Thursday, 27 December 2012

Capital I, Chapter 17 - Part 2


    Marx identifies three laws.
  1. A working day, of a given length, always produces the same amount of new value. (NB. As with the statements above, this assumes, of course, that the labour-time expended was socially necessary.   Labour-time expended on production that is not demanded, which is faulty such as a failed crop, for example, does not create new value, or creates new value only of a diminished amount.)

    is a measure of socially necessary labour-time. If a greater quantity of items are produce during this period, because the labour has become more productive, this does not change the amount of value produced in this time, it only means that value is spread across a larger number of items so that the value of each is reduced.
  1. Surplus value and the value of labour-power vary in opposite directions. A variation in the productiveness of labour, its increase or diminution, causes a variation in the opposite direction in the value of labour-power, and in the same direction in surplus value.” (p 487)A working day of say 10 hours produces a constant amount of new value = 10 hours, assuming we are talking about average labour. If £1 = 1 hour, this equals £10. This time, and this new value is divided into necessary and surplus labour-time, the value of labour-power (wages) and surplus value. Consequently, if one of the components of this constant quantity rises, the other must fall. If initially, they are equal, £5 wages, and £5 surplus value, then if wages rise to £6 (because the cost of food, clothing, shelter etc. rises) then surplus value must fall to £4. Similarly, surplus value cannot rise from £5 to £6, without wages falling to £4.

    But, wages are fixed by the costs of reproducing the labour power. Marx assumes here that they cannot fall below the value of labour power. In other words, we have two constant magnitudes – the total value of the 10 hours = £10, and the value of the labour power. Everything else remaining the same, only the surplus value is a variable quantity.

    However, as was demonstrated previously, the value of labour-power can fall if the value of necessaries fall, or if the productivity of labour rises, reducing the portion of the working day required to reproduce it. If the productivity of labour rises by 40%, then what previously took five hours to produce, can now be produced in three. So, the workers necessaries can now be produced in three hours = £3. That means that surplus labour-time can rise from five hours to 7 hours, surplus value rises from £5 to £7, but the workers real wages remain constant.

    “It follows from this, that an increase in the productiveness of labour causes a fall in the value of labour-power and a consequent rise in surplus value, while, on the other hand, a decrease in such productiveness causes a rise in the value of labour-power, and a fall in surplus value.” (p 488) 
This law was first developed by Ricardo, but Marx correctly points out that he failed to note that although the two components move in opposite directions by the same amount, they do not move in the same proportion. That depends on the original amounts. For example, if originally wages were £4 and surplus value £6, a 50% rise in productivity would reduce wages to £2, and increase surplus value to £8. However, this a 2/4 = 50% reduction in wages, but only a 2/6 = 33.3% rise in surplus value. The opposite is the case had the original figures been reversed.

3)“Increase or diminution in surplus value is always consequent on, and never the cause of, the corresponding diminution or increase in the value of labour-power.” (p 488)

Marx also notes here,

John Ramsay McCulloch
To this third law MacCulloch has made, amongst others, this absurd addition, that a rise in surplus value, unaccompanied by a fall in the value of labour-power, can occur through the abolition of taxes payable by the capitalist. The abolition of such taxes makes no change whatever in the quantity of surplus value that the capitalist extorts at first-hand from the labourer. It alters only the proportion in which that surplus value is divided between himself and third persons. It consequently makes no alteration whatever in the relation between surplus value and value of labour-power. MacCulloch's exception therefore proves only his misapprehension of the rule, a misfortune that as often happens to him in the vulgarisation of Ricardo, as it does to J. B. Say in the vulgarisation of Adam Smith.” (Note 1, p 488)

This presages Marx’s analysis of “Capital in General” in Volume III, where Marx examines the division of surplus value between different sections of the exploiting classes – Interest to Money Capital, Profit to Productive and Commercial Capital, Rent to Landed Property, and Taxes to the Capitalist State.

If, then, as we have already seen, there can be no change of absolute magnitude in the value of labour-power, and in surplus value, unaccompanied by a change in their relative magnitudes, so now it follows that no change in their relative magnitudes is possible, without a previous change in the absolute magnitude of the value of labour-power.” (p 489)

Fordism worked by reducing the value of labour
power via continual increases in productivity, whilst
ensuring an annual increase in real wages.
This can only be brought about by a change in the productivity of labour. (That is if we leave aside things like the fall in food prices resulting from abolition of the Corn laws.) It is the change in the value of labour power which provides the limiting factor to the change in surplus value. Moreover, Marx points out that other factors may affect the way the law operates in practice. The value of labour-power might fall from £5 to £3, and yet wages only fall to £4, for example.

The amount of this fall, the lowest limit of which is 3 shillings (the new value of labour-power), depends on the relative weight, which the pressure of capital on the one side, and the resistance of the labourer on the other, throws into the scale.” (p 489)

It is here that the organisation of the workers, into Trades Unions, was able to play a role, at the margin, in the determination of wages in the short term. But, it is only marginal and only short term, for the reasons Marx and Engels set out.

Engels wrote,

The history of these Unions is a long series of defeats of the working-men, interrupted by a few isolated victories. All these efforts naturally cannot alter the economic law according to which wages are determined by the relation between supply and demand in the labour market. Hence the Unions remain powerless against all great forces which influence this relation. In a commercial crisis the Union itself must reduce wages or dissolve wholly; and in a time of considerable increase in the demand for labour, it cannot fix the rate of wages higher than would be reached spontaneously by the competition of the capitalists among themselves.”

Whilst Marx wrote,

I think I have shown that their struggles for the standard of wages are incidents inseparable from the whole wages system, that in 99 cases out of 100 their efforts at raising wages are only efforts at maintaining the given value of labour, and that the necessity of debating their price with the capitalist is inherent to their condition of having to sell themselves as commodities. By cowardly giving way in their everyday conflict with capital, they would certainly disqualify themselves for the initiating of any larger movement.

At the same time, and quite apart from the general servitude involved in the wages system, the working class ought not to exaggerate to themselves the ultimate working of these everyday struggles. They ought not to forget that they are fighting with effects, but not with the causes of those effects; that they are retarding the downward movement, but not changing its direction; that they are applying palliatives, not curing the malady. They ought, therefore, not to be exclusively absorbed in these unavoidable guerilla fights incessantly springing up from the never ceasing encroachments of capital or changes of the market. They ought to understand that, with all the miseries it imposes upon them, the present system simultaneously engenders the material conditions and the social forms necessary for an economical reconstruction of society. Instead of the conservative motto: A fair day's wage for a fair day's work! they ought to inscribe on their banner the revolutionary watchword: Abolition of the wages system!"

In the end, as Marx and Engels set out, it is the demand for and supply of labour power which determines, and that is a consequence of the rate of accumulation of capital, which in turn depends on the rate of profit, and the opportunity for investing new capital in profitable ventures.

Marx also gives a variation of the situation described previously, where a rise in productivity allows real wages to remain constant, while nominal wages fall and surplus value rises. If productivity doubles, but nominal wages remain constant, then the working day remains 5 hours for wages, and 5 hours for surplus value. But now, twice as many Use Values can be bought with these £5's. The workers' real wage has doubled, and the capitalist can buy twice as many luxuries, or twice as much constant capital, to expand production.

In the post war boom, Fordism meant
workers real wages rose sharply, and
they acquired many more Use Values,
but rises in productivity meant, profits rose
even more.
In this way it is possible with an increasing productiveness of labour, for the price of labour-power to keep on falling, and yet this fall to be accompanied by a constant growth in the mass of the labourer's means of subsistence. But even in such case, the fall in the value of labour-power would cause a corresponding rise of surplus value, and thus the abyss between the labourer's position and that of the capitalist would keep widening.” (p 490)

As stated previously, this was precisely the basis upon which Fordism operated in the 20th Century, particularly after WWII. These three laws, set out by Marx, were originally developed by Ricardo, but Marx sets out the limitations of Ricardo's understanding of them.

Ricardo does not take account of changes in the length of the working day, or its intensity, so only the productivity of labour acts as a variable factor. Ricardo does not analyse the source or nature of surplus value, separate from his analysis of Interest, Rent and Profit. Instead he simply takes its existence for granted. It also leads him to confuse the rate of profit with the rate of surplus value. The latter is surplus value expressed as a proportion of wages, whilst the former is surplus value expressed as a proportion of total capital advanced.

I shall show in Book III. that, with a given rate of surplus value, we may have any number of rates of profit, and that various rates of surplus value may, under given conditions, express themselves in a single rate of profit.” (p 491)

Marx then analyses the effects of changes in these variables.

Back To Part 1

Forward To Part 3

No comments: