Friday, 23 June 2017

Friday Night Disco - Sweet Gypsy Jane - The Temptations

Theories of Surplus Value, Part I, Chapter 4 - Part 108

Destutt has only succeeded in showing that the industrial capitalists do not pay wages, rent or interest twice, once as money and secondly as commodities, because what is paid out first as money wages, rent or interest is “drawn back”, only in exchange for commodities of the same value. At best, the idea that this second exchange takes place on a basis favourable to the industrial capitalist explains the relative distribution of that profit. It does not, in any way, indicate the origin of the profit itself.

But, later, Destutt, echoing Adam Smith, actually alights, by accident, on the real source of the profit.

““Whence come their revenues to these idle men? Is it not from the rent which those who set their capitals to work pay to them out of their profits, that is to say, those who use their funds to pay labour which produces more than it costs, in a word, the men of industry? ”” (p 278) 

In other words, the profit arises not at all from these capitalists selling their commodities above their value, but from the workers creating more value than they are themselves paid as wages, in other words, creating a greater quantity of value than the value of their own labour-power.

“... a surplus-product which the industrial capitalist appropriates for himself, and of which he gives away only one part to those receiving rent from land and money. 

Monsieur Destutt concludes from this: not that we must go back to these productive labourers, but that we must go back to the capitalists who set them in motion.” (p 279)

If we take Smith's correct definition of productive labour being that which produces surplus value, then Destutt's argument leads to the conclusion that the only productive labourers are the industrial capitalists!

““They” (the industrial capitalists) “who live on profits maintain all the others and alone augment the public fortune and create all our means of enjoyment. That must be so, because labour is the source of all wealth and because they alone give a useful direction to current labour, by making a useful application of accumulated labour” (p. 242).” (p 279)

But, all this means is that the industrial capitalists set labour to work to produce use values. They do so by using accumulated labour to set this current labour to work. The value of the accumulated labour, in the form of wages, is less than the value produced by the labour it sets in motion.

“In the passage just cited Destutt naïvely epitomises the contradictions which make up the essence of capitalist production. Because labour is the source of all wealth, capital is the source of all wealth; the actual propagator of wealth is not he who labours, but he who makes a profit out of another’s labour. The productive powers of labour are the productive powers of capital.” (p 280)

Destutt writes,

““Our faculties are our only original wealth; our labour produces all other wealth, and all labour, properly directed, is productive” (p. 243).” (p 280)

On that basis, labour is not wealth. But, the act of labour thereby produces all other wealth. Only labour which produces profit for capital is properly directed, and thereby productive.

Destutt gives a good summary, Marx says, of Adam Smith's discussion of different types of consumption, and their effect. A firework and a diamond may have the same value, Destutt says, but the former once lit, is soon consumed and disappears, whereas the latter will still exist 100 years hence to still be enjoyed. This is a similar distinction as that between material and immaterial commodities. The same is true of services.

““The most ruinous consumption is the quickest, because it is that which destroys more labour in the same time, or an equal quantity of labour in less time; in comparison with it, consumption which is slower is a kind of treasuring up, since it leaves to times to come the enjoyment of part of the present sacrifices… Everyone knows that it is more economical to get, for the same price, a coat that will last three years than a similar one which will only last three months” (pp. 243-44).” (p 281).

Thursday, 22 June 2017

Theories of Surplus Value, Part I, Chapter 4 - Part 107

The third category of consumers that Destutt lists, who buy these overpriced commodities is the idle capitalists, and as the consumption of their workers also forms a part of their revenue, the two can be considered together.

“Here again there is the childish conception of the rent, etc., coming back, as there was above of the drawing back of the whole of the wages.” (p 275)

In other words, the industrial capitalist hands over £100 in rent or interest to the landowner or money-capitalist. These idle capitalists then buy £100 of commodities from the industrial capitalists, so that they “draw back” this £100. But, they achieve this “drawing back” only by handing over £100 of commodities to the idle capitalists instead! Even if they hand back only £80 in value, in exchange for this £100, they have only, in effect, reduced the amount they have handed to the idle capitalists to £80.

Destutt himself has said that rent and interest are only a deduction from the industrial profit, and so had this £100 not been deducted in the first place, it would not have needed to have been drawn back. Therefore, even had the industrial capitalist drawn back the entire £100, without giving any commodities to the idle capitalists in exchange, they would have only set this deduction from their profit to zero, rather than in any way added to it.

But, there is a further absurdity in Destutt's argument, yet one that is reflected in actual history. Suppose a landlord receives £100 in rent from an industrial capitalist. The landlord buys commodities from the capitalist with this £100. But, the capitalist sells commodities to him with a value of £80. The landlord, however, needs commodities with a value of £100. So, they sell a portion of their land to raise the additional £25 required to buy the additional commodities (they need to buy 25% more, which means £25 more than the £100 they have already paid.) 

The buyers of this land will be the productive-capitalists. Over time, therefore, all of the land will pass out of the hands of the idle landowners and into the hands of the productive-capitalists. But, at this point, the idle landowners will have no rent as revenue, and no means to buy commodities from the industrial capitalists. But, this process did, in fact, occur in history, as Marx describes.

“And Monsieur Destutt is quite right up to a certain point, although not at all in what he wants to explain. In the period of the declining Middle Ages and rising capitalist production the rapid enrichment of the industrial capitalists is in part to be explained by the direct fleecing of the landlords. As the value of money fell, as a result of the discoveries in America, the farmers paid them nominally, but not really, the old rent, while the manufacturers sold them commodities above their value —not only on the basis of the higher value of money.” (p 276-7)

Something similar has occurred more recently.  As the prices of financial assets, fictitious capital, (shares, bonds, property) bubbled to ever higher levels, so the yields on these assets fell lower and lower towards zero.  Instead of being concerned over the revenue these assets might produce, their owners became concerned only with the potential capital gains, arising from the ever higher prices.  Pension funds, depend upon the revenue from such assets to cover their future pension liabilities to pensioners, but as yields fell, they too saw the means of paying pensions being from out of these large capital gains, but which could only be realised by selling some of the underlying financial assets.  In other words, current liabilities were met by undermining the capital base of the pension fund, which then led to inadequate capital in the pension fund to cover future liabilities, particularly as yields on those assets fell to near zero.

Wednesday, 21 June 2017

A Tale of Two Cities

Numerous people have noted the contrast between Grenfell Tower, and its inhabitants, and the multi million pound properties within a short distance from it, and their inhabitants.  A tale of two cities in many ways.

One wonders just how much the decisions about cladding the outside of the tower, for example, were governed by a desire that those in the multi-million pound properties did not have to look out on the brutalist concrete architecture of the tower that previously existed.  Brutalist, and perhaps less aesthetic, but at least concrete is flammable (in the correct usage, meaning that you can apply a flame to it without it burning, as opposed to inflammable meaning you can't apply a flame to it without it burning), as one of the nearby residents noted having seen a fire in one of the apartments some years ago, which failed to spread.

In Dickens' A Tale of Two Cities the activity is spread between London and Paris, with characters moving between the two.  Some of the residents of Grenfell Tower are themselves migrants and refugees from other countries.  In contrast, many of those who own the multi-million pound properties nearby are far from refugees, many are foreign millionaires, who own the property in London, not as somewhere needed to live, but as merely somewhere to stash some of their money, in an asset that government and Bank of England policies over the years have deliberately inflated, and kept inflated so as to protect the private wealth of such individuals whilst simultaneously pricing millions of workers out of being able to buy a house, and at the same time thereby causing rents to rise, and private landlords to massively subsidised to the tune of around £11 billion a year in Housing Benefit payments.

When Jeremy Corbyn, quite rightly proposed, last week, that the immediate housing needs of Grenfell Tower residents should be addressed by sequestering some of those empty properties, it brought howls of anguish from the ranks of Tories and their supporters in the media.  Their empathy towards people made homeless by such an event obviously only goes so far, as far as pretty empty words, in the aftermath, but not as far as dipping into their pockets or seeing the rights of property infringed, even unused, empty property!

Sophy Ridge, on Sunday complained that the suggestion to sequester the empty property was ridiculous because of the cost for the government to compulsory purchase these multi-million pound properties.  Absolute nonsense.  If the property is empty, and earning no rent currently, the owners are losing nothing from allowing a homeless family to live in it, and they should be compensated by the payment of nothing for it, accordingly.  Indeed, a systematic programme of occupying and squatting empty properties across the country, would be a good immediate way of dealing with homelessness, and of encouraging property speculators to get their properties occupied or sell them, and thereby would act to bring property prices down, by getting some of the 1.5 million empty properties in the country on to the market.

The fire also showed the schizophrenic nature of the government in another way.  In the London Bridge terrorist attack, 8 people were killed and 48 injured.  Within 24 hours, the troops were on the streets, in support of the police and across the country, police were knocking down doors, and hauling dozens of people in for questioning or under arrest.  A similar response came with the Westminster Bridge attack, and the Manchester attack.

But, when Grenfell Tower burned, the response of the state seems to have been completely different.  The firefighters and paramedics did the best they could to save lives, and prevent injuries way beyond the call of duty.  But, already the official estimate of deaths runs to around 80, and the residents know the real figure is likely to be more like 150.  Yet, where were the troops to help with dealing with the fire?

When there are large forest fires, Hercules transport aircraft and helicopters are used to drop fire retardant or even just water from nearby sources on to the fire.  Yet, no such help was provided in this instance.  If the £100 billion being wasted on Trident were instead used on resources for real civil defence and security, then a more effective response would have been possible.  Indeed, the £100 billion wasted on Trident would have been much better used on providing adequate fire and other safety measures in these buildings.

But, also where have been the dawn raids by police, and the arrests of those responsible for the cladding on these buildings and so on.  It may turn out that many of the people who might be so arrested, or brought in for questioning are released without charge, but so have been many of those arrested and brought in for questioning following the terror attacks.  The point is that it shows a completely different approach when it comes to businesses when such events occur.  Its much the same with Health and Safety.  Never do you see police going into firms to investigate breaches of Health and Safety Law, even while they are being sent out to break up strikes against such bad employers.

Theories of Surplus Value, Part I, Chapter 4, Part 106

Next, Destutt lists the workers as buyers of these commodities above their value. But, Destutt, by his previous argument, has made it impossible to derive a profit by selling commodities to workers above their value. He told us that these commodities are not, in fact, bought by the workers, who have no wealth of their own, but are bought by the capitalists, with their own wealth that is given to the workers as wages.

But, if it is actually the industrial capitalists who are really the buyers of these wage goods, not the workers, then, by selling them above their value, this once again amounts to to them selling them to themselves above their value, and thereby simply swindling themselves! Moreover, this applies not only to the industrial workers, but also to the workers employed by the idle capitalists, who must also buy these overpriced commodities, out of the revenues they deduct from the industrial capitalists profit.

As Marx comments,

“First the capitalist pays money to the labourer as wages. Then he sells him his product “too dear”, and by so doing draws the money back again. But as the labourer cannot pay back to the capitalist more money than he has received from him, so the capitalist can never sell his products to him dearer than he has paid him for his labour. He can always only get back from him as much money for the sale of his products as the money he has given him for his labour. Not a farthing more. How then can his money increase through this “circulation”?” (p 273)

This is the point referred to earlier. Destutt believes that the capitalist is able to make this profit by “drawing back” the money wages paid to the worker. In other words, having paid £1 in wages, the capitalist draws it back in exchange for commodities. But, what the capitalist has given to the worker is first £1 in wages, and then £1 in value of commodities. Having given out £2 in value, they have only “drawn back” £1 in money.

As Marx points out, they could hardly get rich on the back of such an exchange.

“Here, therefore, the noble Destutt confuses the circulation of money with the real circulation of commodities. Because the capitalist, instead of giving the labourer directly commodities to the value of £1, gives him £1, with which the labourer then decides as he likes which commodities he wants to buy, and returns to the capitalist in the form of money the draft he had given him on his merchandise—after he, the labourer, has appropriated his aliquot share of the merchandise—Destutt imagines that the capitalist “draws back” the wages, because the same piece of money flows back to him, And on the same page Monsieur Destutt remarks that the phenomenon of circulation is “little known” (p. 239).” (p 273-4)

As analysed previously, the surplus value arises not from those exchanges, or the circulation of money and commodities, but from production. The surplus cannot be explained on the basis of cheating.

“If I go into a shop and the shopkeeper gives me £1 and I then use this £1 to buy commodities to the value of £1 in his shop, he then draws back the £1 again. No one will assert that he has enriched himself by this operation. Instead of £1 in money and £1 in commodities he now has only £1 in money left. Even if his commodity was only worth l0s. and he sold it to me for £1, in this case too he is 10s. poorer than he was before the sale, even though he has drawn back the whole of one pound sterling.” (p 274)

The same thing applies here in relation to wages. Had the capitalist simply given the workers £1 to spend, and then sold those workers commodities, for £1, whose value was only £0.50, then they would have cheated the workers out of £0.50, but it would only thereby have reduced the loss of the capitalist, who gave the workers the £1 to spend in the first place!

Tuesday, 20 June 2017

Theories of Surplus Value, Part I, Chapter 4 - Part 105

Destutt then gets into the same sort of contradiction that we have seen with other writers in trying to explain the profit of the industrial capitalists, and how this relates to the revenue of the workers, landlords and money lenders.

Having started from a position where all wealth is in the hands of the industrial capitalists, Destutt is first faced with explaining wages of workers, who “... have no other treasure but their everyday labour.” (p 271)

The real problem Destutt has here is a failure to understand what wages are. Wages are merely the phenomenal form of the value of labour-power, and that value is itself determined by the value of all those commodities required for the reproduction of labour-power. If Destutt understood wages in this way, and saw the workers wage as essentially an exchange of these commodities for labour-power, much of his confusion would be removed. Instead, Destutt sees wages as being simply money in the hands of the industrial capitalists paid to the workers, money which the workers then use to buy the commodities they require. The workers consumption, therefore, is paid for not by them, but by the industrial capitalists.

“ “It follows from this that the consumption paid for by this wealth is the consumption of the wage-labourers, in the sense that it is they whom it maintains, but at bottom it is not they who pay it. Or at least they only pay for it with funds existing beforehand in the hands of those who employ them. Their consumption should therefore be regarded as having been made by those who hire them. They only receive with one hand and return with the other.... It is therefore necessary to regard not only all that they” (the wage-labourers) “spend but even all that they receive as the real expenditure and consumption of those who buy their labour. That is so true that in order to see whether this consumption is more or less destructive of wealth that has been acquired, or even if it tends to increase it … it is necessary to know what use the capitalists make of the labour that they buy” (pp. 234-35).” (p 271-2)

Marx demonstrates later that what this amounts to is effectively the industrial capitalist paying the workers twice, once in the money wages, and secondly as commodities bought with those money wages. But, first, Marx looks at Destutt's arguments for where the surplus value comes from with which they pay revenue to themselves and the idle capitalists.

““I will be asked how these industrial entrepreneurs can make such large profits, and whence they can draw them? I reply that it is through their selling everything that they produce at a higher price than it has cost them to produce” (p. 239).” (p 272)

This is the same argument seen previously and dealt with by Marx in Volume I. Marx breaks down the groups who Destutt says these commodities are sold to above their value. First of all, according to Destutt they sell these commodities to themselves. But, its impossible to enrich yourself, individually, by selling the things you produce to yourself above their value, because that would be simply to swindle yourself! It would be to merely put into one pocket as a producer what you have taken out of the other pocket as a consumer.

Yet, this applies to the entire class of producers equally. If producer A sells commodities at 10% above their value to producer B, and producer B likewise sells commodities to producer A at 10% above their value, they have both equally swindled one another by 10%, so that it would have been exactly the same had they exchanged their commodities at their value. A first took £10 too much out of the pocket of B as a consumer, and put it into his pocket as a producer, but then B, as a producer, took this same £10 out of A's pocket as a consumer, and put it back into his own pocket, from whence it originally came!