Editing Crisis Theory (section)

== Falling Rate of Profit ==


Capitalists are conscripted by the pressure of concentration to constantly revolutionize the forces of production, increasing productivity (and driving down production costs) through the sophistication of machinery. As a consequence, the ratio of constant capital to variable capital shifts toward constant, and profit decreases. If we take the labor theory of value seriously, then we know that it is variable capital, human labor, which endows commodities with their value. Thus, the rate of profit falls even as, and directly because, productivity expands. "The gradual growth of constant capital in relation to variable capital must necessarily lead to a gradual fall of the general rate of profit." (Capital, Volume 3) Since some costs, including rent, remain the same, there comes a point where these cannot be paid. Hence there is crisis.