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)

Wednesday, 17 October 2018

Ireland: No Border Means Abandoning Brexit, or Accepting a United Ireland

There is a simple truth that those who say there can be no border in Ireland have to recognise; it is that Brexit was all about erecting such borders!  If they really want no border in Ireland, they have to abandon Brexit.

Brexit is all about erecting borders where none previously existed, and hardening and extending borders where they already existed.  The core of the Brexit vote came from around 30% of the population who are bigots - not just on the question of nationalist bigotry and immigration, but as numerous surveys have shown also on questions such as homophobia, misogyny, climate change and so on.  The idea that this hardcore could have been, or might still be assuaged, by the EU granting some further appeasement of their racist beliefs in relation to free movement, as some liberals and conservative social-democrats have suggested, is pure wishful thinking, and just another reflection of the fact that they are remote from the views of this section of society, that their middle class safe spaces keep them separated from, and oblivious to.  It was illustrated by the actions of the more ignorant sections of that core, who, in the immediate aftermath of the Brexit vote, who could be found, accosting anyone with a darker skin, or a foreign sounding voice, and telling them "We've voted to leave, so it's time for you to go!"

However, some within that core might try to dress it up, and the Brexit vote has meant fewer of them now feel the need even to do that, their real concern is not over the numbers coming into the country, and so on, but is simply a fear, or a dislike of foreigners.  It is the same sentiment I have heard many times, from such sections of society, who complained about the fact that foreigners smell, because of the food they eat, their unclean habits, their willingness to occupy dwellings on an overcrowded basis and so on.  Those views, of course based not on facts - indeed usually held by people who do not live in communities where there are immigrants - are what constitutes bigotry, and it is what makes them all the more willing to accept all of the attendant ideas about immigrants taking away jobs, living off benefits, getting privileges, being the cause of housing shortages, hospital waiting lists, and so on.  For these elements, Brexit is about erecting a border, to keep out all of these alien intruders, erecting a safe space around themselves, even though the reality is that, in doing so, they will merely make worse, all of the actual causes of the many problems that capitalism throws at them.

For all of the small businesses, the so called plethora of white van men, many of whom have fallen into the precarity of self-employment, because Tory austerity led to an erosion of properly paid, full-time employment, or those just above them, who scrape buy only because they are able to pay rubbish wages to a few employees, kept on poor conditions, and subsidised by in-work benefits, the desire to erect new borders amounts to nothing more than a desire to isolate themselves from competition from bigger, more efficient firms, and from the minimal protections for workers, consumers, and the environment that the EU provides, and which they hope a right-wing Tory government will sweep away for them.

The claims put forward by the Tories, and unfortunately by Labour, of wanting to simultaneously put themselves outside the borderless confines of the EU, and thereby erect new borders between the EU, and UK, so as to appease these bigoted views, in relation to immigrants, by ending free movement, whilst also having free access to the single market of the EU, is simply a self-centred, arrogant desire to have cherry cake, and eat it.  

In Ireland, that becomes abundantly clear.  Theresa May is trying to frame the choice as between a bad deal and no deal.  Whether that bad deal is her Chequers Plan, which she seems to no longer mention, because it's clear she does not even have support for it amongst her Cabinet, let alone Tory MP's, or the EU, or is something even worse, such as some Canada style free trade agreement, the result will be additional borders, additional restrictions, and a contradiction with the requirements of the Good Friday Agreement in relation to the Irish border.  The truth is that MP's can refuse to allow May, and the Brextremists to make any parliamentary vote such a binary choice, but as I wrote recently, if backed into a corner, they should vote for No Deal, rather than a bad deal, making clear why they had been forced to do so, and that responsibility for that rests entirely with May's government.

Similarly, May and the Brextremists are saying they do not want a border in Ireland.  But all of their proposals ensure that such a border has to exist.  On the one hand, they refuse to agree to staying inside the Customs Union and Single Market, on the other, they object to the idea of a border between Ireland and the UK mainland.  They claim that this is because they cannot accept the idea of Northern Ireland being separated from the rest of the UK, because that would amount to a break-up of the UK.  In fact, the logic of the Tories, and DUP stance is to ensure a break-up of the UK.  If they will not keep the whole of the UK in the Customs Union and Single Market, and they will not accept a separate settlement for Northern Ireland, to do so, then the only way there can be no border in Ireland, is for there to be a United Ireland.  That would mean not just a temporary, and partial separation of Northern Ireland from the rest of the UK, but a permanent separation.

The Brextremists say, in the event of a No Deal Brexit, Britain would not erect a border between the North and the Republic, thereby daring the EU to erect such a border.  That is typical of the way the Brextremists have tried to use Northern Ireland as a trojan horse in their negotiations over Brexit from the start.  (It is also typical of the way they have tried to claim that it is up to the EU to find ways of getting them out of the contradictions that Brexit has thrown up, in general, rather than accepting responsibility for those contradictions themselves.  The truth is, as I wrote, recently, that a no border, in Ireland, in the event of a No Deal, would directly contradict one of the main reasons the Brextremists had, which is to stop immigration.  The lack of a border, would simply mean that unlimited numbers of EU citizens could just use Ireland as a gateway into the UK, using the Common Travel Area as their conduit.

The Tories and Brextremists think that by posing the question in this threatening tone, they place responsibility on others to resolve their dilemma.  The truth is that a sizeable majority in Northern Ireland voted for Remain.  The unionist parties in Northern Ireland are now in a minority, in relation to the nationalist and republican parties.  There is no basis for the DUP being able to hold the people of Northern Ireland to ransom, with their bigoted views, and minority position, in relation to Brexit, let alone being able to hold the rest of the UK to ransom.  If the Tories and Brextremists push through a No Deal Brexit, the next step is obvious, in Ireland.  It is for the convening, in short order, of a border poll.  A recent survey showed a majority in Northern Ireland in favour of such a border poll, if a hard Brexit is pushed through.  That would be the obvious solution.  It would resolve the question of the Irish border, by removing it entirely by the creation of a United Ireland.  That would leave the rump of the UK to go their own way, and under such conditions, its likely that Scotland would also demand a second independence referendum, in order also to remain inside the EU.

For a unionist party, the Tories are doing everything they can to break apart the United Kingdom, in order merely to deal with the internal Tory party squabbles of Europe.

Theories of Surplus Value, Part II, Chapter 18 - Part 20

None of the producers who see demand for their output decline, as part of this process, see a part of their capital released. If demand for any of these commodities declines, because the unemployed workers no longer have wages to spend, the effect is to reduce the market price of these commodities, as the supply exceeds that demand. The lower price means that the realised profit falls and maybe the capital consumed in the production cannot be reproduced. In itself that reduces the revenue – profit – of the capitalist, in that sphere, and if the capital cannot be reproduced, and production is cut back, it will mean workers are laid off, and their revenue – wages – also fall. 

Marx emphasises again the point made in Capital II, that what confronts the workers, in particular, here, the discharged workers, in the shape of the commodities being sold, is not capital. Workers do not exchange their commodity – labour-power – for capital. The variable-capital, whether it is in the form of commodities paid directly to the workers as wages in kind, or more commonly in the form of a money wage, equivalent to the value of these commodities, is only capital for the capitalist. What the worker receives is not capital, but only commodities, or their money equivalent. What the worker sells is not capital, but only a commodity. That commodity – labour-power – only becomes capital in the hands of the capitalist, so that in the process their money-capital is metamorphosed into productive- capital

“What confronted the workers as capital, was a part of the commodity now being produced with machinery; this part came to them in the form of money and was exchanged by them for other commodities (means of subsistence), which did not face them as capital, but confronted their money as commodities. This is therefore an entirely different relationship. The farmer and any other producer whose commodity they bought with their wages, did not confront them as capitalist and did not employ them as workers. 

They have only ceased to be buyers for him, which may possibly—if not counterbalanced by other circumstances—bring about a temporary depreciation in his capital, but does not set free any capital for the discharged workers. The capital that employed them “is still in being”, but no longer in a form in which it resolves into wages, or only indirectly and to a smaller extent. 

Otherwise anyone who through some bad luck ceased to have money, would inevitably set free sufficient capital for his own employment.” (p 564)