 Let me get this tableau away. And I've been given the motivation now for two things. OK, let me get that on the blackboard. C plus V divided by UV. So this is in UK now. In UK, the British are continually trying to raise the productivity of labor in Britain by raising the composition of capital there, the C over C plus V. They are searching the world for cheap C and cheap V. And they're also putting pressure on the workers to reduce their real wage. What I mean by that is, I understand there's a lot here, but we've done a lot on this course. In UK, British capitalists are searching the world for cheap V goods, but they're also putting downward pressure on the real wage, which is the one I just did, cutting that real wage from two to one. So there's two things going on here in conjunction. Search the world for cheap wage goods, T. OK, that's this component. Search the world for cheap C goods. Also put pressure on the workers to cut their real wage. And these are not substitutes. They can go together and raise the productivity of the laborers in Britain. All of this to drive down average cost in UK so the British can compete. So let me turn to this now. I want to go back and I want to go talk about this and then I'll extend it to the cheapening of V. So I want to talk about how does Britain actually accomplish this? How did this happen? How does it still happen? So let's look at the C. For Marx, the C has two components. It has the exchange value per unit use value of what he calls circulating capital plus the exchange value per unit use value of fixed capital. Remember correctly, we did this once before in this course. So the C has these two components. Your fixed capital refers to the value of your machines, the price of the machine times the number of machines. So if a machine costs $1,000, that would be here. But note, if the machine costs $1,000 in the last for 10 years, then in one year we only use up 1 tenth of the machine. So the economists and the accountants and the engineers call this a depreciation rate. So in this case, only $100, 1 tenth of 1,000 would be written off as the amount of the machines used up. The circulating capital, that's assumed to be used up in that same production period. So this would be all the raw materials necessary to produce cotton shirts. So this would be the raw cotton. These would be the machines in England to produce the shirts. Suppose it were the case, which is the case, that England doesn't produce raw cotton, which you need to produce cotton shirts where in England. So they do have the machines in England. That's produced and sold in England. That's the department one industry. But unfortunately for the British, the raw cotton is produced someplace else. Let's say it's produced in India, a colony of Britain. So Britain wants a cheap sea. So yes, it's important to have the cheapening of fixed capital machines. We already discussed that. That's the competition in the machine good industry. That's occurring. That's good for the industry that's buying those machines. But it also wants cheaper cotton, because both of these will drive down sea and allow the average cost in the textile industry in Britain to fall so that they can compete with the French and the Germans. So how does that Britain accomplish this part of its cost? Cotton is produced in India. If I take this price of cotton, let me just write it down here, raw cotton, the raw material, I have then the use value over the C plus V plus surplus. Where? In India. We started. This is Britain. We have now moved to India. These things are connected by what? The world economy. So in India, if the British can increase the productivity of labor, increase the productivity of labor where in India, simultaneously decrease the cost of producing raw cotton where in India, they're able to drive this down, reduce the sea, and to make a long story short, increase the rate of profit where in UK. That's really quite dramatic. So Marx in volume three of Capital begins to discuss how the world economy, and let's add to it now, colonialism and imperialism, in this case British colonialism in India, can be a way to offset the declining rate of profit in Britain by producing cheap C, and let's just extend it, cheap V goods as well. That's really quite dramatic. Now, let's turn to the right-hand side. How might this be accomplished? Well, rising the productivity of labor, that's part of colonial policy. Let's just take simple stuff. Let's summarize what we've done here. One, to raise the productivity of labor in India, you raise the composition of capital in India. We've done that. Increase the capital labor ratio. In India, enables a rise in the productivity of labor there. Cheapens raw cotton enhances the rate of profit in UK, OK? Number two, invest in social overhead capital, where? In India. Investing the state in India should invest in social overhead capital, road systems, harbors, and so forth, et cetera, enabling that productivity of labor to rise, cheapening the price of cotton, enhancing the rate of profit in UK. Let's not forget the rate of profit in UK here. So what I'm doing here is dropping this and pushing up the rate of profit by cheapening circulating capital. Let me take a moment on this, because this is so much history here. Suppose it were the case in this tropical country that the longer people worked in the fields, H, the longer people worked in the fields, the more susceptible they were to tropical diseases. So one of the things the British might do to enable people to work the hours in the fields, and to get more people to work in the fields, would be to invest in health facilities, because health facilities would allow people to withstand these tropical diseases, work longer hours, and have more of them doing that, and hence, you'd be able to have a numerator. So I'm not talking about that the productivity necessarily grows, but if the H is very small, to make this dramatic, if the L is zero, you're not going to get any productivity of labor. So you have to have people alive and working long hours in order to get an output. So investment in health facilities matters. Education matters. So the British, it's not just that the rise in the composition of capital in India, but also this investment in all kinds of social overhead capital of education, health, research and development in the production of cotton, new technologies, all of this to raise the productivity of labor. Along with that is to decrease C. Now notice this. This is the C that's being deployed in India. So let me just examine that. This is in India circulating capital plus fixed capital in India. Let me focus on this, write this one here. The C may be falling in India because this component, the fixed capital is falling. What does that mean? Well, to produce cotton in India, the Indian cultivators, whoever they might be, might be purchasing cheaper fixed capital, deploying it in the cultivation of cotton, machines and tools and new technologies embodying the machines and tools, which enables the seed to fall, which raises the rate of profit in the UK. Why might this been falling? Well, because of the struggle over super profits. So after the 1850s, there is intense competition in the means of production industry throughout the West. And in this case, in England, the rate of profit is falling there. And the unit value of these machines, fixed capital, is falling. They become the exports from Britain to India. Deployed in Indian cultivation of raw cotton, drives down the C there, along with the rise in the productivity of labor of workers in India, cheapens raw cotton, enhances the rate of profit in Britain. So if you put it all together, the declining rate of profit in UK, from intense competition within Britain and then with the Germans and so forth, et cetera, creates an opportunity to raise the rate of profit in Britain. And this link here is the world economy. And you can just extend what we just did to v-goods as well. It's not just the c-goods in which this is occurring. And the last step, because I don't want to lose what we've done in the first part of the course. In India, what we just discussed here in India, or let me extend it actually, across the world can be done on a variety of different class structures. This CVS surplus value to go back to the first part of the course, that can be done under different class structures. So for example, you could have the feudal during this period of time in India. So this could be a feudal arrangement. And the feudal unit values would be falling, which would enhance capitalism in Britain. It could be done under the ancient class structure. So this would be India. A kind of sharecropping arrangement in the ancient, in Uganda, in Africa, at that point in time. It could be the slave in the United States South prior to the 1860s. And of course, capitalism too. In other words, we can have these different class structures in which all of this is occurring. This doesn't necessarily have to be capitalism across the third world. Let me now summarize if I can this interesting, I hope interesting story about the world economy. Let me erase this board to get our summary on it. OK. In Britain, we have the following. During this period of time, or act during any period of time, makes no difference. We have a struggle, a competitive struggle in capitalism, a rise in the composition of capital, a rise in C over C plus V. OK. Those long and eloquent passages in capital on mechanization, cooperation, division of labor, managers as an orchestra leader, that really quite striking description that Marx provides in Volume 1 over something like 200, 300 pages, of a rise in the composition, the mechanization, the rise in the composition of capital, and how capitalism is increasing the predictivity of labor. And I want to emphasize it need not only be by this, it can be by Lambda as well. OK. Different management strategies, different incentives and so forth, et cetera, can serve to increase the predictivity of labor. This rise in the composition of capital tends to drive down the rate of profit. We're in Britain. So the focus in the C industry, well, let me do it here, rise in the composition of capital in the C industry, in the C industry, C industry, a fall in the rate of profit in the C industry as a result of this competitive struggle, but also a fall in the unit value of machines, OK, fixed capital in this industry, OK, both. And it's not just one. These are two sides of the same story. So we have the possibility of recession in Britain because the rate of profit is being driven down by intense competition within British capitalism and across different capitalist nations. So Lenin describes both of these that are occurring, OK. This fall in fixed capital enables Britain to do what?