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analysts espouse a cyclical fall in the rate of profit(industrial cycles or cyclical crisis)
and others do so a more secular fall(for the whole capitalist system or systemic crisis).
Marxist economic theory should have another time segment, argues Mandel, that of
the long-wave; otherwise pedantic consequence of which would be an ‘ostrichlike
denial of reality’(1995:7-9). A rethinking of Marxist analytical categories, that does
not extenuate the cyclical downturns or the inescapability of systemic crisis but
nevertheless is evocative of long-waves within the capitalist economy, is practical
only with the proviso that basic variables of Marxist theory are ‘partially autonomous
variables’(ibidem).
These basic variables are the determinants of the regular patterns and contradictions of
capitalism, of which the rate of profit is both the ‘seismograph’ and ultimately the
consequence of these variables of capital valorisation along their changing format
over time. In the Marxist understanding of rate of profit, organic composition of
capital(dead to living, socially necessary labour ratio) and the rate of exploitation or
the rate of surplus value(surplus labour to socially necessary labour ratio) are the two
sides of the profit rate. Increases in organic composition of capital have a profit rate-
lowering effect; increases in the rate of surplus value however have a profit rate-
increasing effect. In fact, the theory of the falling-rate-of-profit is technically about
the thorough machining of the productive system. As such, organic composition of
capital over time increases as rate of surplus value declines, each does so because of
the ever thinning of extant living labour on the shopfloor. Rate of profit would still
decline, even though rate of exploitation does not or even soars, whenever the increase
in the constant capital is more excessive than the increase in surplus value. This is
because, the automatic increase in the throughput-labour ratio on the basis of the
increasing organic composition of capital cannot be in excess of the throughput-
capital ratio that the very increasing organic composition of capital simultaneously
affords. In these terms, with a steady level of real wage, ever-increasing labour
productivity cannot in the long run withstand the adverse effects of a concomitant
increase in the value composition of capital.
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