Tuesday, 15 January 2013

Capital I, Chapter 19 - Part 2

Classical political economy took on the concept of “Price of Labour” from its use in everyday life, but without subjecting it to any kind of analysis. It remained on a surface level description. As with every other commodity, in asking how is this price determined, it turned to the law of supply and demand, only to find that, as with every other commodity, that law could only explain changes in price, not why the price should settle at A rather than B.

If demand and supply balance, the oscillation of prices ceases, all other conditions remaining the same. But then demand and supply also cease to explain anything. The price of labour, at the moment when demand and supply are in equilibrium, is its natural price, determined independently of the relation of demand and supply. And how this price is determined is just the question. Or a larger period of oscillations in the market-price is taken, e.g., a year, and they are found to cancel one the other, leaving a mean average quantity, a relatively constant magnitude. This had naturally to be determined otherwise than by its own compensating variations. This price which always finally predominates over the accidental market-prices of labour and regulates them, this “necessary price” (Physiocrats) or “natural price” of labour (Adam Smith) can, as with all other commodities, be nothing else than its value expressed in money.” (p 503-4)

But, the value, as with other commodities is the labour-time required for production. Production of what? Of the labourer who provides the labour. Classical Political Economy then wrapped itself in knots trying to identify the value of labour on this basis, whilst avoiding the inevitable contradiction described earlier, that, on this basis, there could be no surplus value. It was only Marx that recognised that,

What economists therefore call value of labour, is in fact the value of labour-power, as it exists in the personality of the labourer, which is as different from its function, labour, as a machine is from the work it performs. Occupied with the difference between the market-price of labour and its so-called value, with the relation of this value to the rate of profit, and to the values of the commodities produced by means of labour, &c., they never discovered that the course of the analysis had led not only from the market-prices of labour to its presumed value, but had led to the resolution of this value of labour itself into the value of labour-power. Classical economy never arrived at a consciousness of the results of its own analysis; it accepted uncritically the categories “value of labour,” “natural price of labour,” &c.,. as final and as adequate expressions for the value-relation under consideration, and was thus led, as will be seen later, into inextricable confusion and contradiction, while it offered to the vulgar economists a secure basis of operations for their shallowness, which on principle worships appearances only.” (p 504)

It was on this latter basis that the Neo-Classical School of economics, which forms the basis of orthodox economics today, was developed.

The daily value of labour-Power is determined by the average lifespan of the worker. The longer workers live, the lower the value of labour-Power. Suppose on average workers live for 60 years. The cost of producing that worker includes maybe 10 years when they are not producing, 8 years at the start of their life, and 2 at the end. But, they still require feeding, clothing etc. during those periods, particularly at the beginning. That leaves fifty years when they are producing. But, if workers' lifespan falls to 30 years, the value of their labour-Power rises. Now, they only work for 20 years, during which they have to cover the expenses of the ten years they are unable to work!

Where workers have to work extended hours, or more intensively, this raises the value of labour power for two reasons. Firstly, the worker will require more food etc. to cover their additional exertion, and wear and tear – today it might also involve additional medical care to cover treatment for the physical and mental stress caused. But, secondly, beyond a certain level, it will shorten the workers' life, thereby increasing the cost of production, because more labour-Power will need to be produced, to replace that worn out prematurely.

But, this change in the value of labour power does not at all change the value of the product of the labour, which would have to be the case were what was being determined the price or value of labour itself. Rather, the value of the product remains the same, determined by the labour-time required for its production, whilst the reduction in workers' lifespan raises the value of labour-Power, and thereby reduces surplus value.

As the value of labour is only an irrational expression for the value of labour-power, it follows, of course, that the value of labour must always be less than the value it produces, for the capitalist always makes labour-power work longer than is necessary for the reproduction of its own value. In the above example, the value of the labour-power that functions through 12 hours is 3s., a value for the reproduction of which 6 hours are required. The value which the labour-power produces is, on the other hand, 6s., because it, in fact, functions during 12 hours, and the value it produces depends, not on its own value, but on the length of time it is in action.” (p 505)

It appears, however, that the price of labour (the wage) is the price of that labour for the whole time it is in action – which further encouraged by the fact that wages may be proportional to the hours worked, for example, for part-time work, or else workers may receive additional wages for overtime etc.

The wage form thus extinguishes every trace of the division of the working-day into necessary labour and surplus-labour, into paid and unpaid labour. All labour appears as paid labour. In the corvée, the labour of the worker for himself, and his compulsory labour for his lord, differ in space and time in the clearest possible way. In slave labour, even that part of the working-day in which the slave is only replacing the value of his own means of existence, in which, therefore, in fact, he works for himself alone, appears as labour for his master. All the slave’s labour appears as unpaid labour. In wage labour, on the contrary, even surplus-labour, or unpaid labour, appears as paid. There the property-relation conceals the labour of the slave for himself; here the money-relation conceals the unrequited labour of the wage labourer.” (p 505)

It is on the basis of this illusion, that wages are the price of labour, rather than of labour-Power, that, therefore, all labour is paid labour, that the ideological and juridical relations, and ideas of workers and capitalists rest. The importance of that for capital is obvious.

What is presented at first appearance is an exchange, the same as the exchange of any other commodity for money. Money (Exchange Value) is given in exchange for a commodity (Use Value). Commodity fetishism, as described in previous chapters, gives the impression that the value of the commodity is intrinsic to it, that it is the specific nature of the commodity as a Use Value, which gives it its value, rather than that it is itself an embodiment of value i.e. of a certain quantity of labour-time. It appears that Exchange Value (money) is being given in exchange not for an equal amount of labour-time, but for an amount of Use Value, and thereby two incommensurate things are being equated.
Furthermore, exchange-value and use-value, being intrinsically incommensurable magnitudes, the expressions 'value of labour,' 'price of labour,' do not seem more irrational than the expressions 'value of cotton,' 'price of cotton.'” (p 506)

The illusion is strengthened by other factors. Firstly, the worker is paid for his labour-Power only after it has been supplied. Secondly, the worker does not supply labour-Power as abstract labour to the capitalist, but sells a specific, concrete labour – tailoring, spinning etc. The fact that this concrete labour is at the same time reducible to abstract labour, which is the substance of value, is not at first glance, or easily, discernible.

The worker, who works for ten hours a day, might see their wages rise from £10 to £12, or fall to £8, for this day, depending on the supply and demand for labour. It appears to him, therefore, that these changes in market price are a result in changes in its value, even if that value (determined by the labour-time required for its production) remains constant.

But, of course, the demand and supply of labour cannot ultimately be divorced from the value of labour power. If wages are below the value of labour-Power then this may lead to a reduction in the supply of labour-Power, or it will result in higher rates of profit, leading to accelerated accumulation and increased demand for labour-Power. If wages are higher than the value of labour-Power the opposite will occur. More Labour-Power will arise, accumulation will be slower, capital will seek to replace labour with machines etc.

Seen from the perspective of the capitalist, his approach to labour is as with any other commodity – he seeks to get as much as possible for as little as possible. He sees his profit coming from his own ability to buy low and sell high, rather than from the fact that his workers provide unpaid labour. So he does not know he paid the worker the value of their labour-Power, and still made a profit. He simply believes he paid less than it was worth.

Marx also deals with the other two main cases, which give the appearance that wages are the price of labour rather than the value of labour-Power.

1.) Change of wages with the changing length of the working-day. One might as well conclude that not the value of a machine is paid, but that of its working, because it costs more to hire a machine for a week than for a day. 2.) The individual difference in the wages of different labourers who do the same kind of work. We find this individual difference, but are not deceived by it, in the system of slavery, where, frankly and openly, without any circumlocution, labour-power itself is sold. Only, in the slave system, the advantage of a labour-power above the average, and the disadvantage of a labour-power below the average, affects the slave-owner; in the wage-labour system, it affects the labourer himself, because his labour-power is, in the one case, sold by himself, in the other, by a third person.” (p 507) 

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