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Explain The Primary Goal Of Capitalists

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Recommended: Marx theory of surplus value

The primary goal of capitalists is to make money by using their own money. Competition in among capitalists in an economy leads to a never ending search to increase productivity. New technologies and strategies are constantly being developed to increase productivity. In the short term, increasing productivity leads to an increase in profits, yet this effect only erodes over time as competitors copy the innovation of others. As new technologies and strategies spread the rate of surplus value declines whittling away at the profitability of companies within a sector. This is because surplus value comes from labor power and productivity reduces the amount of labor needed to produce a product. With this reduction in needed labors comes a decline in the rate of profit. Marx called this the Law of the …show more content…

At first when a capitalist adopts a new technologies their profits do increase. Even when technologies reduce the labor needed to produce a product, reducing the rate of profit, they still can end up make more money overall. Assuming the capitalists plays their cards right, the increase in the number of products that they sell makes up for the decline in the rate of profit*. On the other hand, this is really only true for the original innovator. A good example of this would be if a company that makes TVs found a way to make them cheaper than the competition. The company could then sell there TVs at a cheaper price, while this would decrease their rate of profit they would be able to command more market share. This increases the

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