Monday, 17 June 2019

Theories of Surplus Value, Part III, Chapter 21 - Part 25

Marx, in this section, also sets out the reason that capitalism, let alone socialism, is only conceivable as an international system, and so why any attempts to restrict either within the borders of the nation state are reactionary. Marx quotes Adam Smith. 

““… It is the infinite variety of wants, and of the kinds of commodities” [and therefore also the infinite variety of real labour, which produces those different kinds of commodities] “necessary to their gratification, which alone renders the passion for wealth” (and hence the passion for appropriating other people’s labour) “indefinite and insatiable” (Wakefield’s edition of Adam Smith, An Inquiry into the Nature and Source of the Wealth of Nations, Vol. 1, London, 1835, p. 64, note).” (p 253) 

What is also seen here is the extent of Marx's scientific method, which separates out his view of the historic role of capitalism, in increasing the production of surplus value, and its extraction from the workers, for the purpose of its accumulation, from his views about the way that is done and the need thereby to move beyond it, as soon as possible. It is the difference between the scientific method of Marx, and the moralistic approach of Sismondi

So, here, Marx sets out, in the quote from Smith, that it is the opening up of global trade which creates the possibility of this wider range of human desires of the rich, which, in turn, prompts their desire to extract greater masses of surplus labour, which can be exchanged for these wider range of products, and which, in turn, creates the conditions which lead to the accumulation of capital, technological development, and the potential for socialism. Marx notes, 

“But it is only foreign trade, the development of the market to a world market, which causes money to develop into world money and abstract labour into social labour. Abstract wealth, value, money, hence abstract labour, develop in the measure that concrete labour becomes a totality of different modes of labour embracing the world market. Capitalist production rests on the value or the transformation of the labour embodied in the product into social labour. But this is only [possible] on the basis of foreign trade and of the world market. This is at once the pre-condition and the result of capitalist production.” (p 253) 

Sunday, 16 June 2019

Theories of Surplus Value, Part III, Chapter 21 - Part 24

Smith had already removed the mysticism that limited the Physiocratic view, by showing that value is labour, and that the surplus value is indeed created in production, but is the result, therefore, of surplus labour. In other words the labour undertaken by the labourer, is greater than the labour required to reproduce the labourer's own labour (power). Its manifestation is the surplus product. But, in the process, Smith also thereby disposes of the Mercantilist theory, because if the surplus is created in production, it can only ever be simply realised in exchange. 

The Mercantilists, however, did reflect a very real process referred to earlier. For the feudal ruling class, a growing surplus product becomes increasingly useless, for the reasons described above. Particularly, a relatively small ruling class can only consume a limited quantity of products of any type. Even allowing for feeding and otherwise providing for a growing band of retainers and state lackeys, there are limits. Either the peasant producers must be allowed to keep more of what they produce, or else the surplus collected from them, as rent, tithes and taxes goes to waste. This is one reason to move to money rents from rent in kind. But, unless the money rent can be used to buy a wider range of products, it too simply accumulates as a hoard of treasure. It provides the basis for the feudal lords to form a symbiotic relation with the growing merchant class, to explore the world, develop trade, and so bring back an increased range of exotic products that can be bought with the accumulated surplus. 

Once this global trade is established, and the feudal landlords, in alliance with the merchants, develop colonies, and colonial markets, the merchants themselves become the ones who source the manufactured goods to be exported, and the materials, foodstuffs and luxury products to be imported, which then leads to the idea that the wealth of the nation is derived from this trade, rather than the creation of surplus value in production. Those today who try to explain the wealth of the more developed capitalist economies by reference to this kind of unequal exchange, and super exploitation, also, thereby, fall back to a stage before Marx and even Smith, into the theories of the Mercantilists, like James Steuart, and their explanation of profit as profit on alienation

The reality was, of course, that the profit/surplus value was not primarily explained by exchange and profit on alienation, but by the fact that all commodities, whether sold in the domestic market, or traded internationally, already contain, as part of their value, the surplus value created in the production process, by labour. The sale of the commodity in the domestic market, or the export market, does not create the surplus value, it merely realises it as profit. This is recognised by the author of the pamphlet, as shown in the quotes given by Marx. 

““For do what you will, in a series of years the whole world can take little more of us, than we take of the world […] so that all your foreign trade, of which there is so much talking, never did, never could, nor ever can, add one shilling, or one doit to the wealth of the country, as for every bale of silk, chest of tea, pipe of wine that ever was imported, something of equal value was exported; and even the profits made by our merchants in their foreign trade are paid by the consumer of the return goods here” (op. cit., pp. 17-18).” (p 252) 

But, the author is still limited within the Ricardian framework, as described earlier, in relation to the expansion of the surplus product, and the process of accumulation. Essentially, the surplus product, in the hands of the capitalists, is viewed in similar terms to the surplus product in the hands of the feudal ruling class. In other words, it can only be exchanged for luxury imports, or, for a time, to finance the accumulation of fixed capital. So, the author writes, 

““…foreign trade is mere barter and exchange for the convenience and enjoyment of the capitalist: he has not a hundred bodies, nor a hundred legs: he cannot consume, in cloth and cotton stockings, all the cloth and cotton stockings that are manufactured; therefore they are exchanged for wines and silks; but those wines and silks represent the surplus labour of our own population, as much as the cloths and cottons, and in this way the destructive power of the capitalist is increased beyond all bounds:—by foreign trade the capitalists contrive to outwit nature, who had put a thousand natural limits to their exactions, and to their wishes to exact; there is no limit now, either to their power, or […] desires…” (loc. cit., p. 18).” (p 253) 

The significance of foreign trade here is the extent to which it facilitates not this diversification of consumption, for the rich, but the extent to which it broadens the range of use values, and of the market in total. 

“If surplus labour or surplus-value were represented only in the national surplus product, then the increase of value for the sake of value and therefore the exaction of surplus labour would be restricted by the limited, narrow circle of use-values in which the value of the [national] labour would be represented. But it is foreign trade which develops its [the surplus product’s] real nature as value by developing the labour embodied in it as social labour which manifests itself in an unlimited range of different use-values, and this in fact gives meaning to abstract wealth.” (p 253) 

Saturday, 15 June 2019

Theories of Surplus Value, Part III, Chapter 21 - Part 23

[c) The Merits of the Author of the pamphlet and the Theoretical Confusion of His Views. The Importance of the Questions He Raises about the Role of Foreign Trade in Capitalist society and of “Free Time” as Real Wealth] 

Marx begins with a long quote from the pamphlet, which sets out the argument previously advanced. That is, it assumes that the labour of a country can produce enough, in a year, to sustain its population for two years. The surplus product is in the hands of the capitalists, and exists for them as capital. But, the pamphlet argues, there is no reason for them to hand the surplus over to the workers unless the workers were to perform labour in exchange for it. Yet, there is no purpose in performing additional labour, which would then result in 2 year's surplus product sitting unsold in the market. It would be possible to employ the workers producing fixed capital, rather than any additional consumption goods, so that, over the year, the surplus product was consumed. However, in the following year, the workers would again produce enough consumption goods to sustain the population for two years, but now with the assistance of all the machines and other fixed capital produced the previous year, they would produce even more than that, so that now the surplus product would be even larger. 

They might again refrain from producing consumption goods, and engage in producing even more fixed capital, but each time this process is undertaken, the surplus product gets even larger, “... till men must cease from productive labour for a time, or the produce of their labour must perish, This is the palpable consequence in the simplest state of society” (op. cit., pp. 4-5). 

“The demand of other countries is limited, not only by our power to produce, but by their power to produce…” 

In other words, it is the reply to Say's claim that there cannot be overproduction of commodities, only under-consumption, resulting from underproduction elsewhere. 

As Marx described in Theories of Surplus Value, Part I, the reason the Physiocrats were able to uncover the source of surplus value in production, whereas, in Britain, the search for an explanation for it was undertaken by the Mercantilists, in the realm of exchange, is the different economies of the two countries. The Physiocrats were studying a French economy in transition from feudal agriculture to capitalist agriculture. It was this agricultural production that was the main feature of the country's economy, and source of its wealth. The physical characteristics of this production – a certain quantity of inputs at one end, a greater quantity of outputs at the other – made it fairly obvious where the source of the surplus derived from, i.e. production, even if it also encouraged false conclusions about the nature of value as being use value, rather than labour, and about the surplus itself being a product of the land, a free gift of nature, rather than being the product of surplus labour. 

When Britain replaced Holland as the premier mercantile power, it was equally understandable that the large amounts of money coming into the economy, in payment for the exports going out, would lead to theories that this surplus value was a consequence of exchange, or to be more precise unequal exchange, of the ability to sell at prices higher than the costs of production, and that the country was able to import the commodities it required, as means of production, and means of consumption, and then to export commodities at a higher price. 

Northern Soul Classics - Since You Showed Me How To Be Happy - Jackie Wilson

Friday, 14 June 2019

Friday Night Disco - What Am I Gonna Do With You - Barry White

Theories of Surplus Value, Part III, Chapter 21 - Part 22

Marx repeats, in this section, an argument he made in Capital I, but, as I explain in my book Marx's Capital Translated For The 21st Century, Vol I, the argument is quite simply wrong. Marx, in fact, repeats an error he had previously criticised in Senior and others. It is particularly noticeable here given that Marx has so extensively shown what is wrong with Smith's argument that the value of outputs resolve wholly into revenues, i.e. v + s, rather than into c + v + s. Marx says, 

“Let us assume that I have saved £500 from my wages. In fact, therefore, this sum represents not only accumulated labour but, in contrast to the “accumulated labour” of the capitalist, my own labour accumulated by me and for me. I convert the £500 into capital, buy raw material, etc., and take on workers. Profit is, say, 20 per cent, that is, £100 a year. In five years I shall have “eaten up” my capital in the form of revenue (provided new accumulation does not continuously take place and the £100 [profit] is consumed). In the sixth year, my capital of £500 itself consists of other people’s labour appropriated without any equivalent.” (p 251) 

But, as I set out in my book, this is completely wrong. As Marx himself sets out, in Capital I, concrete labour “preserves” the value of the constant capital, in the production process; it does not reproduce it, or produce a new value equal to it. It is the same error that Senior and others made in relation to the debate over, the Last Hour, as part of the struggle over the Ten Hours Bill, whereby they required labour to produce sufficient value not only to reproduce the value of their wages, and of profit, but also to produce an equivalent amount of new value to reproduce the value of the materials etc. consumed in production. Put another way, Marx's argument would be correct if the value of output were equal only to v + s, rather than c + v + s. The reality is that because labour preserves the value of the means of production, then, whether or not the workers produce surplus value, this value of c is reproduced in the value of output. 

Suppose that £500 is saved and turned into £300 of materials (c), and £200 means of consumption (v). Now suppose I then begin production on my own account. I consume from the £200 fund of consumption goods, until my production is complete, and I can sell the output. After a month, production is complete. I have only undertaken necessary labour required to produce £200 of new value, required to replenish my fund of consumption goods, so as to reproduce my labour-power. The value of my output is £300 (c), which I have merely “preserved” by my labour, the use value now having been metamorphosed into that of the final product, plus £200 of new value created by my labour. On selling the output for £500, I thereby reproduce the £300 of constant capital, and £200 of variable-capital, but not a penny of that has been reproduced from surplus value

The same would apply where wage workers were employed who produced no surplus value. In that case, unless I had revenue from elsewhere, I would not be able to consume, but, in that case, it makes more sense to describe any surplus value produced by those workers funding my personal consumption than to describe it as replacing the productively consumed constant capital. 

In fact, Marx's argument here seems peculiarly back to front. So, in relation to a portion of the surplus value being accumulated, he makes the odd claim that, 

“If, on the other hand, I had always accumulated half of the profit made, the process [of eating up my original capital] would have been slower, for I would not have consumed so much, and [the process of appropriating other people’s labour] more rapid.” (p 251) 

Marx sets out the following table.
Capital
Profit
Consumed
First Year
500
100
50
Second Year
550
110
55
Third Year
605
121
60
Fourth Year
665
133
66
Fifth Year
731
146
73
Sixth Year
804
160
80
Seventh Year
884
176
88
Eighth Year
972
194
97
569

But, what Marx should have concluded from this is not that the original £500 of capital was consumed more slowly, because less surplus labour was consumed unproductively, but that an increasing proportion of the capital is constituted wholly of appropriated labour. By Year 8, the reality is that each year the £500 of original capital created by primary accumulation has been turned over, and reproduced, along with surplus value. But, each year, an amount of unpaid labour, having been appropriated, has been accumulated as capital, so that by Year 8, whilst the £500 of original capital has continued to be turned over, an almost equal amount of capital is now working alongside it, all of which is the product of unpaid appropriated labour. 

Had the original £50 of profit continued to be consumed unproductively, the accumulation of that unpaid labour, as capital would be even more stark.
Capital
Profit
Consumed
First Year
500.00
100.00
50
Second Year
550.00
110.00
50
Third Year
610.00
122.00
50
Fourth Year
682.00
136.40
50
Fifth Year
766.40
153.28
50
Sixth Year
869.68
173.94
50
Seventh Year
1007.94
201.59
50
Eighth Year
1159.53
231.91
50
400

Now, whilst the original £500 of capital has continued to be turned over, each year, it represents less than half the total capital. £659 of the total capital is new capital, that has been entirely appropriated from unpaid labour. 

Marx concludes this section with another comment that illustrates the need to view social reproduction not only in abstract mathematical equations of value relations, but also recognising the role of quality as well as quantity, of taking into consideration questions of demand as well as supply of use value as well as exchange-value

“In considering surplus-value as such, the original form of the product, hence of the surplus product, is of no consequence. It becomes important when considering the actual process of reproduction, partly in order to understand its forms, and partly in order to grasp the influence of luxury production, etc., on reproduction. Here is another example of how use-value as such acquires economic significance.” (p 251-2) 

Thursday, 13 June 2019

Theories of Surplus Value, Part III, Chapter 21 - Part 21

Explaining why accumulation is not just an accumulation of variable-capital, Marx writes, 

“Let us suppose for example that a part of the surplus product of the farmer is exchanged for a part of the surplus product of the machine manufacturer. It is then possible that the latter will convert the corn into variable capital and employ more workers, directly or indirectly. On the other hand, the farmer has converted a part of his surplus product into constant capital, and it is possible that, as a result of this conversion, he will discharge some of his old workers instead of taking on new ones. The farmer may cultivate more land. In this case, a part of his corn will be converted not into wages, but into constant capital, etc.” (p 250) 

So, if the machine manufacturer produces 12 machines, they may require the value of 8 of these machines to be able to replace the wood, steel and so on used in the production of those 12 machines. They may require the value of 2 machines to be able to employ workers again, in the following year. A further machine's value may be required to provide them with the revenue required to cover their own personal consumption, in the year ahead. That leaves them with one further machine, and the value from that can enable them to buy additional materials, and employ additional labour-power, so as to build an increased quantity of machines. But, to do that, they must be able to first sell the twelfth machine. If the farmer is looking to expand their own production, then, just as the machine maker had this 12th machine available, so the farmer may have a 100 kilos surplus of grain, after they have sold all the grain required to cover the value of their own means of production, wages and personal consumption. 

The farmer might then exchange this surplus 100 kilos of grain for a machine. The machine maker now has an additional 100 kilos of grain, which they can use to employ additional workers, and to trade for additional materials, so that, next year, they may be able to produce 13 rather than 12 machines. But, as Marx sets out, the farmer, who now puts this machine to work, may require fewer workers, expend less capital as variable-capital, if the level of production remains the same. They will employ capital as fixed capital rather than variable-capital. On the other hand, the farmer might continue to employ the same amount of labour, and so the same amount of variable-capital, and same number of workers will cultivate a larger area of land. They will then need to plant additional seeds, use additional fertiliser and so on, so that rather than an accumulation of variable-capital, there is an accumulation of circulating constant capital.