while placing a hard limit on the amount of money people can spend because they always spend all of it.
Exactly, and then circulation of capital grinds to a halt and capital is no longer being valorized, resulting in entire banks collapsing overnight.
I'm being told on my radio communicator that this is a good thing, though, because those banks were not maximally efficient according to the whims of the free market.
Going into the readings of Capital last year, one of my major misconceptions about Marx's work was that the falling rate of profit was one of the "disproven" predictions... when in fact, it's a fact of life that the capitalists spend a supermajority of their effort trying to overcome.
To be fair, it's extremely easy to miss that it's more of a downward pressure and not an ironclad and steady drop. It's as you said, a great force that capitalists must work against to maintain profits.
Do not listen to what the capitalist says but pay attention to what they do. They'll say the LTV is incorrect but they have to act like it is because IT IS. Its like the saying, the purpose of a system is what it does.
And libs are also convinced that the falling rate of profit cant be true because it backs up the LTV and thats not ok for lib ideology. But the capitalists act as tho its true because reality doesn't care about your ideology. They say one thing and do another.
This also happens in the financial realm, where concentration of stock ownership gets to such a high level (e.g. BlackRock) that selling the stock would demolish the price thereby negating it's own value.
Capital is a blind, hungry demon.
Yep, and it's important to keep that tied to how it exists contextually with the rest of the economy.