Wednesday, 26 September 2012

Capital I, Chapter 12 - Part 1

Production Of Relative Surplus Value

1) The Concept of Relative Surplus Value

Up to now, the analysis has assumed that the amount of Necessary Labour-time, required to reproduce Labour-power, was constant. The analysis began with an historical analysis of the length of the working day, which showed that its length was variable. The determination ultimately turns on the relative strength of Labour and Capital, which in turn depends on the demand for and supply of labour-power. Surplus labour-time is then the difference between the actual working day, and the amount of necessary labour-time.

When capital has developed to the stage whereby a normal working day is established, according to the objective laws Marx described in Chapter 10, it appears that the only way to expand the mass of surplus value is to increase the number of workers – or to increase the proportion of complex to simple labour – employed.

Cobden & Bright led the political struggle of the
industrialists against the landowners for the Repeal
of the Corn Laws, which kept food prices high, and
 thereby kept the Value of Labour-power high.
However, there is another means of increasing both the mass and rate of surplus value, that, in fact, is more effective than lengthening the working day. That is by reducing the proportion of the working day required as necessary labour-time. To be clear, this is not a question of simply cutting wages. Marx continues to insist that Labour-power, like every other commodity, is sold at its value. That value, as we have seen, is determined by the amount of socially necessary labour-time required for its reproduction. In the case of labour-power, that is the SNLT required to produce all of the food, shelter, clothing, education, entertainment and so on required to reproduce workers in the quantity, and to the standard that capital requires at the particular time. So, if the cost of producing these things can be reduced – whilst maintaining their quality – the value of labour-power falls. The proportion of the working day required as necessary labour-time falls, leaving a bigger proportion of the day as surplus labour-time.

Suppose the working day is 12 hours long. 10 hours are required as necessary labour-time, leaving 2 hours as surplus labour-time. Now, if the cost of producing the wage goods needed by the worker can be reduced by 10%, so that only 9 hours of the day are required as necessary labour-time, this will leave 3 hours as surplus labour-time, an increase of 50%! The rate of exploitation has gone from 2/10 = 20%, to 3/9 = 33.3%. Yet the worker is, in absolute terms, no worse off. They continue to consume the quantity and quality of commodities, that they did before. But, these commodities are now 10% cheaper, allowing capital to reduce nominal wages by 10%, whilst real wages stay constant. Of course, the worker is relatively worse off, because they are now handing over 3 hours of their labour-power to the capitalist for free, whereas before they were only handing over 2.

In fact, as Marx demonstrates, on this basis, real wages can and do rise, whilst the rate and amount of profit rises simultaneously. It was on this basis that Marx opposed the idea of immiseration of workers contained in Lassalle's “Iron Law of Wages”, and against which Marx commented, in the Critique Of The Gotha Programme Chapter 2,

It was made clear that the wage worker has permission to work for his own subsistence—that is, to live, only insofar as he works for a certain time gratis for the capitalist (and hence also for the latter's co-consumers of surplus value); that the whole capitalist system of production turns on the increase of this gratis labor by extending the working day, or by developing the productivity—that is, increasing the intensity or labor power, etc.; that, consequently, the system of wage labor is a system of slavery, and indeed of a slavery which becomes more severe in proportion as the social productive forces of labor develop, whether the worker receives better or worse payment. And after this understanding has gained more and more ground in our party, some return to Lassalle's dogma although they must have known that Lassalle did not know what wages were, but, following in the wake of the bourgeois economists, took the appearance for the essence of the matter.

It is as if, among slaves who have at last got behind the secret of slavery and broken out in rebellion, a slave still in thrall to obsolete notions were to inscribe on the program of the rebellion: Slavery must be abolished because the feeding of slaves in the system of slavery cannot exceed a certain low maximum!”

Marx calls the extraction of surplus value, by lengthening the working day, Absolute Surplus Value, and by reducing the value of labour power, Relative Surplus Value.

As stated above, this cannot be achieved simply by cutting wages.

This result, however, would be obtained only by lowering the wages of the labourer below the value of his labour-power. With the four shillings and sixpence which he produces in nine hours, he commands one-tenth less of the necessaries of life than before, and consequently the proper reproduction of his labour-power is crippled. The surplus-labour would in this case be prolonged only by an overstepping of its normal limits; its domain would be extended only by a usurpation of part of the domain of necessary labour-time. Despite the important part which this method plays in actual practice, we are excluded from considering it in this place, by our assumption, that all commodities, including labour-power, are bought and sold at their full value. Granted this, it follows that the labour-time necessary for the production of labour-power, or for the reproduction of its value, cannot be lessened by a fall in the labourer’s wages below the value of his labour-power, but only by a fall in this value itself.” (p 297-8)

This reduction in value requires an increase in the productivity of labour.

For example, suppose a shoe-maker, with given tools, makes in one working day of twelve hours, one pair of boots. If he must make two pairs in the same time, the productiveness of his labour must be doubled; and this cannot be done, except by an alteration in his tools or in his mode of working, or in both. Hence, the conditions of production, i.e., his mode of production, and the labour-process itself, must be revolutionised. By increase in the productiveness of labour, we mean, generally, an alteration in the labour-process, of such a kind as to shorten the labour-time socially necessary for the production of a commodity, and to endow a given quantity of labour with the power of producing a greater quantity of use-value. Hitherto in treating of surplus-value, arising from a simple prolongation of the working day, we have assumed the mode of production to be given and invariable. But when surplus-value has to be produced by the conversion of necessary labour into surplus-labour, it by no means suffices for capital to take over the labour-process in the form under which it has been historically handed down, and then simply to prolong the duration of that process. The technical and social conditions of the process, and consequently the very mode of production must be revolutionised, before the productiveness of labour can be increased. By that means alone can the value of labour-power be made to sink, and the portion of the working day necessary for the reproduction of that value, be shortened.” (p 298-9)

In order for this improvement in productivity to reduce the value of labour power it must reduce the value of wage goods. But, that does not mean just a rise in productivity in these industries will have this effect. For example, productivity in shoe making might remain constant, but if productivity in leather production rises, the cost of the leather in shoes will fall, bringing about a fall in the value of shoes themselves.

Marx says,

But the value of a commodity is determined, not only by the quantity of labour which the labourer directly bestows upon that commodity, but also by the labour contained in the means of production. For instance, the value of a pair of boots depends not only on the cobbler’s labour, but also on the value of the leather, wax, thread, &c. Hence, a fall in the value of labour-power is also brought about by an increase in the productiveness of labour, and by a corresponding cheapening of commodities in those industries which supply the instruments of labour and the raw material, that form the material elements of the constant capital required for producing the necessaries of life. But an increase in the productiveness of labour in those branches of industry which supply neither the necessaries of life, nor the means of production for such necessaries, leaves the value of labour-power undisturbed.” (p 299)

If the value of one commodity, that forms part of the workers' consumption, falls, then this can only reduce the value of labour power in proportion to the significance of that commodity in relation to the workers' total consumption. For example, suppose the necessary labour-time amounts to 10 hours. Of that 1 hour is required to cover the purchase of clothing. If productivity in clothing production doubles, so that only 1/2 hour is now required, this only reduces necessary labour-time from 10 hours to 9.5 hours, a fall of 5%. However, if 5 hours are required to cover food, and the cost of food is halved, then only 2.5 hours are required, which brings about a 25% reduction in the value of labour-power.

This reduction in the value of labour-power does not reduce the value of other commodities. The labour-time required for their production remains the same. It is only the labour-time required to reproduce labour-power -the necessary labour-time – that falls, and it is this consequence that, thereby, increases the amount and rate of surplus value.

This general result is treated, here, as if it were the immediate result directly aimed at in each individual case. Whenever an individual capitalist cheapens shirts, for instance, by increasing the productiveness of labour he by no means necessarily aims at reducing the value of labour-power and shortening, pro tanto the necessary labour-time. But it is only in so far as he ultimately contributes to this result, that he assists in raising the general rate of surplus-value. The general and necessary tendencies of capital must be distinguished from their forms of manifestation.” (p 299-300)

Marx makes an important point in relation to where his completed work would have taken him, in analysing competition, and how this was manifest in the subjective decisions of capitalists. Of course, he did not live to complete that work. He writes,

It is not our intention to consider, here, the way in which the laws, immanent in capitalist production, manifest themselves in the movements of individual masses of capital, where they assert themselves as coercive laws of competition, and are brought home to the mind and consciousness of the individual capitalist as the directing motives of his operations. But this much is clear; a scientific analysis of competition is not possible, before we have a conception of the inner nature of capital, just as the apparent motions of the heavenly bodies are not intelligible to any but him, who is acquainted with their real motions, motions which are not directly perceptible by the senses.” (p 300)


Jacob Richter said...

Sorry for this late post, but this blog has me wondering: where between absolute and relative surplus value does piecework fall?

Contrast Trotsky:

"It was not the Soviet administrators who invented the secret of piecework payment. That system, which strains the nerves without visible external compulsion, Marx considered “the most suitable to capitalistic methods of production.” The workers greeted this innovation not only without sympathy, but with hostility [...] In the struggle to achieve European and American standards, the classic methods of exploitation, such as piecework payment, are applied in such naked and crude forms as would not be permitted even by reformist trade unions in bourgeois countries."

With Kautsky the Marxist:

"All forms of modern wage-payment-fixed salaries, piece wages, time wages, bonuses – all of them are reconcilable with the spirit of a socialist society; and there is not one of them that may not play a role in socialist society, as the wants and customs of its members, together with the requirements of production, may demand."

Indeed, perhaps there can be such a thing as "socialist piecework" for socialized agriculture, comprised solely of farm workers on public-sector wage relations (a la sovkhozniks).

Boffy said...

Piece work is entirely consistent with a socialist economy. Marx describes it in the Critique of the Gotha Programme. There he talks about the continued role of "bourgeois right" within the first stage of Communism, which can only be replaced at the higher stage, when abundance makes possible "From each according to his ability to each according to their needs."

In describing how bourgeois right continues, he is essentially talking about the continued operation of the Law of Value i.e. society has limited social labour-time, and still has to allocate it within constraints. In other words, it continues to have to make choices, which in turn means the continuance of competition in one form or another for resources, and for Use Values.

He says that, at this stage, the rule will be you get out as much Value in Labour-time as you have put in. However, this means the continuation of inequality, because one person is strong, has more stamina than another, and so can work longer, lift more, and so on, or put another way, can do the same amount of work in labour hours as someone else, but with much less effort. Similarly, he describes this from the other standpoint of piece work i.e. for the same reasons, differences in skill etc. one person can work more intensely, faster or whatever than another, and therefore, produce more pieces than someone else. Both would get the same amount, or else the stronger, faster, more skilled worker could work longer, faster or whatever, and thereby withdraw more from society.

Chapter 1

Its not a matter of where piee work comes between Absolute and Relative Surplus Value, because it is merely a means of payment, as opposed to Day Rates. The same law of wages determine by the Value of Labour Power apply. However, piece work facilitates speed-up, as a means of extracting more Absolute Surplus Value, precisely because of its basis.

Jacob Richter said...

Hmmm. From my perspective it's both a socialist polemics issue and one of Total Quality Management, specifically finding ways to reduce the cost of rework, scrap, and warranties associated with material products:

Boffy said...

That still effectively comes down to it being a metjod of payment. There are arguments from a TQM perspective for saying that piece work can increase costs of wastage etc. from poor quality. I am a qualified Quality Management Auditor, and I would say that its better to avoid waste and rework in the first place, than to not pay workers for faulty production.

To the extent that piece work encourages speed over quality, it can increase the number of rejects, and increase the need for inspection,and the costs involved with it.

The various methods of Toyotism, of group working, limited control by workers over the labour process, flexible specialisation and so on are designed to obtain the benefits of continuous flow production - without the use of assembly lines - of piece work and of quality.

Jacob Richter said...

Qualified Quality Management Auditor? Now we can definitely talk some technical stuff along with polemics!

You should definitely do a blog at some point discussing piecework, Six Sigma, and various total quality management topics!

Anyway, there is also the risk that piecework might actually reduce incentives for companies themselves to expend in prevention and appraisal measures.

Damn, that's a manufacturing setting! I originally had publicly owned agriculture in mind! Despite grumblings by farm workers, do you think that "socialist piecework" is applicable as an alternative incentive in agriculture to private plots?

Boffy said...

Perhaps not. I am a qualified Quality Management Auditor in that I've done the course, passed the exams for BS 5750/ISO 9000, but it was nearly 20 years ago, because my boss at the time had a thing about it. I've never practiced as an auditor.

I retain some of the knowledge from it, and obviously as a marxist economist I'm interested in labour process theory. I also have some experience. When I was 18 I worked for a small textile firm, and did everything virtually including negotiating new piece rates with machinists. That was interesting. The machinists negotiator, was the mum of one of my friends, and several of the girls I'd gone to school with. One was also the sister of the main sales rep for the firm who had done the job before I started.

I also worked after that for a glazing firm, doing bonus calculations for the cutters and glazers. The glazers loved it. They'd never been paid so much, because I found the bloke who did the job before me - who was a director of the Company - had been interpreting the rules in the most stingy way imagineable. But, the amount of work the glazers got through increased massively.

The firm had recently been taken over by a much larger business with more liberal management attitudes. I felt the bonus scheme was unfair to the cutters who did not and could not really benefit from the increased work the cutters were doing even though they had to do more cutting. I was about to look at a new bonus scheme for them, but left for another job.

At the time, you could simply move from one job to another as the easiest way of increasing your wages significantly.

As I am in favour of workers ownership, I think its up to workers in each particular situation to work out what is the most effective system of payment. generally, I'd say in co-operatives Day Rates make most sense, because all production relies even more on co-operative labour, so how can you assign production to any particular worker fairly?

One option is the development of toyotist models of modular and group working so payment would be based on the group rather than the individual. I think the general proposals I've made in my blog on the "Economics Of co-operation" is a better way of thinking about things, which is that the largest portion of the surplus of the Co-op should go to the federation to be used as an accumulation fund, to fund social insurance (unemployment, sickness, pensions) and for a general distribution of profits to all members of the federation. But, a portion of each Co-ops surplus should be distributed to its members, so as to give them a direct incentive to increase efficiency, improve quality and so on.