The greater productivity of labor resulting from the introduction of improved machinery gives the capitalists the possibility of increasing the rate of exploitation of labor, and they are never too slow to grasp the opportunity. This increases the mass of surplus-value, and consequently also the rate of profit. We, therefore, have two cross tendencies:—first, the tendency to lower the rate of profit by raising the composition of capital, thus diminishing, proportionately, the amount of variable capital which alone produces surplus-value; and second, to increase the rate of profit by increasing the rate of exploitation and thereby increasing that part of the product produced by the variable capital employed which goes to the capitalist as his surplus or profit. As the variable part of capital diminishes in proportion, the rate of exploitation grows. Of these two tendencies, however, the first is necessarily stronger, and the second can not overcome it for the simple reason that a part can not be greater than, nor even as great as, the whole. No matter to what proportions the rate of exploitation should grow, it can never absorb the whole product. In order that there should be a surplus-product or value, there must necessarily be a necessary product or value. Any diminution, therefore, of the proportionate part of the capital employed by the capitalists as variable, must necessarily lead to some diminution of the rate profit, be it ever so small. Hence, the resultant tendency of a falling rate of profit. The actual extent of the fall will depend on the co-operation of a number of factors, no mean part being played by the success which the capitalists will meet in their efforts to raise the rate of exploitation of labor in order to counterbalance the effects of the change in the composition of their capital.
This question of the rate of profits brings us to the so-called Great Contradiction in the Marxian theory, and to the question of the relation between the first and the third volumes of Capital. Before, however, entering upon the discussion of this question, the present writer desires to
