Wednesday 19 September 2018

Theories of Surplus Value, Part II, Chapter 17 - Part 83

Ricardo, in this chapter, also makes the comment referred to earlier that a million men employed in manufacture will always produce the same value, but varying amounts of use values. But, as set out earlier, this is wrong, because although they will only produce the same amount of new value, the total value produced depends also on the value of material processed etc. 

“The value of the product of a million men does not depend solely on their labour but also on the value of the capital with which they work; it will thus vary considerably, according to the amount of the already produced productive forces with which they work.” (p 538) 

Ricardo continues arguing that, as a result of machinery, the development of skill and division of labour, as well as through comparative advantage, derived from foreign trade, 

“... a million of men may produce double, or treble the amount of riches, of ‘necessaries, conveniences, and amusements,’ in one state of society, that they could produce in another, but they will not on that account add anything to value” (p 538) 

To which Marx responds, 

“they certainly will, since their past labour enters into the new reproduction to a much greater extent”. (p 538) 

What is true, Marx explains, is that the value of each individual commodity unit falls, because it contains the same value, of materials as before, but it will contain less value of labour, and less value of wear and tear of fixed capital. But, the total value of output will rise, because a much greater volume of commodities is produced, i.e. the same amount of value of labour, but a much expanded value of circulating constant capital (raw materials). 

Ricardo says, 

“Suppose with a given capital the labour of a certain number of men produced 1,000 pair of stockings, and that by inventions in machinery, the same number of men can produce 2,000 pair, or that they can continue to produce 1,000 pair, and can produce besides 500 hats; then the value of the 2,000 pair of stockings or of the 1,000 pair of stockings, and 500 hats, will be neither more nor less than that of the 1,000 pair of stockings before the introduction of machinery; for they will be the produce of the same quantity of labour.” (p 538-9) 

This continues the error of failing to include the value of materials, but also, as Marx points out, it fails to include the value of the machinery, which would be transferred to the stockings and hats, as wear and tear. 

Ricardo continues. 

““But the value of the general mass of commodities will nevertheless be diminished; for, although the value of the increased quantity produced, in consequence of the improvement, will be the same exactly as the value would have been of the less quantity that would have been produced, had no improvement taken place, an effect is also produced on the portion of goods still unconsumed, which were manufactured previously to the improvement; the value of those goods will be reduced, inasmuch as they must fall to the level, quantity for quantity, of the goods produced under all the advantages of the improvement: and the society will, notwithstanding the increased quantity of commodities, notwithstanding its augmented riches, and its augmented means of enjoyment, have a less amount of value. By constantly increasing the facility of production, we constantly diminish the value of some of the commodities before produced, though by the same means we not only add to the national riches, but also to the power of future production” (l.c., pp. 320-22).” (p 539) 

This statement needs to be dissected to see what is right and what is wrong within it. Firstly, Ricardo is saying that, as a result of a rise in productivity, the value of commodities falls. He then says, correctly, that this fall in the value of commodities also applies to all of those same commodities produced under previous conditions. In other words, their value is determined by their current reproduction cost not their historic price. But, in terms of “the value of the general mass of commodities” this is the result not just of the value of each commodity unit, but also the total quantity of units produced. For example, suppose 1,000 commodity units are produced with a value per unit of £1, so £1,000 in total. Now, a new machine is introduced, which raises productivity, so that 3,000 units are produced, with a value of £0.80 each, so £2,400. Now, the value of the original 1,000 units, if they are still on the market, falls to £800, and the value of each new unit of output falls from £1 to £0.80, but the total value of “the general mass of commodities” has risen from £1,000 to £3,200 (£2,400 for the 3,000 new units, plus £800 for the 1,000 previous units still in the market), because output has risen. And, as Marx points out, 

“secondly, if one leaves out of account the fact that with the development of the productive forces, the number of spheres of production is also steadily increasing, thus creating possibilities for capital investment which previously did not exist at all. Production not only becomes cheaper in the course of the development, but it is also diversified.” (p 539) 

This is fundamental to understanding the wider consequences of the role of labour-saving machinery in raising productivity, beyond the immediate effect of displacing labour. Marx deals with this aspect further in the next chapter. The main point here being that this rise in productivity, on the one hand, displaces labour, but, by reducing the value of labour-power, and of constant capital, makes it possible to employ more of it, for any given amount of surplus value, on the other. By reducing the value of labour-power, it also raises the rate of surplus value and profit, and thereby makes more accumulation possible, so long as this is not offset by the reduction in the mass of surplus value caused by the displacement of labour, or by the rise in the mass of materials processed.
When Marx talks about machinery replacing labour, and machines are being introduced where they are cheaper than the paid labour they replace, he means not the actually existing labour, but the potential labour that would have been required had the machine/s not been introduced. As he says, in Capital I, Chapter 15, 

“If it be said that 100 millions of people would be required in England to spin with the old spinning-wheel the cotton that is now spun with mules by 500,000 people, this does not mean that the mules took the place of those millions who never existed. It means only this, that many millions of workpeople would be required to replace the spinning machinery. If, on the other hand, we say, that in England the power-loom threw 800,000 weavers on the streets, we do not refer to existing machinery, that would have to be replaced by a definite number of workpeople, but to a number of weavers in existence who were actually replaced or displaced by the looms.” 

(Capital I, Chapter 15) 

The accumulation of capital, in other words, enables an expansion of the economy, and of output – some of which simply would not have been possible without machinery – and this expansion, brings about an absolute expansion in the number of workers employed, even if it simultaneously brings about a relative diminution in the proportion of labour to output. This accumulation, which thereby also employs more labour, may arise from an expansion of existing industries, or it may come, as Marx says here, from diversification, as capital opens new industries – again some of which would not have been possible without the development of new technologies, and introduction of labour-saving machines. Moreover, as Marx set out previously, in Capital III, Chapter 14, these new industries tend to have a lower organic composition of capital, which produces a higher rate of profit, which in turn leads to a higher average rate of profit, as a result of competition, as this additional surplus value is shared out, and capital is attracted away from existing lower profit areas, into this new higher profit sphere. 

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