The amount of profit that can be extracted per unit of investment was predicted to fall over long timelines (ie a general tendency). This is tied to the labor theory of value and dead labor.
Rate of profit = surplus value / capital invested
Surplus value is created by living labor (aka variable capital or the actual workers) not by machinery (dead labor aka constant capital)
Since capitalism incentivises capital accumulation, it incentivises increased productivity. You can only exploit living labor so much hence more and productivity is extracted through machinery. Since surplus value is a function of living labor and living labor gets more and more dwarfed by constant capital the rate of profit falls as per equation above.
The amount of profit that can be extracted per unit of investment was predicted to fall over long timelines (ie a general tendency). This is tied to the labor theory of value and dead labor.
Rate of profit = surplus value / capital invested
Surplus value is created by living labor (aka variable capital or the actual workers) not by machinery (dead labor aka constant capital)
Since capitalism incentivises capital accumulation, it incentivises increased productivity. You can only exploit living labor so much hence more and productivity is extracted through machinery. Since surplus value is a function of living labor and living labor gets more and more dwarfed by constant capital the rate of profit falls as per equation above.