 Good day. This is Professor Resnick again and I want to continue this presentation of Marx in which he is beginning to analyze the business cycle in capitalism. So you're continuing to read in volume one capital that the stuff that has been assigned to you and here Marx is beginning to develop this idea of the business cycle and once again to remind where we are, this is in the examination of how capitalist can expand their mass of surplus. So this is the second way that capitalist can do this and the expanding their mass of surplus, the SV with the same rate of exploitation, can lead in society to this business cycle. All right. I want to pick up where I left off last time if I can remember correctly, which is the capitalists have to pay higher prices, costs for their inputs, not just labor power means of production but credit and land and so forth, etc. and that can create problems for them. But then as I said last time, there's no necessity for those problems to occur. There's no necessity for this downturn. I want to examine that. The first thing I want to focus on is workers. It is true that when there is an expansion, when K-stop plus Lambda is positive, that the changes in the labor power and the means of production market and other markets as well increase costs to capitalists. But also we have an increase in market wages of productive and unproductive laborers. Their earnings rise. So on one hand, the increased cost to business, which can may lead to a downturn, occurs along with increased earnings of workers productive and unproductive in the labor power market and that can increase the demands for the wage goods and help capitalists expand. So we've got two different things going on in the society, two different consequences of capitalist expansion. We'll have to use our language. You have two different kinds of over-determinance, which are occurring, which are impacting the economy in these two different ways. So let me examine analytically this first one. Workers, so I'm examining now the impact of workers. We already went through the cost of the capitalist. Let's take the per worker. They get a price of labor power equal to the V plus this subsumed class revenue that they're getting per worker. So this extra that we had before, this deviation of price from the value of labor power, that was that extra that I had in the blackboard. So let's examine all the workers, okay? So then they get times L times H. That's all the workers times the hours they work. This then is the value of labor power, V times the LH, plus this price of labor power minus the V L times H. So I'm multiplying this first equation by L times H. Or altogether the workers are getting a value of labor power plus this subsumed class revenue that goes to the workers. And that's the extra subsumed, that's equivalent to the subsumed class payment. That's the same as the subsumed class payment that the capitalists pay to workers. And this is received by workers, okay? What does this mean? This means now that the workers, all the workers have higher wages that they can use to go out and purchase consumer goods. So this impacts another market. This is the price of wage goods, V goods. Remember there's two different kinds of goods. There's C goods and V goods. So this means that in this supply of V, demand for V, supply of these consumer goods, demand for consumer goods, TV sets, automobiles and so forth, the demand shifts to the right. Why? Because workers have higher incomes. This is their income. So their incomes go up and they can spend more. This implies an increase in the demand for V goods and that's what I just did in this graph. So this is your TV market, this is your automobile market, your food market, your housing market. All these different markets are then affected by the higher incomes and workers demand more and hence the prices of all these goods tend to rise. By the same logic, this is the means of subsistence markets but if we look at the capitalists, the capitalists are receiving higher prices for the stuff that they're selling. So I don't want to lose the logic here. The higher costs to capitalists of purchasing means of production also means that those capitalists that are producing and selling means of production are benefiting from this kind of unequal exchange. Let me take an example that when you're watching this today. The capitalists who are purchasing energy to produce their commodities have a cost, a higher cost. They have to pay more for the energy. That's a subsume class payment that they have to make. On the other hand, the higher energy is a benefit to those capitalists who are producing energy. And so they can sell, that's what I have here on the whiteboard, they can sell C plus V plus S, they can sell their energy at a higher price, I'll put the C, they can sell their energy at a higher price and they're benefiting from this. Because they can sell this at a higher price. You see that? That's what we have over here. I'm sorry, that's another market. Same logic though, supply of C, demand for C. So here we have the supply of C, we have the demand for C, energy. And the demand has shifted to the right. So the price of oil, price of energy is rising and this is benefiting these producers. So this is an increase in the price of energy. So they take their energy, they bring it, this is what it costs in value terms, but they can sell it for a higher price. So here the deviation is, once again, the price is higher than the, I'm assuming, the unchanged value. And that's then an extra revenue that these capitalist sellers, workers as sellers, capitalist as sellers receive. Okay? We focused on the last lecture on the bias. We're focusing now on the sellers. So what does this mean? Well the capitalist can sell their stuff for something extra. That's a subsumed class revenue that these capitalists receive because the other capitalists who are buying the energy, they have to take a cut of their surplus to get access to this energy market and pay higher prices. So the subsumed class payment that they have to pay, that's a subsumed class revenue that these capitalists receive. That's the same logic here. This is a subsumed class revenue that the workers receive, which is a subsumed class payment that these other purchasing capitalists have to make. So notice something. In the capitalists who are selling this stuff, their profits go up. That is they get a surplus value, but they get this subsumed class revenue. I'll put in my denominator here. So there, I'm going to call this a market rate of profit. Their market rate of profit has increased as a result of this expansion. Because this is positive and hence they're doing better. So the cost to the buying capitalists is the benefit to the selling capitalists. The cost to the buying capitalists of labor power is the benefit to the sellers of labor power. So let me try and put this together now. Okay, then I want to focus on capitalist business here, if I may. So I have capitalists who are producing and selling consumer goods. So I'm going to go back now.