Can anyone explain this to me in terms a dumb dumb can understand?

https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to_fall

In Marx's theory, the value of a commodity is the amount of labour that is necessary to produce that commodity. Marx argued that technological innovation enabled more efficient means of production. In the short run, physical productivity would increase as a result, allowing the early adopting capitalists to produce greater use values (i.e., physical output). However, in the long run, if demand remains the same and the more productive methods are adopted across the entire economy, the amount of labour required (as a ratio to capital, i.e. the organic composition of capital) would decrease. Now, assuming value is tied to the amount of labor necessary, the value of the physical output would decrease relative to the value of production capital invested. In response, the average rate of industrial profit would therefore tend to decline in the longer term.

So lets take McDonalds for example. McDonalds invents a machine to make burgers so they get rid of all cooks. This decreases the "value" of the burger because less labor is required to make each burger, but since the number of burgers created (use value) increased relative to demand the profit per burger is decreased? Is this basically another way of saying Capital reaches a point where production outpaces demand and that reduces profit per unit? Or to put it in none Marxist terms Capital buys more expensive machines to produce more goods but that increases supply and without a corresponding increase in demand the price will fall and thus so will profit?

Am I understanding this?

  • bananon [he/him]
    ·
    4 years ago

    Labor gives things value

    Machines let us use less labor, so thing is less valuable

    Less labor means we make more things, and if no one want to by those things price goes down

    This is why markets must constantly expand to find new demand