Furthermore , for Marx , this general equalization process across all spheres of production , eventually gives way to a general falling rate of profit . It does so because the motive force within capitalist production to ever-lower production-costs in order to augment profit and the rate of profit so as to expand production and lure increasing capital investment , eventually drives the value creating force itself from the labor-process , namely , labor-power . Consequently , according to Marx , after a small burst of surplus profits and higher profit rates , brought about by cost-saving production techniques , these advantages eventually give way to slumps , which in turn reduce the profit rate below its former level , producing a general falling rate of profit . According to Marx ,
the progressive development [ itself ] of … productivity ,… which is shown by the way that the growing use of machinery and fixed capital generally enables more raw … materials to be transformed into products in the same time by the same number of workers , i . e . with less labor , there corresponds to this a growing volume of constant capital and continual cheapening of … product [ s ]. Each individual product , taken by itself , contains , a smaller sum of labor than at a lower stage of development of production , where the capital laid out on labour stands in a far higher ratio to that laid out on means of production . With the progressive decline in the variable capital in relation to the constant capital , [ i . e . in relation to the cost of wages and means of production ], leads to a rising organic composition of the total capital , and the direct result of this is … steadily falling general rate of profit .[ 79 ]
The general falling rate of profit is the direct result of less and less labor-power being used-up in production in relation to ever-increasing sizeable amounts of means of production , that is , constant capital . To have a general falling rate of profit , variable capital , i . e . capital laid out on wages , must remain stagnant and / or decrease , while constant capital , i . e . capital laid out on means of production , must increase as profits increase and , in general , capitalist production increases . For instance , Marx outlines the general falling profit rate , pending a rate of surplus-value of 100 %, as
1 ) C = 50 and V = 100 , then P ’ = 100 / 150 = 66.66 % rate of profit . 2 ) C = 100 and V = 100 , then P ’ = 100 / 200 = 50 % rate of profit . 3 ) C = 200 and V = 100 , then P ’ = 100 / 300 = 33.33 % rate of profit . 4 ) C = 300 and V = 100 , then P ’ = 100 / 400 = 25 % rate of profit . 5 ) C = 400 and V = 100 , then P ’ = 100 / 500 = 20 % rate of profit . [ 80 ]
As per Marx ’ s example , with a continuous investment in constant capital , i . e . means of production , after every turnover period , and with variable capital , i . e . wages , remaining the same after every turnover period , the rate of profit , with every turnover , continuously declines . To quote Marx , “ this gradual growth in the constant capital , in relation to variable , must necessarily result in a gradual fall in the general rate of profit ”[ 81 ]. Moreover , according to Marx , this continuous re-investment of profits , produced by the capitalist mode of production , into constant capital in relation to variable capital is because “ it is always cheaper to employ constant capital rather than variable … in so far as … only wear and tear [ of constant capital ] goes into the value of the commodity , whereas the … wages [ of variable capital ] must be completely reproduced in it ”[ 82 ]. It is because constant capital is replenished piecemeal in comparison to variable capital , which must be replenished , immediately , at once , that constant capital , for Marx , appears cheaper than variable capital in the capitalist ’ s mind . However , for Marx , this is a false belief , by capitalists in the sense that only variable capital can create surplus value , i . e . profit , to invest primarily in constant capital , i . e . means of production , only aggravates and hastens the general falling rate of profit . So , in a peculiar contradiction , as capitalist production expands and develops , producing evermore commodities and a greater social need for means of production and cost-saving technology , in