QUOTE : The declining rate of profit To shore up our understanding of the declining rate of profit it is helpful to represent capital production with the formula c + v + s. The value of c is not increased in production but merely preserved by it, whereas v is the only part of capital that enables the capitalist to increase the value of their capital. s is the portion of the newly created value appropriated by the capitalist. The rate of surplus value is therefore s / v and the rate of profit is the ratio between surplus value and total capital, that is s / (c + v). The organic composition of capital, c / v, measures the difference between the rate of surplus value, s / v, and the rate of profit – ie, in general, the higher the organic composition of capital, the more capital-intensive the industry, and the lower the rate of profit; the more labour-intensive, the higher the rate of profit. Because the demands of capital accumulation, as well as the need to stay ahead of or keep up with competitors, compels capitalists to innovate in order to raise productivity, the fundamental tendency of the capitalist system is to increase the ratio of constant capital to variable capital. But when the organic composition of capital, c / v, increases, other things being equal, the profit rate, s / (c + v), declines.