Tuesday, 20 November 2012

Capital I, Chapter 15 - Part 8


James Mill, MacCulloch, Torrens, Senior, John Stuart Mill, and a whole series besides, of bourgeois political economists, insist that all machinery that displaces workmen, simultaneously and necessarily sets free an amount of capital adequate to employ the same identical workmen.” (p 412)

Marx sets out to disprove this contention. Because of the way Marx develops his argument in Capital, combining an analysis of the actual historical development of Capital and Capitalism with its logical exposition, there are a number of occasions where the actual exposition, contains what appear to be logical flaws, which are only corrected as the further exposition develops. That is the case in this particular section.   Marx's actual contention that these economists were wrong about capital being freed to employ "the same identical workmen", is undoubtedly correct, however.  Marx is right to point to the problems with the idea of an amount of capital being "freed".  But, at a theoretical level, especially one in which we treat labour as being homogenous, simple labour capable of being employed anywhere to do anything, then its possible to argue that the introduction of machinery does create the conditions for more labour to be employed, possibly even more than has been displaced by it.  I was going to deal with those logical flaws here, but decided it would be a distraction. I will write a separate post at some time dealing with them.

The short version, however, is this. Firstly, Marx in his analysis of the effects of the machine on employment, introduces the machine as though it had appeared from nowhere. He says,

Suppose a capitalist to employ 100 workmen, at £30 a year each, in a carpet factory. The variable capital annually laid out amounts, therefore, to £3,000. Suppose, also, that he discharges 50 of his workmen, and employs the remaining 50 with machinery that costs him £1,500. To simplify matters, we take no account of buildings, coal, &c. Further suppose that the raw material annually consumed costs £3,000, both before and after the change. Is any capital set free by this metamorphosis? Before the change, the total sum of £6,000 consisted half of constant, and half of variable capital. After the change it consists of £4,500 constant ( £3,000 raw material and £1,500 machinery), and £1,500 variable capital. The variable capital, instead of being one half, is only one quarter, of the total capital. Instead of being set free, a part of the capital is here locked up in such a way as to cease to be exchanged against labour-power: variable has been changed into constant capital. Other things remaining unchanged, the capital of £6,000, can, in future, employ no more than 50 men. With each improvement in the machinery, it will employ fewer. If the newly introduced machinery had cost less than did the labour-power and implements displaced by it, if, for instance, instead of costing £1,500, it had cost only £1,000, a variable capital of £1,000 would have been converted into constant capital, and locked up; and a capital of £500 would have been set free. The latter sum, supposing wages unchanged, would form a fund sufficient to employ about 16 out of the 50 men discharged; nay, less than 16, for, in order to be employed as capital, a part of this £500 must now become constant capital, thus leaving only the remainder to be laid out in labour-power.” (p 412)

But, the machine itself had to be produced, which in turn requires labour time in the form of constant and variable Capital, that otherwise would not have been employed. Suppose we have a situation with no Surplus Value. We have £1 = 1 hour of labour-time, and 100 workers at £30 p.a. each. Then:

100 workers = £3000 = 3000 hours.

The machine costs £1500 = 1500 hours = 50 workers.

So, the 50 workers not now employed in carpet production COULD IN THEORY be employed in machine production including the production of the Constant Capital required to produce the machine etc.

In the future post I will deal with the situation where there is Surplus Value production, and where, therefore, the labour-time required to produce the machine is less than the saving in labour-time the use of the machine brings about. But, secondly, Marx does not account for the role of the machine in producing Relative Surplus Value, in the way he has analysed in previous sections. Surplus Value is a form of Capital, or more precisely Capital is accumulated Surplus Value. So, in raising Surplus Value, the machine expands Capital, which takes the form of increased employment of workers both in the production of Constant and Variable Capital.

The third objection is simply empirical. Since Marx’s time, the amount and effectiveness of machinery has increased many fold, yet it has not resulted in ever increasing amounts of mass unemployment. On the contrary, many more workers are employed today than in Marx’s time.

The issue is not really whether capital is “freed”, but whether this capital is able to be, and under the specific conditions is, employed. Marx’s statement later,

The labourers, when driven out of the workshop by the machinery, are thrown upon the labour market, and there add to the number of workmen at the disposal of the capitalists. In Part VII of this book it will be seen that this effect of machinery, which, as we have seen, is represented to be a compensation to the working class, is on the contrary a most frightful scourge. For the present I will only say this: The labourers that are thrown out of work in any branch of industry, can no doubt seek for employment in some other branch. If they find it, and thus renew the bond between them and the means of subsistence, this takes place only by the intermediary of a new and additional capital that is seeking investment;” (p 415)

as it stands cannot be correct because this would imply that all of the workers that have previously been displaced and have found other employment, have only done so because large amounts of capital have somehow been formed from outside the system, and thrown into it. In fact, this large amount of new capital formation is not at all separate from the growing volume of surplus value produced, which in turn is a function of the relative surplus value resulting from the introduction of machinery. As stated earlier, Marx deals with some of these issues later in Capital in looking at accumulation.

But, in practical terms, there is a considerable amount that is correct in Marx’s analysis. For example, he is right when he says,

But, suppose, besides, that the making of the new machinery affords employment to a greater number of mechanics, can that be called compensation to the carpet-makers, thrown on the streets?” (p 413)

If all labour were homogeneous then workers could seamlessly move from one job to another. But, it isn't and they can't. The consequence is that workers are of the wrong type and in the wrong place, and so they end up in the streets, and this then itself has reperussions.

As a matter of fact the apologists do not mean this sort of setting free.

They have in their minds the means of subsistence of the liberated work-people. It cannot be denied, in the above instance, that the machinery not only liberates 50 men, thus placing them at others’ disposal, but, at the same time, it withdraws from their consumption, and sets free, means of subsistence to the value of £1,500...

The circumstance that they were “freed” by the machinery, from the means of purchase, changed them from buyers into non-buyers. Hence a lessened demand for those commodities — voilà tout. If this diminution be not compensated by an increase from some other quarter, the market price of the commodities falls. If this state of things lasts for some time, and extends, there follows a discharge of workmen employed in the production of these commodities. Some of the capital that was previously devoted to production of necessary means of subsistence, has to become reproduced in another form. While prices fall, and capital is being displaced, the labourers employed in the production of necessary means of subsistence are in their turn “freed” from a part of their wages. Instead, therefore, of proving that, when machinery frees the workman from his means of subsistence, it simultaneously converts those means into capital for his further employment, our apologists, with their cut-and-dried law of supply and demand, prove, on the contrary, that machinery throws workmen on the streets, not only in that branch of production in which it is introduced, but also in those branches in which it is not introduced.” (p 414-5)


Crippled as they are by division of labour, these poor devils are worth so little outside their old trade, that they cannot find admission into any industries, except a few of inferior kind, that are over-supplied with underpaid workmen. Further, every branch of industry attracts each year a new stream of men, who furnish a contingent from which to fill up vacancies, and to draw a supply for expansion. So soon as machinery sets free a part of the workmen employed in a given branch of industry, the reserve men are also diverted into new channels of employment, and become absorbed in other branches; meanwhile the original victims, during the period of transition, for the most part starve and perish.” (p 415)

Marx details some of the ways, in fact, how the introduction of machinery leads to additional employment.

Although machinery necessarily throws men out of work in those industries into which it is introduced, yet it may, notwithstanding this, bring about an increase of employment in other industries. This effect, however, has nothing in common with the so-called theory of compensation. Since every article produced by a machine is cheaper than a similar article produced by hand, we deduce the following infallible law: If the total quantity of the article produced by machinery, be equal to the total quantity of the article previously produced by a handicraft or by manufacture, and now made by machinery, then the total labour expended is diminished. The new labour spent on the instruments of labour, on the machinery, on the coal, and so on, must necessarily be less than the labour displaced by the use of the machinery; otherwise the product of the machine would be as dear, or dearer, than the product of the manual labour. But, as a matter of fact, the total quantity of the article produced by machinery with a diminished number of workmen, instead of remaining equal to, by far exceeds the total quantity of the hand-made article that has been displaced. Suppose that 400,000 yards of cloth have been produced on power-looms by fewer weavers than could weave 100,000 yards by hand. In the quadrupled product there lies four times as much raw material. Hence the production of raw material must be quadrupled. But as regards the instruments of labour, such as buildings, coal, machinery, and so on, it is different; the limit up to which the additional labour required for their production can increase, varies with the difference between the quantity of the machine-made article, and the quantity of the same article that the same number of workmen could make by hand.” (p 417)

Exactly how this affects the numbers employed itself depends upon the composition of capital, and the extent to which machines have been introduced there too.

For example,

The number of the men condemned to work in coal and metal mines increased enormously owing to the progress of the English factory system; but during the last few decades this increase of number has been less rapid, owing to the use of new machinery in mining.” (p 417)

One new branch of industry becomes machine and tool making itself. In 1861, 60,807 people were employed in England and Wales in this industry. It also stimulates those industries that provide inputs. The massive rise in productivity in cotton spinning created a surge in demand for US cotton. That in turn stimulated the slave trade. In 1790, there were 697,000 slaves in the US. By 1861, it was nearly 4 million.

Where machinery is introduced at a stage in the production process that supplies primary or intermediate products, this leads to a surge in demand for workers in handicraft or manufacture.

Spinning by machinery, for example, supplied yarn so cheaply and so abundantly that the hand-loom weavers were, at first, able to work full time without increased outlay. Their earnings accordingly rose. Hence a flow of people into the cotton-weaving trade, till at length the 800,000 weavers, called into existence by the Jenny, the throstle and the mule, were overwhelmed by the power-loom. So also, owing to the abundance of clothing materials produced by machinery, the number of tailors, seamstresses and needlewomen, went on increasing until the appearance of the sewing-machine.” (p 418)

At one point, hand loom weavers were earning so much that they would walk around with £5 notes tucked into their hats. A few years later they were starving!

As machinery hugely increases the amount of raw materials produced, and reduces their price so the number of branches of industry working them up increases through an extension of the social division of labour. This is intensified by the development of the factory system, which increases specialisation and productivity far more than did manufacture.

Machinery massively increases the production of relative surplus value. This means that the number of capitalists and their dependants increases. It also means that they can buy an increased quantity and range of luxury goods. The fact that the increase in productivity brought about by machinery means that fewer workers are required to produce goods, means that a greater proportion of society's available labour-time can also be devoted to the production of these luxury goods.

However, its important to add a note of caution here. In Volume III of Capital, Marx says,

It must never be forgotten that the production of this surplus-value — and the reconversion of a portion of it into capital, or the accumulation, forms an integrate part of this production of surplus-value — is the immediate purpose and compelling motive of capitalist production. It will never do, therefore, to represent capitalist production as something which it is not, namely as production whose immediate purpose is enjoyment or the manufacture of the means of enjoyment for the capitalist. This would be overlooking its specific character, which is revealed in all its inner essence.” (Chapter 15)

This impression can be gained because of the immense wealth and range of luxury goods that the richest capitalists enjoy. But, this is a reflection of the extent to which capitalism has expanded social wealth, the quantity quality, and variety of Use Values in total, way beyond any previous Mode of Production.

Under feudalism, there was no objective imperative driving feudal lords to expand their land ownership. The only drive for that was purely subjective, based on individual greed. The same was true for the peasant. Provided the peasant could provide enough food and other necessities for their family, there was nothing driving them to produce more. This is why changes in production in such societies proceed slowly.

The feudal lord did not need to spend their rental income on expansion and so was free to spend it on their own conspicuous consumption. The reason this pales compared with the luxury consumption of capitalists is not the greater greed of the latter, but the more restricted range of products available to the former.

Unlike the feudal lord, the capitalist is driven not by greed, not by consideration for their own consumption, but by the objective requirement to accumulate capital in order to survive.

As machine production massively increases output, so it creates a surge in demand for inputs, including those which have to be imported, as with US cotton. This establishes new international economic and social relations. This increased international trade also opens up demand for new types of foreign luxury goods by capitalists.

Another consequence of this is that it creates a new demand for workers in the carrying trades, which become important industries in their own right. But, this development, in turn, stimulates the introduction of machinery into this industry too. The steam engine is introduced to power locomotives, barges and steam boats.

But, all of these also require the production of large amounts of infrastructure, the value from which may only be fully realised many years into the future. So, workers are required to work producing railways and depots, canals, ports, roads, and so on. They are also required for the production of gas works, for laying gas and water pipes, and later building power stations and laying cables. They are required for establishing telegraph and then telephone systems etc.

So, although the introduction of machinery may not “free” capital and labour in the way its apologists claimed, the massive increase in relative surplus value it produces, and the subsequent huge rise in capital accumulation that engenders, together with the consequent increase in trade, and production of a wider range of products, does create new channels for the newly produced capital to move into, and thereby to employ labour.

In fact, in the 19th Century the increased demand for labour in some of these new areas could only be satisfied by importing foreign labour, for example, in the form of the Irish navvies. Similarly, after WWII, a whole range of new machines and technologies were introduced that replaced existing labour on a large scale e.g. in coal mining. Yet, the increase in surplus value that accompanied it, and the increase in trade, and in new productive investment opportunities, that necessarily accompanied it, meant that far from causing rising unemployment, it led to labour shortages. That meant that, in Britain, married women had to be encouraged into the labour market, and the Conservative Governments of the 1950's actively encouraged immigration from the West Indies and Asia.

Marx seems, possibly to have under estimated this effect, because of the time he was writing. Most of his analysis of capital was done during a period of Long Wave decline that did not end until around 1890. In fact, for much of that time, the economy had gone into a prolonged stagnation, signified by the First Great Depression of the 1870's. As a consequence, Marx missed the huge expansion of capital that arose with the Long Wave Boom that ran from around 1890 to 1914. So, its no wonder he thought that capital might have reached its limits. For similar reasons, Lenin made the same mistake in the 1920's, based on the ending of the previous Long Wave Boom.

Marx also refers to another class of workers, whose employment probably expanded during this period, as a consequence of the increasing numbers and wealth of capitalists. That is the servant class. Marx estimates the number of workers in 1861 to be about 8 million. Of these 1.2 million were in this servant class, as opposed to around 1.1 million employed in agriculture and a similar number employed in production and mining.

Marx concludes,

What a splendid result of the capitalist exploitation of machinery!” (p 421)

But, of course, the further advance of machine production saw the demand for industrial labour rise so substantially, with a consequent rise in wages, that the capitalist and middle classes increasingly found they could not afford to employ domestic servants, whilst new consumer domestic machinery removed the need for them anyway. Not only did this expansion of industrial capital, brought about by the increased relative surplus value created by new machinery, soak up all of the workers from the servant class, but it also soaked up nearly all of the agricultural workers too. Today, less than 1% of the UK population is employed in agriculture.

No comments: