Using the formula presented earlier, in which the total output is divided into C+V+S, it can be seen that this is merely the capitalistic form of the Law of Value, which describes the necessary proportions in which society's available labour-time is divided up. We have seen above that any society that simply wants to continue to produce on the same scale has to devote a certain proportion of its available labour-time to physically replacing/reproducing the means of production (constant capital) used up. How much labour-time will be determined in line with the Law of Value, by the level of productivity. For example, if there is a good harvest, less time will be required to produce the 100 kilograms of corn needed to replace the original seed. Vice versa if there is a bad harvest. A society with a suitable climate and fertile soil will need to set aside less time for that purpose than a society with an unsuitable climate, and less fertile soil.
But, the formula/production function C+V+S also tells us that out of total production there are two further components – the proportion of the output required for consumption by the producers, and the proportion left over. This latter, for a primitive communist society, or Robinson Crusoe, or for a future Communist Society, and in part in a society of peasant producers, is in the hands of the producers themselves, and can be used to increase current consumption, to reduce the quantity of labour to be performed in future, or for investment.
In a slave society, it is directly appropriated by the slave owner. In a feudal society it is appropriated, in whole or in part, by the feudal ruling class, the landlords and clergy in the form of rents, tithes and taxes on the peasant. But, the peasant or artisan, may retain ownership of part, which is one means by which they may transform themselves into capitalists.
Under capitalism, however, the whole of this surplus is appropriated by capital in the form of surplus value.
However, just as in order to continue producing at the same level (simple reproduction) a proportion of society's available labour-time has to be devoted to reproducing the means of production, so a certain proportion has to be devoted to ensuring the reproduction of the workers. So, it can be seen that whatever the form of the surplus, it really is just that remainder after these other two necessary expenditures of available labour-time have been met. If the amount taken out as surplus encroaches on these necessary quantities, then future production will shrink. If a slave owner does not adequately feed his slaves, they will die or be unable to do so much work, so his future output from them will fall. If a capitalist does not repair or replace his machines, the workers will be less productive, as the machines break down, and so future output will fall.
So, a given proportion of society's output must also be devoted to producing those goods which ensure the reproduction of the producers. Again, how much labour-time will depend on the level of productivity. The higher the level of productivity, the less time has to be allocated to this purpose. As seen earlier, this is why capital has an incentive in raising productivity, because it means a proportionately smaller amount of society's labour-time has to be devoted to reproducing labour-power, which leaves a greater proportion of labour-time left over as surplus.
Of course, it is the worker who produces both the constant capital and the goods which go into his own consumption, as well as the commodities which form the surplus production. On the one hand, this forms the physical production of the society, but under capitalism, operating through the market, this physical production also has another side, which confronts it, and that is its monetary value. So, for example, a certain proportion of the workers time is devoted to producing the goods needed for their reproduction. But, the worker is not simply handed these goods by the capitalist, in the way the slave is handed back a portion of their output by the slave owner. Instead, the capitalist gives to the worker a sum of money in the form of wages to buy these necessaries.
In reality, the same underlying relations exist. The producers/workers spend a given amount of available labour-time reproducing the means of production. They spend a given amount of labour-time producing those necessaries required for their own reproduction. The available labour-time remaining produces the surplus.
“The illusion begotten by the intervention of money vanishes immediately, if, instead of taking a single capitalist and a single labourer, we take the class of capitalists and the class of labourers as a whole. The capitalist class is constantly giving to the labouring class order-notes, in the form of money, on a portion of the commodities produced by the latter and appropriated by the former. The labourers give these order-notes back just as constantly to the capitalist class, and in this way get their share of their own product. The transaction is veiled by the commodity form of the product and the money form of the commodity.
Variable capital is therefore only a particular historical form of appearance of the fund for providing the necessaries of life, or the labour-fund which the labourer requires for the maintenance of himself and family, and which, whatever be the system of social production, he must himself produce and reproduce. If the labour-fund constantly flows to him in the form of money that pays for his labour, it is because the product he has created moves constantly away from him in the form of capital.”(p 542-3)
Marx removes the illusion created by commodity fetishism by analysing the operation of the Law of Value in terms of the peasant producer.
“Let us take a peasant liable to do compulsory service for his lord. He works on his own land, with his own means of production, for, say, 3 days a week. The 3 other days he does forced work on the lord’s domain. He constantly reproduces his own labour-fund, which never, in his case, takes the form of a money payment for his labour, advanced by another person. But in return, his unpaid forced labour for the lord, on its side, never acquires the character of voluntary paid labour. If one fine morning the lord appropriates to himself the land, the cattle, the seed, in a word, the, means of production of this peasant, the latter will thenceforth be obliged to sell his labour-power to the lord. He will, ceteris paribus, labour 6 days a week as before, 3 for himself, 3 for his lord, who thenceforth becomes a wages-paying capitalist. As before, he will use up the means of production as means of production, and transfer their value to the product. As before, a definite portion of the product will be devoted to reproduction. But from the moment that the forced labour is changed into wage labour, from that moment the labour-fund, which the peasant himself continues as before to produce and reproduce, takes the form of a capital advanced in the form of wages by the lord. The bourgeois economist whose narrow mind is unable to separate the form of appearance from the thing that appears, shuts his eyes to the fact, that it is but here and there on the face of the earth, that even nowadays the labour fund crops up in the form of capital.” (p 537)