Thursday, 6 September 2012

Capital I, Chapter 9 - Part 3

3) Senior's Last Hour

Nassau W. Senior was an Oxford economist. He was chosen by the manchester textile manufacturers to present their case that the provisions of the Factories Acts and the Ten Hours Act would destroy profits, whereas a relaxation that allowed factories to work their employees for 13 hours a day rather than the normal 11.5 hours, would double profits! However, to be fair to Senior, as Marx points out, in later years, he was to admit that he had been wrong, and was to become a supporter of those regulations. It may well be a reflection of the change amongst the bigger capitalists, that Engels refers to in his later Prefaces to the “Condition of the Working Class”.

We hear the same kinds of nonsense from penny-pinching, usually small capitalists, and their representatives amongst right-wing politicians and journalists today. It takes the form of proposals to relax health & safety laws, despite the fact that large numbers of workers continue to die from industrial accidents, and thousands more die or are disabled as a result of industrial diseases. It takes the form of calls for bosses to be able to sack people at will. It takes the form of ridiculous arguments that because some workers are living a few years beyond retirement age, and actually managing to collect on the payments they have made over a lifetime into pension schemes, that all workers have to work longer. It was nonsense when Senior made the case back then, and its still nonsense today.

Leonard Horner
As Marx points out, and as one of the Government Factory Inspectors of the time, Leonard Horner, spelled out, Senior's presentation of the figures themselves, was muddled, but even correcting for that, his argument is false. Senior's argument was this:

A capitalist invests £80,000 in a mill, and machinery, and £20,000 in material and Labour-power. It produces a 15% profit, giving a total annual value of output of £115,000.

The workers are employed for 11.5 hours per day. Senior then broke this down into half hour periods. So, in 0.5 hours = £115,000/23 = £5,000. On this basis, in 10 hours, £100,000 is produced, which is only enough to replace the original capital employed. Of the 1.5 hours remaining, Senior argued that 0.5 hours = £5,000, was required to cover the wear and tear of machines, leaving just 1 hour during which profits were made.

Reduce the working day from 11.5 hours to 10, senior argued, and not only would net profits (i.e. after wear and tear of machines) disappear, but so would the gross profit. Increase the working day by 1 hour, on the other hand, and net profit could be doubled!

Marx then demolishes this argument.

Suppose, Senior accepted the argument put to him by the manufacturers that the workers spent so many hours first reproducing the value of the buildings, materials and so on. Then, if so, if the workers worked for 10 hours, rather than 11.5, they would use less material, wear out the machines and buildings less. So, in order to reproduce this smaller quantity of Constant Capital, they would require less time out of the working day!

In response to the manufacturer's claim that the workers only reproduced the value of their wages in the last hour but one, he should have responded, the time the worker spends reproducing his wages according to you is equal to the time he spends creating your profit – 1 hour in each case. But, the worker works for 11.5 hours not 2. If the worker works equal amounts of time to produce the value of his wages, and to produce Surplus Value, then out of that 11.5 hours, he works 5.75 hours producing his wages, and 5.75 hours producing Surplus Value.

But, then the value of the yarn produced in the last 2 hours is equal to the value of the wages and the profit. That is, its equal to 11.5 hours. In the last but one hour it is equal to 5.75 hours. We have then reached a ridiculous conclusion. The value produced by the worker in this last hour, on the basis of the manufacturers assumptions, is equal to 5.75 hours. But, how is it possible that a value, created by the worker, equal to 5.75 hours, can be created in just 1 hour!!!

Obviously, it can't. What Senior and the manufacturers have done is to fail to take into account the value of the Constant Capital transferred into the yarn. They have made the new value, created by the worker, bear all the cost of reproducing the value of the Constant Capital!

In reality, in 1 hour the worker produces a quantity of yarn. It has a value of 5.75 hours. But, 4.75 hours of this value was not created by the worker. It was value that already existed in the form of material, of the wear and tear of machinery, buildings etc.

In 2 hours, the worker will create a quantity of yarn that has a value twice as great as in 1 hour, but that is because it will have transferred twice as much value from the Constant Capital, as well as twice as much value from his own labour-time. It doesn't matter if those 2 hours are the last of the day or the first. The yarn produced in them will have a value equal to 11.5 hours. That will be 2 hours of value created by the worker's labour, and 9.5 hours created by the labour of other workers, who produced the cotton, machinery and so on.

In the first 5.75 hours, of the day, the worker creates new value equal to his wages, and in the other 5.75 hours creates new value for which he is not paid, and which goes to make the profit. If the working day was increased to 13 hours, then the Surplus Labour would increase from 5.75 hours to 7.25 hours. The previous Rate of Surplus Value of 100%, would rise to 126.09%; far less than the doubling of profit that Senior believed.

At the same time, if the working day were reduced to 10 hours, the amount of Surplus Labour would fall to 4.75 hours, still giving a Rate of Surplus Value of 82.6%.

Marx points out the invaluable work done by the Factory Inspectors like Horner. Given that in the second half of the century, as Engels sets out, the big manufacturers became advocates of the Factory Acts, and other such regulations, this activity by the Inspectors should perhaps be seen as an indication of the way that the Capitalist State (that is the permanent bureaucracy, not the Political Power in Parliament) acted in the interests of Capital as a whole – the distinction that Marx makes between Capital in General and Many Capitals. As Marx later describes, some employers like Wedgwood – who at the time was one of the Big Capitalists, his Etruria factory was one of the biggest in the country, and already used large amounts of steam and other mechanical power – already understood the damage that was being done to their long-term interests by overworking the workers.

By contrast, the politicians, dependent on the votes of the manufacturers – at a time when workers had no vote – were keen to accept the manufacturers arguments. We see the same today with those like the Tories dependent on the votes of those small employers, still tied to those kinds of short-sighted measures. For more than 100 years now, it has been the Social Democrats who are more closely attuned to the interests of the Big Capitalists, interests which tie in with the ideology of those parties and of the Trades Unions, based on bargaining within the system.

Marx also describes another feature that is familiar today. Alongside the economic campaign waged by the employers was another campaign. They argued that, particularly for young people, the additional “leisure-time” they would gain from only working 10 hours a day, would be detrimental to their morals. Being inside the environment of the factory was much better for them than having idle hands and being prone to all the temptations of the outside world.

Marx quotes another Factory Inspectors' Report of October 1848, which detailed the environment of those factories, complete with all the deafening noise, flax dust and so on. We see the same kind of thing today with the Liberal-Tories proposals for looking after the welfare of today's young people, by demanding that they agree to work for nothing, stacking shelves overnight in supermarkets, in order to obtain “work experience”. How wonderful it must be to have spent those extra years at school, and run up huge debts to pay the £9,000 a year Tuition Fees in order to be able to benefit from such experience, when Capitalism can't find you a proper job!

4) Surplus Produce

In the same way that the workers time can be divided into Necessary and Surplus Labour-time, so the output of these periods can be described as Necessary or Surplus Product. As Marx says, the measure of a nation's wealth is the ratio of this Surplus to Necessary Product, rather than the amount of the total product. To that effect, he quotes Ricardo.
““To an individual with a capital of £20,000, whose profits were £2,000 per annum, it would be a matter quite indifferent whether his capital would employ a 100 or 1,000 men, whether the commodity produced sold for £10,000 or £20,000, provided, in all cases, his profit were not diminished below £2,000. Is not the real interest of the nation similar? Provided its net real income, its rent and profits, be the same, it is of no importance whether the nation consists of 10 or of 12 millions of inhabitants.” (Ric. l.c.,.p. 416.) Long before Ricardo, Arthur Young, a fanatical upholder of surplus-produce, for the rest, a rambling, uncritical writer, whose reputation is in the inverse ratio of his merit, says, “Of what use, in a modem kingdom, would be a whole province thus divided [in the old Roman manner, by small independent peasants], however well cultivated, except for the mere purpose of breeding men, which taken singly is a most useless purpose?” (Arthur Young: “Political Arithmetic, &c.” London, 1774, p. 47.)” (Note 2, p 220)
This also has to be borne in mind when considering the views of those who oppose continuing aid to places like India, because their economies are about to become bigger than that of the UK. On the other hand, the size of an economy is not irrelevant from either an economic or political perspective, just as beyond a certain point, the size of a company's Balance Sheet can become a more decisive factor in its power, and its ability to accumulate additional Capital than is its Rate of Profit.

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