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) 

Tuesday, 16 October 2018

Theories of Surplus Value, Part II, Chapter 18 - Part 19

The revenue first assumes the form of commodities. In other words, take a spinner who produces yarn. The yarn they produce is sold, and the money received goes partly to buy wool or cotton, partly to cover wear and tear of machinery, whilst part goes as revenue – wages to workers, profits to capitalists. If a machine is introduced, this still applies. They produce yarn, which is sold, and a portion of the money received goes to buy cotton, a part to cover wear and tear, and another part is revenue as wages and profit. The difference here is more goes to wear and tear, and less goes to wages. 

“With some exceptions in agriculture, he will produce more of these commodities than before, although his discharged workers have ceased to consume, and therefore to buy his own articles, though they did so before. More of these commodities will now be present on the market, although for the workers thrown on the street, they have ceased to exist [as objects of consumption] or have ceased to exist in their previous quantity.” (p 562) 

The excess supply of these commodities can, as previously described, be consumed in greater quantities by other classes, or workers still in employment, or they might be exported. But, there is no necessity that this will be the case. The commodities consumed as wage goods by workers may already be consumed in sufficient quantities by capitalists, landlords and rentiers. The price of such goods may have to fall substantially before they would buy any more of them. If wages fall, as a result of machinery causing unemployment, other workers may not be in a position to increase their demand. But, capitalists may take on more unproductive workers as domestic servants etc. that will absorb some of the excess. Some of the excess may be exported, but this only widens the potential crisis, if oversupply exists simultaneously in several important countries. The increased supply, at a time when the reduction in employment brings about a reduction in demand illustrates the potential for crisis. 

“If the increase in commodities through machinery and the decrease in a previously existing demand (namely in the demand of the workers that have been discharged) for the commodities produced by this machinery were contradictory, then in most cases, no machinery could in fact be introduced. The mass of commodities produced and the portion of these commodities which is reconverted into wages, therefore, have no definite relationship or necessary connection, when we consider the capital of which a part is transformed into machinery instead of into wage labour.” (p 563) 

In other words, although this illustrates the potential for crisis, it does not necessitate a crisis, because although the displaced workers cannot consume this surplus product, other consumers can. Moreover, as with the instance cited above, where more domestic servants are taken on, the surplus commodities can be consumed in other ways. And, that can also take the form that capital currently involved in producing a type of commodity that constitutes a wage good becomes involved in production of a similar commodity, but which represents a luxury item consumed by capitalists. So, as a result of the introduction of a machine, output rises, but workers are laid off, reducing demand. Unless the demand is made up from somewhere, the price of the commodity will fall. If the supply continues to exceed the demand, the price and profit will fall, and capital will reduce production. But, having done so, it might move to simply a more luxury version. In the 1970's, I worked for a large pottery manufacturer, and its products ranged in price from a £1 dinner plate, in one range, to a £1,000 dinner plate in the most expensive range. 

“Perhaps more meat or commercial crops or luxury foods are produced [and] less wheat or more oats for horses etc. or fewer fustian jackets and more bourgeois frock-coats. But none of these consequences need necessarily materialise, if, for instance, as a result of the cheapening of cotton goods, the employed workers are able to spend more on food etc. The same quantity of commodities and even more of them—including those consumed by the workers—can be produced, although less capital, a smaller portion of the total product, is transformed into variable capital, that is laid out in wages! (p 563-4) 

For the smarter producers, the same effect can be obtained by stratified marketing. Soap powder producers put the same product into different boxes, with just a slightly different scent, and use marketing to sell the same product, at different prices, to different segments of the market. Car makers always have a range of models from basic through to high end luxury or sports cars. When workers have less wages to spend, the car companies can always produce fewer basic models, and use their capital to produce more high end luxury and sports cars, aimed at those who have obtained more in profits, interest and rent

Monday, 15 October 2018

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

And, its on this basis that a new expansion takes place. As part of this new expansion, absolutely more labour is employed, even as relatively less labour is employed, precisely because capital and output expands by an even greater degree. Marx's criticism of capital is not that it creates poverty (as for example the Lassalleans argued).  On the contrary, Marx shows that capitalism creates wealth and raises living standards, far more than any previous mode of production. The criticism is that a) it does this chaotically, and through a series of crises, in which the constraints of the system itself have prevented further expansion, and those constraints are breached via the crisis, and b) because, at the same time as raising living standards of workers, it reduces their wealth, their capacity to own and control, individually, the means of production. It illustrates how the increasing socialisation of production, and consequent development of socialised capital, as it bursts asunder the constraints of the monopoly of private capital (the expropriation of the expropriators), can only be rationally transformed into a corresponding change in the social relations that arise upon those changed productive relations, with that socialised capital itself, having to be collectively organised, and controlled by the associated producers in each company. It illustrates how the existing society creates the material conditions, and social forms required for its own transcendence

The gross income consists of wages, profit and rent, whilst the net income consists only of surplus value (profit, rent, interest, taxes). It is quite possible then for gross income to fall, whilst net income rises. It only requires that wages fall more than the fall in gross income. Ricardo was quite wrong then to think that machinery only has a negative effect on workers where it causes the gross income to fall. A fall in wages, or the wage share, as workers are replaced by machines, may leave a surplus product on the market, but this surplus could be exported, or consumed by members of other classes, or indeed, employed workers. 

“The quantity of articles entering into consumption or, to use Ricardo’s expression, the quantity of articles of which the gross revenue consists, can be increased, without a consequent increase in that portion of this quantity which is transformed into variable capital. This may even decrease. In this case more is consumed as revenue by capitalists, landlords and their retainers, the unproductive classes, the state, the middle strata (merchants) etc.” (p 561) 

The error of Ricardo and Barton, following on from Smith, is that they see the accumulation of capital as synonymous with the accumulation of variable-capital. But, along with the accumulation of capital goes a rise in the organic composition of capital, at least, at the time Marx was writing, where economies were dominated by material production rather than service industry. Even in periods when there is no revolution in technology, social productivity rises, even with extensive accumulation, because of economies of scale, greater division of labour, and gains from co-operative labour. Higher productivity alone raises the organic composition of capital, because, by definition, it means more material is processed by a given quantity of labour. As a result, output rises faster than the growth of labour, and wages. Revenue, i.e. commodities destined for personal consumption, rises, along with the general growth of output, but, this rise in revenue, therefore, does not imply a rise in wages. Wages, or wage share, may or may not rise absolutely, but will fall relatively. A larger proportion will fall to other classes, so that their living standards rise relative to workers, and they will have more of this revenue available itself to be converted into capital and accumulated.