Tuesday, 29 October 2013

Capital II, Chapter 8 - Part 10

So, the average life, of fixed capital, is based on it being maintained and repaired to the necessary level. But, the amount of repairs required is indeterminate, because it depends on accidents, and the individual machine.

“But then it is also evident that the value added by this extra expenditure of capital and labour cannot enter into the price of the commodities concerned at the same time as it is incurred. For example, a manufacturer of yarn cannot sell his yarn dearer this week than last, merely because one of his wheels broke or a belt tore this week. The general costs of spinning have not been changed in any way by this accident in some individual factory. Here, as in all determinations of value, the average decides. Experience shows the average occurrence of such accidents and the average volume of the maintenance and repair work necessary during the average life of the fixed capital invested in a given branch of business. This average expense is distributed over the average life and added to the price of the product in corresponding aliquot parts; hence it is replaced by means of its sale.” (p 179)

Capital seeks to regularise such expenditure as much as possible, for example, as stated above, via insurance, but it attempts to do so via planned maintenance and servicing too. In large enterprises, it was the practice, until the 1980's, to have in-house maintenance departments, to undertake such work. But, under the neo-fordist regimes, introduced in the 1980's, which brought in various forms of flexible specialisation, many of these were closed down, and the work transferred to external, usually small, local specialist firms, who were then tied to the contracting large enterprise.

Although repairs are undertaken at indeterminate periods, depending on when they are required, they are closer to being circulating than fixed capital. They are reproduced, on an average, out of the value of the product each year. Marx sets out how capital usually achieves this in its book-keeping, however, by lumping it together with wear and tear. So, for example, if a machine is estimated to last for 15 years, its lifespan is instead calculated on the basis of 10. Instead of 6.66% of its value being written down each year, and transferred to the end product, it is calculated as 10%. The additional sum, each year, then covers the necessary cost of repairs.

Repairs arising from accidents are not part of wear and tear, and the cost of these is not then reproduced in the value of the end product. It is a total loss to capital. In order to share out the risk, insurance is taken out. The insurance premium is paid for out of the Surplus Value. In a sense it is like any other type of unproductive consumption paid for out of surplus value by the capitalist.  So, on the one hand, the money reserve can be, and is, used for the expansion and intensification of production, rather than just to repair and replace fixed capital, on the other, surplus value is used to replace fixed capital, and to cover the costs of insurance, depreciation etc. The process of replacing fixed capital is often indistinguishable from the process of its extensions and intensification.

“In point of fact only the smallest part of the capital needed for replacement consists of the money reserve fund. The most substantial part consists in the extension of the scale of production itself, which partly is actual expansion and partly belongs to the normal volume of production in those branches of industry which produce the fixed capital. For instance a machine factory must arrange things so that the factories of its customers can annually be extended and that a number of them will always stand in need of total or partial reproduction.” (p 181)

Within this process, some capitalists, even within the same branch of production will be more fortunate than others. Some will have machines that break down less frequently than others. Yet, it is only the average cost of repairs that will be passed on to the value of the end product.

“But the addition to the price of the commodities resulting from wear and tear and from costs of repairs is the same and is determined by the average. The one therefore gets more out of this additional price than he really added, the other less. This circumstance as well as all others which result in different gains for different capitalists in the same line of business with the same degree of exploitation of labour-power tends to enhance the difficulty of understanding the true nature of surplus-value.” (p 181)

Back To Part 9

Forward To Part 11

No comments: