Part 2, Chapter 11
(This post is part of an ongoing project: a close reading of volume 3 of Kapital, one post per chapter. I hope that others who are tackling this book for the first time might find my summaries and thoughts useful. I also hope that others might leave their own thoughts, criticisms, help, etc. here so that this blog might become a good collective resource for those brave souls who take on Vol. 3.)
Effects of General Wage Fluctuations on Prices of Production
After all the excitement of Chapter 10, this is a bit of a downer.
How do changes in wages effect the price of production? First we must realize that different firms will be effected differently depending on whether of not they produce at, below or above the average organic composition. Prices of production equal values for these firms of average composition. The individual rate of profit equals the average rate of profit for them as well.
The second thing to remember is that changes in the rate of surplus value do not necessarily change prices. Because value equals c+v+s, a rise in v can be compensated for by a decrease in s. Assuming a fixed amount of value is created each day (a fixed labor force and a fixed level of productivity) changes in v will be compensated for by an opposing direction in s. This means that the commodity’s value will stay the same even if wages rise or fall. But the change in wages does effect the amount surplus value created and therefore the amount of profit the capitalist accrues.
What does this mean for prices of production? For firms of average organic composition their rates of profit are effected by changes in wages but their prices of production remain the same. For firms producing below the average organic composition the price of production rises and profits fall. For firms producing above the average organic composition prices fall and profits fall but not in the same proportion.
What happens when wages fall? Just the opposite… “a general reduction of wages is attended by a general rise of surplus-value, of the rate of surplus-value and, other circumstances remaining the same, of the rate of profit, even if expressed in a different proportion; a fall in the prices of production for commodities produced by capitals of lower composition, and a rise in the prices of production for commodities produced by capitals of higher composition.”