The expansion of share capital

Among the factors that counteract the breakdown Marx includes the fact that a progressively larger part of social capital takes the form of share capital:

these capitals, although invested in large productive enterprises, yield only large or small amounts of interest, so-called dividends, once costs have been deducted ... These do not therefore go into levelling the rate of profit, because they yield a lower than average rate of profit. If they did enter into it, the general rate of profit would fall much lower. (1959, p. 240)

In the scheme, where the entire capitalist class is treated as a single entity, the social surplus value is divided among the portions a~ and a~ required for accumulation, and k which is available to the capitalists as consumption. Now suppose there were capitalists (owners of shares, bonds, debentures, etc.) who did not consume the whole of k, but generally only a smaller portion of it, then the amount remaining for accumulation would be larger than the sum a~ + a~. This could then form a reserve fund for the purposes of accumulation, which would make it possible for accumulation to last longer than is the case in the scheme. The fact that many strata of capitalists are confined strictly to this normal interest, or dividend, is thus one of the reasons why the breakdown tendency operates with less force. This is also the basic reason why Germany, following the example of Britain where this happened much earlier, has seen a sharp increase in the bonds of the industrial societies.