Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 30

Revenue is equal to the labour undertaken in the year/National Income, which is equal to v + s, i.e. wages and profit (the latter dividing into rent, interest, taxes, and profit of enterprise), which is also equal to GDP, which measures not the value of output, but only the amount of value added by labour during the year. The total value of output, as Marx sets out, however, is equal not to v = s, but c + v + s, i.e., it also includes the value of all of that consumed constant capital – raw and auxiliary materials, energy, and wear and tear of fixed capital – produced in the previous year/s.

“Since, as we have seen, constant prices and simple reproduction on a given scale are assumed, the money value of the portion which is thus taken from the gross product is equal to two milliard livres. This portion, therefore, does not enter into general circulation. For, as we have noted, circulation which takes place merely within a particular class, and not between one class and another, is excluded from the Tableau.” (p 316)

In other words, the 2 milliards is the amount of consumed means of production/constant capital that must be replaced to maintain production on the same scale – simple reproduction. Given that in simple reproduction, all surplus value is consumed unproductively, the fallacy of the argument put forward by Michael Roberts, set out earlier, is obvious. If all surplus value is consumed unproductively, then, where would the demand for constant capital come from, according to Robert's schema, in which it all comes from profit?

In reality, as Marx sets out in Capital II, and Theories of Surplus Value, there are numerous exchanges – circulation – between producers, but the net effect is they cancel out so that it is the same as if each producer replaces their consumed constant capital, in natura, from their own production, in the same way that a farmer replaces seed from their own production of corn. For example, a coal producer replaces the coal consumed in their steam engines out of the coal they produce, using those steam engines. But, the coal producer also has to replace steel for worn out rails, and so on. They exchange coal for steel. Similarly, the steel producer replaces their own worn out equipment with steel from their own output, but they also replace the coal consumed in their furnaces with coal from the coal producer, exchanged for steel.

As Marx puts it, if all constant capital were produced by one enterprise, it would replace all of its consumed means of production, directly, from its own output. There would be no exchange with revenue/Department II, in respect of this part of its production. There would only be exchange with revenue/Department II, in respect of the replacement of Department II's constant capital, i.e. Department II (c) = Department I (v + s).

“After the replacement of the working capital out of the gross product there remains a surplus of three milliards, of which two milliards are in foodstuffs and one in raw materials. But, the rent which the farmers have to pay the landlords is only two-thirds of this sum, equal to two milliards. It will soon be seen why it is only these two milliards which figure under the heading of “net product” or “net income”.” (p 316)

Again, contrary to Duhring, the importance of analysing the Tableau, and the same applies to Marx's schemas of reproduction, in terms of material balances, and their replacement, is seen, here. Each cycle must begin with existing material balances, be they of raw materials, machines, buildings, and so on, required for production. You cannot produce unless you have something to produce with. It cannot be produced just by an act of current labour. Similarly, workers – and exploiters – cannot wait until production has taken place, before they can consume. At the very least, there must be existing material balances of food, available to consume, whilst production is undertaken.

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 29

Quesnay used actual prices for this production from the time.

“It comes to five milliard livres, a sum which roughly expresses the money value of the gross agricultural production of France based on such statistical estimates as were then possible. This and nothing else is the reason why Quesnay in his Tableau “operates with several milliards”, to be precise, with five milliards, and not with five livres tournois.” (p 315)

The significance of the assumption of constant prices is seen, here. Contrary to Duhring, the use of money prices is simply a mean of expressing the physical quantities more conveniently. The same is true in Marx's schemas of reproduction, where these same assumptions are made, and the money values represent only the money equivalent of the physical commodities being reproduced.

“The whole gross product, five milliards in value, is therefore in the hands of the productive class, that is, in the first place of the farmers, who have produced it by advancing an annual working capital of two milliards, which corresponds to an invested capital of ten milliards.” (p 315-6)

The ten milliards comprises, in addition to the 2 milliards of working-capital, the fixed capital. As Marx sets out, in Capital II, III, and Theories of Surplus Value, in calculating rates of turnover of capital, it is the circulating capital that is used, but, to calculate the annual rate of profit, it is the total advanced capital, including the fixed capital, that is used.

“The agricultural products—foodstuffs, raw materials, etc.—which are required for the replacement of the working capital, including therefore the maintenance of all persons directly engaged in agriculture, are taken in natura from the total harvest and expended for the purpose of new agricultural production.” (p 316)

Again, Marx uses this same methodology in his schemas of reproduction, and to illustrate Adam Smith's “absurd dogma”, that the value of commodities resolves entirely into revenues, and its concomitant that the total national output resolves entirely into National Income. The difference in Marx's analysis, given that he was discussing a developed industrial capitalism, in which the cottage industry of the agricultural labourer was not simply “auxiliary to agriculture”, i.e. there is no direct production and consumption, is that it is only the reproduction of the consumed constant capital that, in aggregate, is taken “in natura”, from the total output, and so has no revenue equivalent.

Given that it is this constant capital component that grows relative total output, at least quantitatively if not, necessarily, in value terms, the significance of that can be seen in considering the extent to which GDP is a misrepresentation of total output, as a result of Smith's “absurd dogma” being accepted by economists down to today. For example, Michael Roberts states,

“The demand for goods and services in a capitalist economy depends on the new value created by labour and appropriated by capital. Capital appropriates surplus value by exploiting labour-power and buys capital goods with that surplus value. Labour gets wages and buys necessities with those wages. Thus it is wages plus profits that determine demand (investment and consumption).”

It is quite clear that, as soon as we have an accumulation of constant capital (or, in pre-capitalist production, means of production), not provided gratis by Nature, as in hunter-gatherer societies, but as a result of labour expended on it, this constant capital has value, as seen in the earlier example. Wild corn may be a free gift of nature. Its only value is the labour that must be expended to gather it, for consumption, just as the value of the meat a tribe consumes is the labour it expends in hunting. But, as soon as wild corn is collected, but not all of it is consumed, and, instead, a portion is accumulated to be used as seed (means of production – constant capital) this seed, and its value is, then, consumed productively as raw material/means of production/constant capital, in the following year. It can have no revenue equivalent in the year in which its use-value/value is productively consumed, because its revenue equivalent existed in the previous year. Means of production/capital is always accumulated out of revenue, though, as Marx sets out, in Capital III, not necessarily from profit, as bourgeois ideology would have it.

The seed/means of production/constant capital set aside in Year 1, out of revenue, i.e. out of that year's labour, has a value determined by the labour expended on its production, i.e. collection of wild seed provided gratis by Nature. That value is preserved and reproduced in the corn produced in the following year, now the product of settled agriculture. That value can have no revenue equivalent in the year it is then consumed as seed. Its value, and its use-value, is reproduced, in natura, in the output of corn. As Marx puts it in Capital III, and Theories of Surplus Value, it is reproduced, “on a like for like basis”, out of capital, not out of revenue.

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SNNS 34

 

The Hypocrisy of NATO's Illegal War On Iran - Part 2

The introduction of national laws and rules, by the capitalist ruling-class, which created a “level playing field”, like all bourgeois right, is, as Marx describes it in The Critique of The Gotha Programme, a right not to equality, but inequality.

“But one man is superior to another physically, or mentally, and supplies more labour in the same time, or can labour for a longer time; and labour, to serve as a measure, must be defined by its duration or intensity, otherwise it ceases to be a standard of measurement. This equal right is an unequal right for unequal labour. It recognizes no class differences, because everyone is only a worker like everyone else; but it tacitly recognizes unequal individual endowment, and thus productive capacity, as a natural privilege. It is, therefore, a right of inequality, in its content, like every right. Right, by its very nature, can consist only in the application of an equal standard; but unequal individuals (and they would not be different individuals if they were not unequal) are measurable only by an equal standard insofar as they are brought under an equal point of view, are taken from one definite side only – for instance, in the present case, are regarded only as workers and nothing more is seen in them, everything else being ignored. Further, one worker is married, another is not; one has more children than another, and so on and so forth. Thus, with an equal performance of labour, and hence an equal in the social consumption fund, one will in fact receive more than another, one will be richer than another, and so on. To avoid all these defects, right, instead of being equal, would have to be unequal.”

Marx is not even talking about the conditions existing under commodity production, or capitalist production, here, but about the conditions that would exist under socialism, in its initial phases. It is the critique of the fundamental flaw in the concept of meritocracy, which, inevitably entrenches the existing natural abilities of some as against others. Under capitalism, there is no material basis for society seeking to go beyond this “equality of right”, which inevitably means an inequality of outcomes, given the actual “inequality of being”. It is the fundamental flaw of welfarism, which purveys the idea that such “equality of outcome”, or, at least, a mollification of inequality can be achieved, by a complex, inefficient, bureaucratic and costly system of taxes and benefits, itself requiring huge numbers of people involved in its administration, who could have been more usefully employed.

And, this is true in terms of imperialism too. The developed, capitalist economies, with their existing masses of fixed capital, let alone their more advanced technology, produce commodities whose individual value is much lower than that of the same commodities produced by less advanced capitalist countries, that have less fixed capital, and less advanced technology. But, in the world market, as in every market, commodities are sold not at their individual value, but at their market value (if we ignore the question of prices of production), as Marx sets out in Capital I and III. The large, monopoly-capitalist (imperialist) producers, can always sell their commodities at lower prices, and so undercut their smaller competitors.

The large, monopoly-capitalist (imperialist) producers, thereby, obtain surplus profits (rents), even though they often sell their commodities at prices slightly below that of their smaller competitors, and despite the fact that they can, as Engels described above, and as Marx set out in Capital I, pay their workers much higher wages, and provide them with better conditions. Marx noted that European textile workers, were paid wages only half that of English textile workers, and yet English textile production persistently undercut the European producers, and provided higher profits for English producers.

Demanding that less developed economies abide by the same rules and regulations and standards as the advanced capitalist economies, within the confines of a continuation of global capitalism, is as utopian as the welfarist demands for equal outcomes, for unequal individuals. It is simply a manifestation of that petty-bourgeois, social-democratic, managerialist ideology that the interests of capital and labour are the same, and require only a negotiation as to the process of distribution. It imposes the false concept of the idea of “the people”, as though the entire historical process of the differentiation of that “people”, into “bourgeois” and “proletarians”, that took place at an accelerating pace, from the 15th century onwards, had never occurred.

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 28

So now, to return to Engels' exposition.

“The first premise of the Tableau is that the farming system and with it large-scale agriculture as understood in Quesnay’s time, had been generally introduced, Normandy, Picardy, Île-de-France and a few other French provinces serving as prototypes. The farmer therefore appears as the real leader in agriculture, representing the whole productive (agricultural) class in the Tableau and paying the landlord a rent in money.” (p 314)

In other words, we have capitalist production, in agriculture. The social function of the landlord, in organising agricultural production, has ceased, and the landlords, now, simply receive capitalist ground-rent from the farmer, in the same way that, today, the social function of the private capitalist has ended, and the ruling-class of shareholders (owners of fictitious-capital) simply receive their revenues in the form of interest/dividends.

“An invested capital or inventory of ten milliard livres is assigned to the farmers as a whole; of this sum, one-fifth, or two milliards, is the working capital which has to be replaced every year—this figure too was estimated on the basis of the best-managed farms in the above provinces.” (p 314-5)

The “working-capital” is what Marx refers to, elsewhere, as circulating-capital. It is what is required for wages (variable-capital), raw materials, auxiliary materials (circulating constant capital) , and to cover the wear and tear of fixed capital. Because the physiocrats lump together the capitalist farmer with the agricultural labourers – as the productive class – they make no distinction between wages and profit in agriculture.

“Further premises: (1) that for the sake of simplicity constant prices and simple reproduction prevail; (2) that all circulation which takes place solely within one class is excluded, and that only circulation between class and class is taken into account; (3) that all purchases and sales taking place between class and class in the course of the industrial year are combined in a single total sum. Lastly, it must be borne in mind that in Quesnay’s time the home industry of the peasant family itself provided by far the greater portion of its needs other than food in France, as more or less in all Europe, and that it is therefore taken for granted here as accessory to agriculture.” (p 315)

The premise of constant prices simply removes the distraction of changes in productivity, which might lead to the previously discussed issues of tie-up or release of capital. It also removes the distraction of inflation, i.e. changes in the standard of prices. The premise of exchanges only between classes is, also, a simplifying assumption, were it not for the fact that the Physiocrats lump together the capitalists and labourers into the “productive” and “sterile” classes. In doing so, they fail to recognise the actual basis of the creation of surplus-value, in both these “classes”, as the surplus labour performed, and its appropriation by the capitalists.

The assumption of a single annual exchange between the classes is a simplifying assumption, and, in Marx's analysis in Capital and Theories of Surplus Value, he sets out the effects of breaking this down into multiple exchanges, during the year, on the circulation of money and capital. Marx' and Engels' analysis of the rate of turnover of capital is an extension of that.

The description of cottage industry as accessory to agriculture, indicates the extent to which industrial production of commodities was the preserve of the towns, and the “sterile class”, and provided means of production, and items of consumption, for the exploiting classes.

Its also notable, given the earlier discussion, that, in the Tableau, Quesnay's starting point is the total harvest, and is described as “total reproduction”, a phrase emphasised, here, also, by Engels. It is the basis of Marx's determination of value as “current reproduction cost”, and of his schemas of reproduction, in which what is reproduced is not money-values, but the physical elements of capital, i.e. the use-values.

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SNNS 33

 

Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 27

Elsewhere, I have set out the way in which a rise in productivity results in a release of capital. In other words, the opposite condition applies to that set out above. Higher productivity results in a fall in unit values, i.e. more use-values are produced by a given amount of labour, so that each unit contains less labour/value. That lower unit value, means that each unit of output has a lower value than the unit value/historic cost of the same use-values used in production, as inputs. Looked at in the same context as that set out above, as a snapshot, this seems to result in a reduction in the mass of profit, and fall in the rate of profit, just as, in the case of a crop failure, the reverse seems to be true. But, again, that is an illusion caused by a focus on money values/prices.

A rise in productivity, resulting in lower unit values, gives the appearance, if only a single year is considered, of reducing profit, but represents only a capital loss – the most obvious example of that is Marx's analysis of moral depreciation. But, on the basis of continuing production, this rise in productivity, and fall in unit values, means that a smaller portion of total output is required to replace the consumed constant and variable capital. It produces a release of capital. Although this release of capital manifests as an increase in profit, it is again, an illusion. But, the fact that it also reduces the value of labour-power means that it does raise the rate of surplus value, and so does raise the mass of profit. Moreover, any given mass of profit, now, represents a higher rate of profit, because the value of c and v are reduced, so that s/(c +v) rises. This is what happened in the 1980's and 90's.

The Physiocrats made the same mistake of failing to distinguish between labour and labour-power that continues in the work of Smith, and is found in the work of Proudhon. It manifests differently, because the Physiocrats were concerned with use-values, whereas Smith was concerned with values – though, as Marx sets out in Theories of Surplus Value, Smith, also, slips back into Physiocracy in places. The Physiocrats argued, as set out above, that 1,000 tons of corn is used as seed (constant capital), 1,000 tons as wages (variable-capital), but 3,000 tons is the output, with the 1,000 tons surplus mystically arising from the land, providing the basis for the owner of the land to obtain rent.

But, as set out earlier, this assumes that the 1,000 tons of corn paid as wages, which is equal to a value of 1,000 hours of labour, or £10,000, is the same as the new value created by that labour. It isn't. The value of labour-power, the use-value of being able to perform labour, is equal to the value of the 1,000 tons of corn required to reproduce that labour-power, i.e. is equal to 1,000 hours of labour. The workers, however, perform not this 1,000 hours required to reproduce their labour-power, but 2,000 hours, 1,000 hours of surplus labour, manifest in the surplus product of 1,000 tons of corn.

Suppose we go back to an initial condition where, as noted earlier, Nature provides its gifts freely. In other words, we have Nature, by its own evolutionary processes creating corn. Early humans are able to consume this corn, just as cows consume grass in a field, as a use-value, gratis. It has no value, no labour has been expended on its production. Value is just the label, the scientific term we give to this labour required to take the free gifts of Nature, and to enhance them, by transforming them in some way. It may be, for example, taking the seeds from plants, and, instead of relying on Nature to cast them, haphazardly, we plant them in dedicated areas, and tend them so as to raise the output.

In this case, we start with seed corn that has no value, no labour has been spent on it. To use the terms applicable to capitalist production c = 0. But, the first farmers must collect the seed, they must create seed drills into which they plant the seeds, and they must cultivate the seed, watering it and so on. This is labour over and above what is required simply to consume, i.e. to reproduce their labour-power (necessary labour).  If they collect a ton of seed, which, left to Nature, would have produced 2 tons of corn, and, by cultivating it, they may obtain 10 tons of corn. That represents an improvement in their real wealth of 500%.

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