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.
Somewhat simplistic explanation, just to illustrate what some comrades have already said:
Let A = raw materials, B = machinery,productive infrastructure, and C = labor.
Then A+B+C = D, the overall cost of a product.
Capitalism is production organized for the sake of profit. Thus, for production to happen in the first place, the capitalist has to take surplus value from A, B, or C. Because he has relatively little control over the cost of raw materials, he cannot take it from A. Similarly, he cannot take from B, because the cost of running the machinery is a given. So he can only take it from C, and he does so by paying the worker less than the value of his labor. Call value withheld x; then the wage the worker receives is C-x.
Under capitalism, labor is a liability, a cost to be reduced as much as possible. Thus, as the means of production advance (a natural consequence of scientific/technological discoveries), the capitalist uses it as an excuse to shrink labor, or simply to decrease the amount of labor expended. Thus, as technology advances, C decreases. But as C decreases, x (which is taken from C) also decreases. Thus the rate of profit will fall, and the economy will stagnate.