Monday, 24 September 2012

Capital I, Chapter 11 - Part 2

Capital is divided into Constant and Variable Capital as analysed in previous chapters. The proportions between them vary in different types of production. For example, modern car production uses a lot of Constant Capital in the form of buildings, robots, assembly areas, materials and so on, and relatively little in the way of Variable Capital. Apple and other high tech producers use relatively little in the way of Constant Capital, but use relatively large amounts of Variable Capital – lots of developers, analysts, programmers, designers etc – and because these types of labour are highly complex, each hour of their labour-time is equivalent to many hours of simple labour. Put another way, each average worker employed by Apple and other such high tech, high value company is equivalent to many simple labourers.

In addition, even in the same branch of production, the proportion between Constant and Variable Capital varies because technical change occurs, which means that what were once labour intensive types of production become capital intensive instead. At one time, economies employed around 80% of people in agriculture. In Britain today, just 0.7% of the population is employed in Agriculture. Yet, agricultural production is much higher in Britain today than it was prior to the Industrial Revolution. Similarly, in the 19th Century, most of these agricultural workers moved to become employed in manufacturing. That was a process, which the Malthusians argued must end in disaster. Of course, it did not, because agricultural production increased astronomically, in part because of the introduction of capital equipment, and chemicals produced by manufacturing industry. But again, in manufacturing Capital replaced Labour, so that now in Britain only 21.4% of the population is employed in manufacturing, but again the value of manufacturing output is higher than it was! Today, 78% of the population are employed in Services, and once again, Capital is replacing Labour in all of these areas too.

But in whatever proportion a given capital breaks up into a constant and a variable part, whether the latter is to the former as 1:2 or 1:10 or 1:x, the law just laid down is not affected by this. For, according to our previous analysis, the value of the constant capital reappears in the value of the product, but does not enter into the newly produced value, the newly created value product. To employ 1,000 spinners, more raw material, spindles, &c., are, of course, required, than to employ 100. The value of these additional means of production however may rise, fall, remain unaltered, be large or small; it has no influence on the process of creation of surplus value by means of the labour-powers that put them in motion. The law demonstrated above now, therefore, takes this form: the masses of value and of surplus value produced by different capitals — the value of labour-power being given and its degree of exploitation being equal — vary directly as the amounts of the variable constituents of these capitals, i.e., as their constituents transformed into living labour-power.” (p 290)

This appears to contradict all experience.

Everyone knows that a cotton spinner, who, reckoning the percentage on the whole of his applied capital, employs much constant and little variable capital, does not, on account of this, pocket less profit or surplus value than a baker, who relatively sets in motion much variable and little constant capital. For the solution of this apparent contradiction, many intermediate terms are as yet wanted, as from the standpoint of elementary algebra many intermediate terms are wanted to understand that 0/0 may represent an actual magnitude.” (p 290)

What Marx is referring to here is that Capitals of equal magnitude tend to obtain the same rate, and consequently amount of profit, irrespective of how much Variable Capital they employ. The resolution of this apparent paradox is provided in Volume III of Capital, where Marx demonstrates that competition acts to share out the total amount of Surplus Value between these different Capitals, and in the process establishes “Prices of Production” separate from Exchange Values, which then take the place of the latter, as the pivot around which market prices fluctuate. This is the so called “Transformation Problem.”

If we take the total number of workers in a country and a given length of working day, then these workers can be considered as a single collective worker, and their labour as a single collective work day. So, if there are 1 million workers, and a 10 hour day we have a collective 10 million hour day. If we assume that all labour is simple labour, then this limit is set by the growth of population, and the amount of surplus value, by this and the possible lengthening of the working day. As Marx says in examining Relative Surplus Value, it will be seen that this is not exactly true.

I would again point out here that this also only applies in relation to simple labour. As I demonstrated in my Reply To Dr. Paul Cockshott the population could be falling, but if via education, training etc. and consequent changes in the nature of production and consumption, simple labour is replaced by complex labour, then the collective working day and collective surplus value can rise, and possibly rise substantially. For example,

1 million simple labours working 10 hours = A collective working day of 10 million hours.

10,000 David Beckham's working 10 hours = A collective working day of 100 million hours, if each Beckham hour = 1000 hours of simple labour.

Not all money or value can be turned into Capital. If a worker needs to work 8 hours to reproduce the value of their labour power, and also works 4 hours producing surplus value, the capitalist, to live only as well as the worker, off this surplus value, would have to employ 2 workers i.e. 2 x 4 hours surplus value = 8 hours necessary labour time, to buy those necessities. But, capital needs to expand not just feed the capitalist.

So, to live twice as well as a worker, and convert half the surplus value into capital, the capitalist would have to increase the minimum amount of capital employed 8 times. That is not just the amount required to employ 8 workers, but also to provide them with the necessary amount of constant capital. The capitalist could, and they did work themselves.

..but he is then only a hybrid between capitalist and labourer, a “small master.” A certain stage of capitalist production necessitates that the capitalist be able to devote the whole of the time during which he functions as a capitalist, i.e., as personified capital, to the appropriation and therefore control of the labour of others, and to the selling of the products of this labour.The guilds of the middle ages therefore tried to prevent by force the transformation of the master of a trade into a capitalist, by limiting the number of labourers that could be employed by one master within a very small maximum. The possessor of money or commodities actually turns into a capitalist in such cases only where the minimum sum advanced for production greatly exceeds the maximum of the middle ages. Here, as in natural science, is shown the correctness of the law discovered by Hegel (in his “Logic”), that merely quantitative differences beyond a certain point pass into qualitative changes." (p 292)

Marx elaborates a principle that applies today.

The minimum of the sum of value that the individual possessor of money or commodities must command, in order to metamorphose himself into a capitalist, changes with the different stages of development of capitalist production, and is at given stages different in different spheres of production, according to their special and technical conditions. Certain spheres of production demand, even at the very outset of capitalist production, a minimum of capital that is not as yet found in the hands of single individuals. This gives rise partly to state subsidies to private persons, as in France in the time of Clobber, and as in many German states up to our own epoch, partly to the formation of societies with legal monopoly for the exploitation of certain branches of industry and commerce, the forerunners of our modern joint stock companies." (p 293)

This is relevant today in a number of aspects. For example, we see in many established industries high barriers to entry due to the minimum amount of capital required. Its impossible to enter mass car production without hundreds of millions of pounds of capital for instance. On the other hand, Microsoft began in Bill Gates' parents garage. Similarly, many areas of production would not start without state support, or the state taking them on. For example, there would have been no space industry without the US and Soviet states engaging in that activity.

Capital further developed into a coercive relation, which compels the working class to do more work than the narrow round of its own life-wants prescribes. As a producer of the activity of others, as a pumper-out of surplus labour and exploiter of labour-power, it surpasses in energy, disregard of bounds, recklessness and efficiency, all earlier systems of production based on directly compulsory labour.

At first, capital subordinates labour on the basis of the technical conditions in which it historically finds it. It does not, therefore, change immediately the mode of production. The production of surplus value — in the form hitherto considered by us — by means of simple extension of the working day, proved, therefore, to be independent of any change in the mode of production itself. It was not less active in the old-fashioned bakeries than in the modern cotton factories.” (p 293)

Capitalist production and the production of surplus value changes the relation of the worker to the means of production. Outside Capitalism, the worker utilises the means of production to achieve his goal, the creation of some new Use value. He does not relate to them as Capital, but merely as a means to an end, means of production.

But, under Capitalism, the worker relates to them as capital. Now, the means of production are the means of absorbing the workers' labour, in order to create value and surplus value. Instead of the worker employing the means of production to achieve his end, of creating a new Use Value, the means of production (Capital) employs the worker to achieve its end of creating Exchange Value, and Surplus Value.

It is now no longer the labourer that employs the means of production, but the means of production that employ the labourer. Instead of being consumed by him as material elements of his productive activity, they consume him as the ferment necessary to their own life-process, and the life-process of capital consists only in its movement as value constantly expanding, constantly multiplying itself. Furnaces and workshops that stand idle by night, and absorb no living labour, are “a mere loss” to the capitalist. Hence, furnaces and workshops constitute lawful claims upon the night-labour of the work-people. The simple transformation of money into the material factors of the process of production, into means of production, transforms the latter into a title and a right to the labour and surplus labour of others.” (p 293-4)

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