Capitalists aim to increase profits, and one primary method they use is through the accumulation of capital - purchasing new technologies, machines, or production facilities (constant capital), or hiring additional workers (variable capital).
Marx argued that in the long term, the organic composition of capital tends to increase as businesses invest more in constant capital (machinery, technology) relative to variable capital (labor), seeking to increase efficiency and gain a competitive edge.
Due to the labor theory of value if a larger proportion of total investment is tied up in constant capital rather than variable, then there is less new value produced relative to the total investment, leading to a falling rate of profit.
Marx identified several countervailing tendencies that could offset the TRPF in the short term.
These include increases in the rate of surplus value (more exploitation / intensification of labor), cheapening of the elements of constant capital, a large reserve army of labour depressing wages, expanding the market, …
→ Capitalism always finds a way out of the crisis, but only by preparing the next one on an even higher level.
When these countervailing forces are not strong enough, capitalism falls into one of its periodic crisis, which manifest as recessions / depressions / …
The rate of profit can be temporarily restored through destruction of constant capital, as happens in such crisis or war, etc.
Counterarguments
“The contribution of the machine to production is significantly greater than its depreciation”
The use value of the machine is significantly greater than the exchange value - Marx (according to this guy in some note)
“This insight undermines his explanation for revolution” (KEK)
Intuitively this makes sense tho, right? Like on first intuition, it might seem like a machine contributes so much more than it cost to make.
Although, after reading machine again, I would answer it like so: As long as not ALL work is fully automated by AI, machines will only ever multiply the value produced by labor.
The thesis that machines produce value is odd. Machines produces only USE-VALUES which are not specfic to capitalism too. Any mode of production with machines can produce the same use values without this form of production
Marx never saw a dialetical tension between exchange value and use value. He explicitly discards this misconception in “Capital”. Exchange value is a third moment of the commodity. It exists only when the exchange is realized on the market. The real tension is between VALUE and USE VALUE. Those are the categories that Marx discovered to be a dialectical contradiction. Exchange value is not even specific to capitalism, it exists on markets on every mode of production. Value, to the contrary, is specific to a certain degree of development of the productive forces, after an universal generalization of markets.
What about the service sector?
Many services are inextricably linked with the production of goods. You need equipment and tools to perform most sevices.
For instance, much of the IT sector is dedicated to managing information related to the production, distribution, and marketing of goods. Therefore, it would not be exempt from the dynamics of the TRPF.
The same with waiters, flight attendants, food delivery ppl, … Restaurants, Uniform, Supplies, Airplanes, Bikes.
And… even in the service sector there is a drive towards capital accumulation. Think call center employees. Think food delivery, think taxi drivers. AI will replace these jobs sooner than later. Again, machines increasing the accumulation on an unforseen level.
References
TRPF in Marxist Economics - gpt4 convo (Amazing intro, debunking critics and the effect of AGI!; July 27, 2023 … asking the same questions as today (jun 17, 24) haha.)