Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 31

The production of the current year, assuming simple reproduction, i.e. no accumulation of capital, must first replace those material balances, i.e. must replace the physical use-vales that comprise the means of production (c), and of consumption, (v + s). The physical replacement of these use-values is effected by labour undertaken in the current year, but its value is necessarily greater than the value newly created in the current year, precisely because it includes the value of the consumed constant capital produced in the previous year/s. It does not include the value of the consumed means of consumption, produced in the previous year, because it forms no part of the output of the current year. It is consumed by workers and exploiters to reproduce themselves, but it is not a part of new value production itself.

It is not labour-power that creates new value, but labour. Only the new value created by labour in the current year forms a part of the value of output (v + s), in addition to the preserved value of the consumed constant capital.

So, at the starting point of the Tableau, there are existing material balances of stocks of food and raw materials. Part of these are in the hands of the farmers – the 2 milliards of working-capital. Another part is in the hands of the landlords, who must also consume prior to current production and the payment of their rent out of it. Finally, a part is in the hands of the “sterile class”, the industrial capitalists and workers, in the form of food and raw materials.

Similarly, there are material balances of industrial products. Because the Physiocrats assumed that the “productive class” met its consumption needs from direct production, its stocks of industrial products comprise only means of production. The sterile class also holds stocks of industrial products, both as means of production and consumption. As with Marx's analysis in Capital II, III and Theories of Surplus Value, there are, of course, material balances existing, also, in the form of fixed capital. But, the large part of this fixed capital does not need to be replaced during the year, because only a small part of the fixed capital is consumed, i.e. wear and tear. So, if there are 10 ploughs comprising the fixed capital, and the average life of a plough is 10 years, only 1 plough per year, on average, needs to be replaced out of current production.

Marx sets out that the circuit of industrial capital begins and ends with material balances.  In between, production transforms them into new commodities.  The surplus product and surplus value is the result of surplus labour being undertaken in that process.

In the current year, the gross product of agriculture was 5 milliards, and 2 milliards replaced the working-capital (consumed c + v). Of the remaining 3 milliards, 2 are in food, and 1 in raw materials. The productive class must, however, replace the material balances of agricultural products in the hands of the landlords and sterile class. The farmers pay 2 milliards to the landlords as rent. Because the Physiocrats only see agricultural labour as productive, and the source of the surplus product/value, arising from the land, they see only this 2 milliard as “Net Income”. In other words, it is equal to the surplus product, gifted by the land, and the landowners appropriate it as rent.

“But before the movement described in the Tableau begins, there is also the whole "pécule", two milliards of cash in the hands of the farmers, in addition to the “total reproduction” of agriculture amounting to five milliards in value, of which three milliards enter into general circulation.” (p 316)

As I have set out, elsewhere, if there is only one transaction a year, for example, the farmers buy £1,000 of industrial products from the sterile class, then, the farmers must have this £1,000 as a money hoard. The fact that the sterile class, then, buys £1,000 of agricultural products from the farmers does not change that, but, simply, means that, now, the farmers receive back this same £1,000, replacing their initial cash balance. However, if the farmers buy £100 of industrial products, they only need £100 in cash. Then, this £100 comes back to them, and they can use it again to buy £100 of industrial products. So, instead of 1 transaction per year, 10 transactions per year means that only £100 of money is required. It is why Marx notes that the velocity of circulation of currency is inextricably tied to the rapidity of transactions, i.e. PT = MV.

Back To Part 30

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.

Back To Part 29

Forward To Part 31

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.

Back To Part 28

Forward To Part 30

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.

Back To Part 1

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.

Back To Part 27

SNNS 33