With progressive advancement of capital, labourers are set free more rapidly than the reduction in the variable part of capital as compared with the constant because it enables the capitalists to exploit the labour power. It also leads to progressive replacement of superior labour power by inferior labour power. Ultimately, the overwork of labour, reduction in the variable constituent of capital, and greater exploitation expand the ranks of industrial reserve army and force the workers to subjugate under the dictates of capital, independently of the natural increase of population. The development in this way increases both the demand and supply of labour by setting them free.

There are four different forms of the relative surplus population or industrial reserve army: floating surplus; latent surplus; stagnant surplus; and paupers. Any member of the working class who is unemployed or partially employed belongs to this pool. In modern industries where modern division of labour exists, only a small number of workers continue to find employment in them, while the majority of them are regularly discharged. This majority constitutes the floating surplus and this sector is marked by contradiction: in this sector complaint of the want of hands and unemployment exist side by side. Latent surplus is associated with agricultural sector. Capitalist development of agriculture causes a latent surplus in the countryside and constant movement of pauperized agricultural workers towards centres of industries. The stagnant surplus forms a part of the labour with extremely irregular employment.