Is there a difference between the rate of profit and rate of surplus value?

[Comrade Hill]

I'm reading on this blog that the rate of profit can decline while the rate of surplus value rises. Is this true? If so, how?

http://critiqueofcrisistheory.wordpress.com/historical-materialism-and-the-inevitable-end-of-capitalism/factors-that-limit-the-life-span-of-the-capitalist-system/

[Ilyich]

I’m going to take a shot at this but I could very well be wrong:

from the MIA: “The rate of surplus value is ratio of the surplus labour time, which the producing class works without pay, to the necessary labour time, that they need to maintain their standard of living. Expressed algebraically, if v is the necessary labour time (or value of labour power), and s is the surplus labour time, then the rate of surplus value is s/v.”

The rate of profit is the rate of surplus value dived by the value of one added to the organic composition of capital, constant capital divided by variable capital. (s/v)/(c/v+1)=p The rate of surplus value is a factor of the rate of profit.

The rate of profit can decrease while the rate of surplus value increases if the organic composition of capital grows faster than the rate of surplus value. This can happen with the introduction of such things as machines to production.

Everyone else, how was my answer?

[Let's Get Free]

I'll take a guess and say the increased usage of technology and science to production mean lower costs of production which allow the more efficient capitals, through the prices of production, to claim the portions of surplus value thrown into the exchange process by all other capitals, thus offsetting a little bit the reduced rate of profit of the more efficient capitals.

[Vladimir Innit Lenin]

I'll answer this as succinctly as I can. The idea of a rate of profit and rate of surplus value come from Marx's Capital.

Essentially, this idea comes from Marx's musings on Value.

The famous equation W = C + V + S, where W is the Value of Product, C is Constant Capital (i.e. non-labour inputs), V = Variable Capital (i.e. Labour power) and S = Surplus Value.

The rate of surplus value (or rate of exploitation), S' = S/V and the organic composition of capital, C' = C/V

The rate of profit is thus S/(C+V), or simplified: S'/(C+1)

So yes, there's certainly a positive correlation likely between the rate of surplus value and the rate of profit, but this can be complicated when judged over long periods of time, due to changes in the organic composition of capital (i.e. technological advance).

[Yuppie Grinder]

There are elements that counteract the falling rate of profit. The falling rate of profit is also governed by things other than the rate of surplus value, as explained by The Boss above.

[The Jay]

I'll answer this as succinctly as I can. The idea of a rate of profit and rate of surplus value come from Marx's Capital.

Essentially, this idea comes from Marx's musings on Value.

The famous equation W = C + V + S, where W is the Value of Product, C is Constant Capital (i.e. non-labour inputs), V = Variable Capital (i.e. Labour power) and S = Surplus Value.

The rate of surplus value (or rate of exploitation), S' = S/V and the organic composition of capital, C' = C/V

The rate of profit is thus S/(C+V), or simplified: S'/(C+1)

So yes, there's certainly a positive correlation likely between the rate of surplus value and the rate of profit, but this can be complicated when judged over long periods of time, due to changes in the organic composition of capital (i.e. technological advance).

I want to give you a hug for this.

[Comrade Hill]

I'll answer this as succinctly as I can. The idea of a rate of profit and rate of surplus value come from Marx's Capital.

Essentially, this idea comes from Marx's musings on Value.

The famous equation W = C + V + S, where W is the Value of Product, C is Constant Capital (i.e. non-labour inputs), V = Variable Capital (i.e. Labour power) and S = Surplus Value.

The rate of surplus value (or rate of exploitation), S' = S/V and the organic composition of capital, C' = C/V

The rate of profit is thus S/(C+V), or simplified: S'/(C+1)

So yes, there's certainly a positive correlation likely between the rate of surplus value and the rate of profit, but this can be complicated when judged over long periods of time, due to changes in the organic composition of capital (i.e. technological advance).

Ah, so that's what he was trying to say. Thanks.

[Vladimir Innit Lenin]

I want to give you a hug for this.

Feel free.

I'm not a huge expert on Capital, i've not really read it, but this is my (very) basic understanding of the rate of profit, surplus value and it's composition within the LTV.

[The Jay]

Feel free.

I'm not a huge expert on Capital, i've not really read it, but this is my (very) basic understanding of the rate of profit, surplus value and it's composition within the LTV.

Seems right to me. I'm on my first read through of Capital and haven't gotten to the math-intensive part. I love math so I'm looking forward to it.

[Vladimir Innit Lenin]

It's not really maths per se; I think only those who take Marxism and in particular the Labour Theory of Value as a watertight mathematical model (which it certainly isn't) take the above at full face value. In reality, there are amendations that need to be made to parts of the model and assumptions relaxed, but in general it's a good broad-brush theory.

I would say my ideas on the LTV are thus: it is incomplete and doesn't fully correlate to reality at this present time, but it's by no means been invalidated as a theory.