The one capitalist can drive the other from the field and carry off his capital only by selling more cheaply.In order to sell more cheaply without ruining himself, he must produce more cheaply -- i.e., increase the productive forces of labor as much as possible.
But the productive forces of labor is increased above all by a greater division of labor and by a more general introduction and constant improvement of machinery.The larger the army of workers among whom the labor is subdivided, the more gigantic the scale upon which machinery is introduced, the more in proportion does the cost of production decrease, the more fruitful is the labor.And so there arises among the capitalists a universal rivalry for the increase of the division of labor and of machinery and for their exploitation upon the greatest possible scale.
If, now, by a greater division of labor, by the application and improvement of new machines, by a more advantageous exploitation of the forces of nature on a larger scale, a capitalist has found the means of producing with the same amount of labor (whether it be direct or accumulated labor) a larger amount of products of commodities than his competitors -- if, for instance, he can produce a whole yard of linen in the same labor-time in which his competitors weave half-a-yard -- how will this capitalist act?
He could keep on selling half-a-yard of linen at old market price; but this would not have the effect of driving his opponents from the field and enlarging how own market.But his need of a market has increased in the same measure in which his productive power has extended.The more powerful and costly means of production that he has called into existence enable him, it is true, to sell his wares more cheaply, but they compel him at the same time to sell more wares, to get control of a very much greater market for his commodities; consequently, this capitalist will sell his half-yard of linen more cheaply than his competitors.
But the capitalist will not sell the whole yard so cheaply as his competitors sell the half-yard, although the production of the whole yard costs him no more than does that of the half-yard to the others.Otherwise, he would make no extra profit, and would get back in exchange only the cost of production.
He might obtain a greater income from having set in motion a larger capital, but not from having made a greater profit on his capital than the others.
Moreover, he attains the object he is aiming at if he prices his goods only a small percentage lower than his competitors.He drives them off the field, he wrests from them at least part of their market, by underselling them.
And finally, let us remember that the current price always stands either above or below the cost of production, according as the sale of a commodity takes place in the favorable or unfavorable period of the industry.According as the market price of the yard of linen stands above or below its former cost of production, will the percentage vary at which the capitalist who has made use of the new and more faithful means of production sell above his real cost of production.
But the privilege of our capitalist is not of long duration.Other competing capitalists introduce the same machines, the same division of labor, and introduce them upon the same or even upon a greater scale.And finally this introduction becomes so universal that the price of the linen is lowered not only below its old, but even below its new cost of production.
The capitalists therefore find themselves, in their mutual relations, in the same situation in which they were before the introduction of the new means of production; and if they are by these means enabled to offer double the product at the old price, they are now forced to furnish double the product for less than the old price.Having arrived at the new point, the new cost of production, the battle for supremacy in the market has to be fought out anew.Given more division of labor and more machinery, and there results a greater scale upon which division of labor and machinery are exploited.And competition again brings the same reaction against this result.