Sunday, 21 October 2018

Brexit and The Tories Are Dead. We Need A General Election To Bury Them

Last week showed that both Brexit and the Tories are dead. They both have the appearance of zombies – dead bodies that are still walking the Earth, not realising they have died. We need a General Election, to put them both out of their misery, and bury them for good. 

The EU referendum was called by David Cameron to try to manage the irreconcilable differences inside the Tory Party. Those irreconcilable differences, over the last 30 years, have taken the form of the divisions over Europe, just as, at a different time, the differences between sections of the English ruling classes took the form of a religious dispute in the Civil War. But, those superficial differences, in both cases, are only a manifestation of the real, underlying differences of class interest. In the Civil War, it was differences between the interests of the rising bourgeoisie represented by the towns, and a growing body of capitalist farmers, as against the interests of the old landed aristocracy, and the Crown, which sought to appropriate rents and taxes, out of the bourgeoisie's profits

In the case of the Tories, it is the fact that developed capitalist economies are social democracies, where the dominant form of capital is socialised capital. Governing parties in such economies have to recognise that reality, and ultimately bow to the needs of that large scale, socialised capital. Yet, the Tory Party has also historically been the party of that old landed and financial aristocracy, whilst its core membership, and electoral base is made up of the remnants of the old private capital, the 5 million or so, small businesses, sole traders and so on, and their attendant social layers, who have always looked to the erection of various forms of state protection to shield them from the ravages of competition from the larger, more efficient capitalists, and from the organised labour movement, able, on the basis of the higher wages and better conditions, provided by the larger capitals, to demand that the smaller capitals also pay up. It was these same reactionary elements that provided the foot soldiers of fascist parties in the 1930's. The Tories have to reconcile within themselves these two contradictory forces. On the one hand, the conservative social democratic wing that recognises the reality of modern social-democratic capitalism, and the need to accommodate its requirements, whilst resisting any further development of social-democracy, and its reactionary wing, which seeks, naively, to turn the clock back to the era of unabated free competition, by a myriad of small private capitals. Its no wonder the Brextremists are epitomised by the MP for the 18th Century, Jacob Rees-Mogg. 

For thirty years, after WWII, the Tory party itself had to bow to the reality. It found that it had to accept the need for a large welfare state, that regulated the economy, and its most important aspect for capital, the supply of labour-power; it had to accept the need for macro-economic planning and regulation, by the use of Keynesian demand management, and monetary policy; it had to recognise that capital, as large scale socialised capital, had burst through the fetters imposed by the nation state and had become multinational, and that, in order to extend all of those elements of a social-democratic polity, required by this large-scale, multinational, socialised capital, that was more powerful than individual nation states, and could freely locate anywhere in the world, it was necessary to construct new transnational para-state bodies, and larger multinational states – just as nation states had been developed in the 19th century to meet the needs of the development of industrial capitalism, and the US had been led into a Civil War, to establish a centralised Federal State. 

This process had led to repeated European wars, essentially for that purpose too, as first France, then Germany sought to construct a European state under the domination of one or the other, whilst Britain sought to prevent either, which would have been a challenge to its own supremacy of the time, culminating in the wars of 1914-18, and its continuation in 1939-45. It was, in a vague sense, grasped by the political leaders. They set about peacefully constructing a European Union, in the post-war period, to avoid such future wars, and put that centre stage, as the motivation and goal of creating the EU. It is also why the Tories today fail to understand the underlying strength of the political conviction of Europeans to preserve the single market, the customs union, and the political institutions, vital to that project, and their willingness to endure short term, economic pain, in order to preserve that polity, which is the basis of their longer-term, economic supremacy and development. 

Lenin in Imperialism, in setting out the reactionary nature of those who sought to oppose the logical development of capitalism, in the form of monopolies that arise out of the concentration and centralisation of capital, caused by the competition between capitals, wrote approvingly of Hilferding's comments, 

““It is not the business of the proletariat,” writes Hilferding “to contrast the more progressive capitalist policy with that of the now bygone era of free trade and of hostility towards the state. 

The reply of the proletariat to the economic policy of finance capital, to imperialism, cannot be free trade, but socialism. The aim of proletarian policy cannot today be the ideal of restoring free competition—which has now become a reactionary ideal—but the complete elimination of competition by the abolition of capitalism.” 

He continues, 

“Let us assume that free competition, without any sort of monopoly, would have developed capitalism and trade more rapidly. But the more rapidly trade and capitalism develop, the greater is the concentration of production and capital which gives rise to monopoly. 

And monopolies have already arisen—precisely out of free competition! Even if monopolies have now begun to retard progress, it is not an argument in favour of free competition, which has become impossible after it has given rise to monopoly. 

Whichever way one turns Kautsky’s argument, one will find nothing in it except reaction and bourgeois reformism.” 

And, the same applies to those reactionaries who would try to turn back the clock on the creation of the EU, as a natural development of the process of capitalist development. But, those who portray the free trade inside the EU, as the main element to defend, do not promote the interests of the working-class, any more than to argue that it is free trade between different towns, cities and regions of the nation state, that was the main thing about the capitalist nation state that socialists sought to promote as a progressive development. What socialists promoted as progressive, about the nation state, in the 19th century, was that it was the rational development of the necessary political form of industrial capitalism that enabled its further development and accumulation, thereby creating the basis for the development of the working-class, and the conditions of its own liberation. The progressive aspect of the EU, and similar economic blocs, is that they create the same conditions, and reflect the rational development of large-scale, multinational, socialised capital, in the conditions of the 21st century, and thereby the conditions for workers, within such structures, to bring about their own liberation, and the development of socialism. 

Similarly, the argument, by some that the EU is reactionary, because it imposes tariffs and trade restrictions on countries, including developing economies, outside its borders, is not an argument that socialists should support, any more than, as Lenin describes, we should promote opposition to monopolies, and support for free trade, by the nation state. Our goal is not to promote free trade by the EU with third countries, but to move forward inside the EU, to a workers Europe, and the creation of a United Socialist States of Europe, and from there to establishing fraternal relations with the workers movement across the globe. 

In the 1960's, the Tories themselves were led to follow the logic of social-democracy, and the needs of large-scale socialised capital, by proposing membership of the EEC. Under pressure from the US, which sought to break up all the old colonial empires, and the monopolistic trade relations they had maintained, so as to open up the world economy, to US multinational capital, Britain's ability to hide its rapidly declining economic and political status within the world order, by relying on those old imperial monopolies, and the rents and interest it brought back from the colonies, came to an end. In the 1960's, as the long wave post-war boom had created an overproduction of capital, resulting in unemployment falling to between 1% - 2%, and a consequent rise in wages, that began to squeeze profits, the decayed nature of British capitalism became increasingly exposed. Britain had the choice of either applying to become the 51st state of the US, or else of joining the EEC, on the road to forming the EU. The existing trade relations between the UK and Europe, and the intertwining of capitals in the UK and Europe, made the latter the only rational solution, whilst its global strategic ties to the US, to which it had played second fiddle since WWII, led it to continue to also act as a conduit for US interests within the European project – one reason that De Gaulle had opposed UK membership. 

The attempts of nationalists to turn back the clock, of taking Britain out of the EU, and of attempting to recreate a world of free-wheeling, free market, competition, based upon a plethora of small private capitals, is a thoroughly reactionary endeavour, which furthermore is doomed to failure. It would essentially require a political counter-revolution to achieve. The support for Brexit amongst the Lexiteers is even more reactionary, and naïve, because they combine the reactionary ambitions of the Brextremists for a return to nationalistic solutions, with a utopian vision of being able to create some kind of autarkic, dirigiste, economy within national borders, that would be even more bound to fail, and end in catastrophe. 

Brexit represents this battle-ground on which the fight between modernism and reaction is being fought out. That it should assume its most acute form within the Tory Party is no coincidence, because it is constructed upon that basic contradiction. With the demise of the old Liberal Party, the Tory party was left trying to ride two horses. On the one hand, it continued as the party of the old landed and financial oligarchy, on the other it was the party of the small private capitalists. But, the interests of the financial oligarchy, of the small, but powerful class fraction of money lending shareholders, who derive their interest/dividends from the large profits of the big socialised capitals, is antagonistic to the interests of the small private capitalists. The profits of the former are dependent upon social-democracy, of an extension of planning and regulation on an increasingly extensive, and so international scale. 

The Tory party is, therefore, riven by meeting the needs of the most powerful, but numerically small fraction of the capitalist class on the one hand, and the demands of the more numerous, but contradictory interests of its core membership and electorate. The talk has been of a split in the Labour Party, but the real basis of a split resides in the Tory Party, which needs to reconcile these two contradictory objectives that exist within the capitalist class itself, reflecting the contradictory interests of opposing class fractions. 

That is why the Tory Party has never been able to resolve this issue over the EU, and why it has continually risen up to divide them. It is why Theresa May has been unable to resolve the issue of Brexit, and why no other Tory leader would be able to resolve it either. May has tried to ride the contradiction within the Tory Party. She has continually fudged deals with the EU, in order simply to get through another day, another stage in the negotiations, only then to have to interpret those fudges in the most ridiculous manner, so as to assuage the outrage of her Brextremist wing. The EU negotiators, aware that May's position as Tory leader was itself unsustainable, have tried to provide her with every support, against those Brextremists. But May cannot accept that support, because it only enrages her Brextremists even further. 

Without the Brextremists, May could do a deal with the EU, based upon membership of the Customs Union, and Single Market. It would logically lead back into the EU itself, because there is no rational basis for remaining in those institutions without having a say in the formulation of their rules and regulations. But, May cannot force through such a deal, because she does not have sufficient votes in parliament to achieve it. Her Brextremist wing would oppose it as a sell-out, so would the DUP, whilst Labour would oppose it, because it does not meet their six tests. It is not just the Irish border issue where this contradiction resides, but the Irish border is its most acute manifestation. 

There would be no need for an Irish backstop, if Britain were to commit, by treaty, to remaining in the Customs Union and Single Market. But, May cannot agree to that, and so her attempts, last week, to again fudge that issue, by introducing the idea of a temporary back-stop whereby Britain as a whole would remain in the Customs Union and Single Market, was necessarily rejected, unless Britain also agreed to an unlimited backstop in Ireland. May cannot accept the idea of an unlimited backstop for the whole of the UK, because, as with permanent membership of the Customs Union and Single Market, the Brextremists would oppose it, and seek to remove May. So, as EU leaders pointed out last week, as far as they are concerned, every technical option has been exhausted, and it now comes down to the need for a political solution within Britain itself. 

But, May cannot provide such a political solution. She called an election in 2017, in the hope, and because of her need, to obtain a large enough Tory majority to be able to push through Brexit. She did so on the basis of a hard Brexit agenda, suitably accompanied by her calls for the need to elect a “strong, and stable” leader, as with the Bonapartist regimes elsewhere. That agenda was rejected. The Tories lost their majority, and Labour acquired millions of votes from those attracted to Corbyn's radical social agenda, but also from those who rejected the idea of Brexit, and for whom the Liberals and Greens were quite obviously not a viable vehicle through which to vent that opposition. 

Brexit represents a reactionary, political counter-revolution that socialists should oppose. But, precisely because of what it is, it is also a utopian adventure on the part of those counter-revolutionaries. The Tories cannot push it through, and any attempt on their part to do so via political manoeuvres in Parliament will be met by widespread opposition. Its notable that for all the talk by the Brextremists about public anger at overturning the Brexit vote, it is the opponents of Brexit that have repeatedly turned out tens and, as yesterday showed, even hundreds of thousands, to actively demonstrate, not the Brextremists. That is also inevitable, because the support for the Brextremists comes from a largely atomised mass of passive individuals, thoroughly disparate, and divided themselves on their motivation for Brexit, other than a vague emotional dislike of foreigners, and particularly of immigrants. 

Its clear that May now sees her best hope is to simply drag out the process for as long as possible so as to present to parliament with a fait accompli, of vote for her proposals, or vote for no deal. Her problem is that she cannot even get the EU to agree to her proposals, and to be able to put proposals to the EU that they would be able to accept, she would first have to face down the Brextremists and the DUP, which would bring down her premiership, and probably the government. This is the inevitable end of the line. If the Brextremists kick out May, and elect Bojo as Tory leader, or Rees-Mogg, the rules of the Fixed Term Parliament Act means that the Queen would have to ask Corbyn whether he could form a government. He would say yes, and might be able to do so, with the tacit acceptance of Tory anti-Brexit MP's, for just long enough for him to be able to negotiate a prolongation of the Article 50 negotiations, before him calling a General Election. 

If not, then its still likely that anti-Brexit Tory MP's would resign the Tory whip rather than support a Bojo or Rees-Mogg drive towards a No Deal Brexit. That would create a constitutional crisis. The Brextremists would hope to ride it through until March 29th, when the UK officially leaves the EU, which is why they were insistent on having that date etched in blood on the face of the Withdrawal Bill. They will not be allowed to get away with that.  For all her bluff and bluster, if May remained in office, and her proposals were defeated in parliament, which they would be, she would not push through a No Deal Brexit, because the consequences for the UK would be so catastrophic.  Nor would parliament allow a Brextremist Prime Minister to do so.  Either way Brexit is dead.  May's softer, unworkable Brexit does not have majority support, and cannot pass.  The Brextremists No Deal Brexit would be a disaster for Britain, and for capital, and would be opposed tooth and claw by the dominant sections of capital, who would oppose the counter-revolution it represents, by fair means and foul, first of all by mobilising parliamentary and state forces to block it.

The answer is not a second referendum, which would have many of the same deficiencies as the 2016 referendum, but is a General Election to remove the Tories from office. But, it's now time for Labour to take leadership, and to base its election manifesto not just on progressive social democratic policies, but upon the recognition that such policies can only be implemented on an EU wide scale, and that central to Labour's programme, therefore, must be an outright rejection of Brexit, a rejection of the conservative agenda of the Blair-rights for restrictions on free movement, whilst promoting an extension of the free market, but instead, for the extension of the rights of free movement of workers within the EU, as the basis for strengthening ties between the workers of Europe, of strengthening their rights, and building a workers Europe, not on the basis of liberal free markets, but of the extension on an EU wide scale, of social-democratic planning and regulation, as the basis for the long-term accumulation of capital, and creation of the conditions for the movement forwards to socialism.  The tragedy is that yesterday's march of three-quarters of a million people, opposing Brexit, was not being led by Jeremy Corbyn and the Labour leadership, which means that its political demands were also not those of a progressive, internationalist social-democracy.  Its time to change that situation, and if doing so means changing the Labour leadership, so be it.

Theories of Surplus Value, Part II, Chapter 18 - Part 24

Marx says, 

“If the wage remained the same, no part of the variable capital would be released. The fact that the product of £8,250 represents the same amount of necessaries and food as previously £15,000 does not cause its value to rise. The farmer would have to sell it for £8,250, partly in order to replace the wear and tear of his machinery and partly in order to replace his variable capital. In so far as this lowering of the price of food and necessaries did not bring about a fall in wages in general, or a fall in the ingredients entering into the reproduction of the constant capital, the revenue of society would have expanded only in so far as it is expended on food and necessaries. A section of the unproductive and productive workers etc. would live better.” (p 567) 

But, the lowering of the value of necessaries would mean the value of labour-power fell, even if wages did not. With the value of labour-power lowered, if the unemployed workers did remain on the streets, in any number, its hard to see how wages could remain the same, let alone not fall. Marx himself notes that, 

“The discharged workers would remain on the street, although the physical possibility of their maintenance existed just as much as before. Moreover, the same capital would be employed in the reproduction process as before. But a part of the product (whose value had fallen), which previously existed as capital has now become revenue.” (p 568) 

If these workers are of the wrong type, in the wrong location or represent only a small proportion of the total workforce, they may not be able to act to push down on wages, so that even with constant nominal wages, other workers enjoy a higher real wage, as that money wage now buys more of the now cheaper necessaries. Marx also quotes Ricardo's comment. 

“The reduced quantity of labour which the capitalist can employ, must, indeed, with the assistance of the machine, and after deductions for its repairs, produce a value equal to £7,500, it must replace the circulating capital with a profit of £2,000 on the whole capital; but if this be done, if the net income be not diminished, of what importance is it to the capitalist, whether the gross income be of the value of £3,000, of £10,000, or of £15,000?” (p 568) 

And Marx notes, 

“This is perfectly correct. The gross income is of absolutely no importance to the capitalist. The only thing which is of interest to him is the net income.” (p 568) 

But, if we are dealing with prices of production, and an average rate of profit, it is not as though the two things are entirely separate. If the ratio of fixed to circulating capital, and the rate of turnover of capital is held constant, then changes in the net revenue will go hand in hand with changes in the gross revenue. In other words, if the capital is all taken to turn over once during the year, the profit will rise in tandem with the gross revenue, for the simple reason that the gross revenue, in this case, is equal to the laid out capital plus the profit. The variation in this relation arises as a result of the variations in the rate of turnover of capital. The higher the rate of turnover of capital, the lower the rate of profit/profit margin, and so the lower the gross revenue in relation to the net revenue. 

Saturday, 20 October 2018

Theories of Surplus Value, Part II, Chapter 18 - Part 23

What Marx should have said is that the price of production of the output is £8,250. That is a total capital of £20,000 is advanced. It comprises £7,000 original fixed capital, £7,500 machine and £5,500 variable-capital. The average rate of profit is 10%, giving £2,000 profit as before. The price of production is then £5,500 wages + £750 wear and tear = £6,250 cost of production + £2,000 average profit = £8,250. This compares with a price of production of this volume of output previously of £15,000, so the price per unit must fall significantly. 

The implication of this, as these items are necessaries, consumed by the workers who produce them, is that the value of labour-power/wages fall accordingly. 

“The lower price would be advantageous to the farmer in so far as he himself consumes food and necessaries as revenue. It would also be advantageous to him in so far as it enables him to reduce the wages of the workers he employs thus releasing a portion of his variable capital. It is this portion, which to a certain degree could employ new labour, but only because the real wage of the workers who have been retained had fallen. A small number of those who have been discharged could thus—at the cost of those who had been retained—be re-employed. The fact however that the product would be just as great as before, would not help the dismissed workers.” (p 567) 

What Marx does not seem to take into account here, as I've set out elsewhere, is that the result of the lower wages is not only to make it possible to employ more workers with the same variable-capital, but that even with the same number of workers, the rate of surplus value, and mass of surplus value rises, so that with the surplus value being accumulated, a greater number of workers can then be employed. By using Ricardo's assumption of a fixed 10% rate of profit, Marx misses this necessary consequence.  Marx's use of the term "real wage", here is also confusing.  The workers real wage as conventionally understood, of what amount of wage goods the nominal wage buys, would not have changed.  The employed, workers could still buy the same quantity of their agricultural products as before, required for the physical reproduction of their labour-power.  The point being that, as the unit value of these wage goods has fallen, they require a lower money wage to be able to do so.  It is the money wage, or nominal wage that has fallen, not the real wage, and it is that which is the basis of the rise in the rate of surplus value.

And, in fact, even assuming that £2,000 of profit is consumed unproductively by the capitalist, as Marx says here, the fall in the value of necessaries would mean that these necessaries have a value less than £2,000, so the capitalist would be able to accumulate capital where previously they didn't.  If previously, 15,000 units of output were produced with a unit value of £1, the capitalist bought 2,000 units with their £2,000 of profit.  The value per unit now falls to £0.47, and so, 2000 units now only costs the capitalist £947.

Moreover, at £0.47 per unit for wage goods, the £5500 of variable capital would buy 11,702 units.  If each worker continues to consume 100 units, this employs 117 workers, with a consequent rise in the mass of surplus value.  Alternatively, if only the 55 workers are employed, this costs only £2585, so that the amount laid out as variable-capital falls, by £3000, and the surplus value rises correspondingly by £3,000 to £3,846. The combined effect of a) a rising mass of profit, b) a lower value of labour-power, and c) a greater proportion of profit available for accumulation, means that the potential for the accumulation of variable-capital and employment of workers is much greater than Marx suggests here. Moreover, if this is considered more widely, the effect of the fall in the value of labour-power that results, affects all capitals, so that they all obtain more surplus value, whilst the fall in wages also enables them to employ more labour-power

Northern Soul Classics - Do What You Wanna - Paul Sindbad

Once again, two videos, the first a better quality audio, and the second a live performance.



Friday, 19 October 2018

Friday Night Disco - Shake - Sam Cooke

Theories of Surplus Value, Part II, Chapter 18 - Part 22

Marx cites an example provided by Ricardo, which “palpably” expresses the nature of surplus value. It involves a capitalist with a capital of £20,000. £7,000 is invested in buildings and other fixed capital. The capital is engaged in agricultural production, and the manufacture of items of consumption. The remaining £13,000 of the capital is employed as variable-capital, paid as wages to his workers. Ricardo makes no account for the wear and tear of the fixed capital, but he assumes a rate of profit of 10%, therefore equal to £2,000. At the start of the year, the £13,000 of variable-capital takes the form of commodities that are sold to the workers, during the year. Simultaneously, the capitalist pays money wages to these workers, so that what is paid out to them as wages, flows back to him as payment for the commodities they buy from him. When the year ends, the workers will have produced commodities with a value of £15,000. Of this, the capitalist consumes a portion equal to £2,000, or the same as his profit. The remaining £13,000 of output now constitutes all of his variable-capital, which he again pays out to the workers during the next year. 

Marx continues Ricardo's quote, elaborating this example, before analysing the flaws in the argument presented by Ricardo. The gross product is £15,000, and net product £2,000. Ricardo assumes that the capitalist then employs half of their workers to produce a machine, whilst the other half continue to produce necessaries. Both groups of workers continue to be paid from the variable-capital with which the capitalist begins the year. At the end of the year, a gross product, still equal to £15,000 is produced, but now, £7,500 of that product consists of the value of the machine, whilst the value of the necessaries produced has fallen from £15,000 to £7,500. The capitalist paid out £13,000, and has created a new value of £15,000, giving them still a profit of £2,000, and they still have their original fixed capital of £7,000. 

Assuming the £2,000 of profit is consumed out of the consumable product, the capitalist is left with a capital still of £20,000 - £7,500 machine, £7,000 fixed capital, and £5,500 necessaries. So, now, only this £5,500 is available as variable-capital, so that the number of workers employed must be proportionally reduced. All of the workers that were previously employed by the other £7,500 of variable-capital (£13,000 - £5,500 = £7,500) would then be redundant. 

Marx then examines Ricardo's argument. He begins by noting Ricardo's failure to account for wear and tear of the original £7,000 of fixed capital, and this must also be accounted for in relation to the £7,500 value of the machine. Marx points out that the machine may enable the workers who remain employed to produce the same amount of output that was previously produced with a variable-capital of £13,000. Marx, however, makes an error in his own explication. He says, assume that wear and tear of the machine is equal to 10%, or £750. In that case, he says, the value of the product is equal to £8,250, which he appears to arrive at from taking the £5,500 of wages, adding the £2,000 of profit, to give £7,500, and then adding the £750 of wear and tear to arrive at the value of £8,250. But, that cannot be correct. 

The adding of a fixed 10% profit confuses matters here. Previously, £13,000 employed all of the workers who produced the surplus value/profit of £2,000. But, now, only £5,500 of variable-capital is employed, which means that fewer than half the workers are employed, and so less than half of the previous £2,000 of surplus value. If previously 130 workers were employed, and produced a value of £15,000, then now, only 55 workers are employed, creating a new value of 55/130 x £15,000 = £6,346. Adding in the £750 of wear and tear gives a product value of £7096. The surplus value is then £846. 

Thursday, 18 October 2018

Theories of Surplus Value, Part II, Chapter 18 - Part 21


Ricardo, like Smith, resolves the value of commodities, and, therefore, of the gross product, solely into revenues. Like Smith, therefore, he fails to take into account the value of the constant capital, i.e. the value of materials, and wear and tear of fixed capital. So, for Ricardo, gross output replaces the value of wages and surplus value (profit and rent). The net product is then equal to this surplus value, or surplus product

“Ricardo’s subsequent treatment is of interest, partly because of some of the observations he makes in passing, partly because, mutatis mutandis, it is of practical importance for large-scale agriculture, particularly sheep-rearing, and shows the limitations of capitalist production. Not only is its determining purpose not production for the producers (workmen), but its exclusive aim is net revenue (profit and rent), even if this is achieved at the cost of the volume of production—at the cost of the volume of commodities produced.” (p 565) 

Marx quotes Ricardo's recognition of his previous error. He notes that the net product can rise, even as the gross product falls. 

“... and therefore it follows, if I am right, that the same cause which may increase the net revenue of the country, may at the same time render the population redundant, and deteriorate the condition of the labourer” (l.c., p. 469).” (p 565) 

The redundant population, here, of course, that arises, as a result of the capitalist drive for profit, does not simply disappear, but also weighs down on the rest of the workforce. 

The total product of society represents a common fund out of which the consumption of workers, capitalists and landlords is drawn. A large part of the commodities consumed by the capitalists and landlords forms no part of the consumption of workers. On the other hand, nearly all of the commodities consumed by workers, are also consumed by capitalists and landlords, if not by themselves directly then by their retainers. Marx sets this out in Capital II, If society's actual gross product is considered, it consists not just of this consumable product (revenue), but also of that product required to replace the constant capital (materials and wear and tear of fixed capital) on a like for like basis (capital). The capital component of this gross product forms a revenue for no one. It simply reproduces itself. In Marx's schemas it is represented by Department I (c). The revenue component, however, as indicated above, divides itself into two parts – Department II(a) and II(b). Department II(a) is that part of the total product which represents the consumption of necessaries by both the workers and capitalists/landlords, and Department II(b) represents that part of the total product that consists of the luxury goods consumed only by the capitalists and landlords. 

This also illustrates the error of those theories in which the wage fund is some kind of fixed amount. There are not separate funds for wages, rent and interest that are fixed. If wages rise, profits and rent will fall, and workers will draw more from the total product of society, whilst capitalists and landlords will draw less, and vice versa. The products that constitute the constant capital must be replaced on a like for like basis, for reproduction to continue on the same scale, but, as seen earlier, if the labour-time required for the reproduction of those commodities falls, as a result of a rise in social productivity, that means that more social labour time is released for the production of revenue, i.e. of consumption goods, and so of the surplus product. It means that the potential for accumulation, and the rate of profit rises, and vice versa. 

“One cannot suppose that there are two essentially distinct fixed funds in existence. The important point is, what relative portion each of these groups draws from the common fund. The aim of capitalist production is to obtain as large an amount of surplus-product or surplus-value as possible with a given amount of wealth. This aim is achieved by constant capital growing more rapidly in proportion to variable capital or by setting in motion the greatest possible constant capital with the least possible variable capital. In much more general terms than Ricardo conceives here, the same cause effects an increase in the fund out of which capitalists and landlords draw their revenue, by a decrease in the fund out of which the workers draw theirs. 

It does not follow from this that the fund from which the workers draw their revenue is diminished absolutely; only that it is diminished relatively, in proportion to their total output. And that is the only important factor in the determination of the portion which they appropriate out of the wealth they themselves created.” (p 565-6)