This is a concise answer I found online, but it only confuses me more.
“Because profit can only come from human labour, as more and more capitalists invest in the new machinery the average labour time required to produce each commodity falls. This is what makes the rate of profit fall, as the ratio of surplus value to investment falls across the whole system.”
My understanding of this paragraph is that as machines play more and more a role in production less human labor is needed to produce the commodity, but I dont get how that lowers profit. My first thought it, don’t machines allow more money to be made? As capitalism develops we are reaching a point where 90%+ jobs in some industries will be replaced by machines, needing less people and less overall investment for the profits you’re getting. The entire reason is that it makes more profits right? Employers at least in the US save a ton just from not needing to pay for employees healthcare and other benefits, there are a lot of incentives in replacing people with machines.
I am sure these questions sound totally moronic to you comrades who have read capital volume three, but I hope you can see where I’m coming from and let me know what I’m getting wrong. I would really like to understand this, but it’s pretty intimidating to get into and wrap my head around some of this stuff. Thanks guys.
It’s about mass production basically. The more automated a productive process becomes, the cheaper the individual pieces become. In a competitive economy, it lowers the barriers to production for others, too. Where you once needed certain skills or knowledge to enter a market, now it just takes capital.
Look at 3d printing for example. Once this technology develops enough, it will reduce the labor necessary for production of a lot of things. If more and more people get the home versions of them and start printing all their dishes and tableware, it’ll make the profit anyone’s able to achieve selling dishes lower.
The less labor necessary to make bowls, the less value they have because they’re more accessible.
Take that on a macro scale, and where once they needed to get metal parts from a whole different company, soon they’ll just have metal 3d printers at the beginning of their assembly line. They can make even more products because it’s so much cheaper and faster. They’re competitors can, too, though. So now everyone’s making more and your products are worth less. This is a big reason capitalism has monopolization as a key feature. Because the products are worth less, you have to sell more to make the same profit, making it harder to stay in business.
Liberals like to talk about supply and demand when it comes to trade value, but they leave out that it proves the labor theory of value. They don’t talk about how every innovation that’s lead to greater supply is an innovation that’s reduced the necessary labor to make that supply. They also don’t talk about how demand is relatively stable because that might make people think a planned economy could work instead of their chaotic market economy.