The rate of profit and changes in the composition of capital

Abstract

This article discusses two aspects of the influence of the value composition of capital (VCC) on the evolution of the rate of profit. First, it shows how changes in this composition caused by variations in the value of the material elements of constant capital or variable capital affect the rate of profit. Second, it discusses the effect of organic changes in the VCC and of their combination with changes in value on the rate of profit. The conclusion relativizes the theoretical importance of the fall in the rate of profit resulting from an increase in value compared to that resulting from an increase in the organic composition and emphasizes the distinction between tendency and countertendencies in the context of the law of the tendential fall in the rate of profit, based on the distinction between the concepts of value and organic composition of capital.