Capital I, Chapter 24 - Part 5

5) THE SO-CALLED LABOUR FUND

I used to live 100 metres from where Brindley's Harecastle Tunnel
runs under the countryside in North Staffordshire.  I also lived about
half a mile from where he's buried.  Wedgwood, and other industrialists
in the area clubbed together to get the canal and tunnel built, because
it massively reduced the transport costs of bringing in raw materials, and
 getting their products to market.

Capital is not a fixed amount. It constitutes just one part of total social wealth, and this part continually fluctuates as new surplus value is divided into Capital and Revenue. Moreover, even given a certain quantity of functioning capital, the effectiveness of this capital, in terms of output, can vary considerably, depending on the nature and productiveness of the labour-power it purchases, the extent to which science has introduced new technological developments, the fertility of the land, and usefulness of other natural features, such as rivers, access to wind and so on.

In addition, the analysis, so far, has not taken into consideration the effects of circulation. That is because Marx wants to emphasise that surplus value is created in production, and not as a consequence of exchange. But, the need to actually realise the surplus value produced, by selling the commodities, imposes costs. The more efficiently circulation takes place (and this applies to the circulation of money as well as commodities) the lower these costs are, and, therefore, the more effective the capital employed is. Marx demonstrates, in Volume III, that it is for this reason that capital becomes divided into Money Capital, Merchant Capital, and Productive Capital. The first two do not produce surplus value but reduce the costs of realising it, and on that basis, claim their share of the total surplus value.

The idea of capital, as a fixed sum, Marx says, was commonplace amongst political economists, and first established as a dogma by Jeremy Bentham.

“The dogma was used by Bentham himself, as well as by Malthus, James Mill, MacCulloch, etc., for an apologetic purpose, and especially in order to represent one part of capital, namely, variable capital, or that part convertible into labour-power, as a fixed magnitude.” (p 571)

If we take the quantity of constant capital, at any point in time, then it will require a certain quantity of labour-power to set it in motion. This relation is determined technically. But, its not possible to then determine, as Bentham and others did, that this then creates a fixed labour fund.

a) Technology is constantly changing, so the technical determination of the relation between constant capital and variable capital is itself constantly changing. That is, there is no such thing as a “point in time”. Time is continuous, and so is change.

b) Even without technological change, a given amount of labour-power to constant capital does not mean a proportionate increase in workers wages. The existing workers could be employed for longer, or more intensively.

c) The limit on wages is only a capitalistic limit. So, that limit sets a minimum limit determined by the Value of Labour-power. Even this limit, in practice, can be breached for a limited period of time. For example, when there is a sufficiently large Reserve Army of Labour. Then, wages can be pushed below the Value of Labour-power, for a time, so that part of the Wage Fund becomes part of the fund for Capital Accumulation.

But, similarly, there is no reason why the Wage Fund should not expand, if society chose to use its resources to do so, at the expense of accumulation. It is only the laws of capitalism that prevent such a choice. Even under capitalism, during those short periods where labour-power is in short supply, the wage fund can expand as a result.

The extent to which bourgeois ideologists saw the wages fund as fixed is reflected in their attitude towards its counterpart, the surplus value. They saw it as natural that it should be divided not only into capital and revenue, but even the capital to be divided into that invested at home, and its surfeit invested abroad. Marx quotes Fawcett (H. Fawcett, Professor of Political Economy at Cambridge. “The Economic position of the British labourer.” London, 1865, p. 120.)

“The aggregate wealth which is annually saved in England, is divided into two portions; one portion is employed as capital to maintain our industry, and the other portion is exported to foreign countries... Only a portion, and perhaps, not a large portion of the wealth which is annually saved in this country, is invested in our own industry.” (p 572)

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