Thursday, 22 May 2014

Capital II, Chapter 16 - Part 10

For any given scale of production, the amount of advanced capital decreases in proportion to the turnover period (or inverse proportion to the number of turnovers). The annual rate of surplus value increases, similarly.

By the same token, for any given amount of advanced capital, the scale of production rises, the higher the rate of turnover.

“It generally follows from the foregoing investigation that the different lengths of the turnover periods make it necessary for money-capital to be advanced in very different amounts in order to set in motion the same quantity of productive circulating capital and the same quantity of labour with the same degree of exploitation of labour.” (p 318)

When the workers withdraw means of subsistence from the market, they put money into it. For the reasons set out previously, however,

“But since the money wherewith the B labourer pays for his means of subsistence, which he withdraws from the market, is not the money-form of a value produced and thrown by him on the market during the year, as it is in the case of the A labourer, he supplies the seller of the means of subsistence with money, but not with commodities — be they means of production or means of subsistence — which this seller could buy with the proceeds of the sale, as he can in the case of A.” (p 318)

B's workers have wages, which they use to buy commodities, but the commodities they produce themselves do not appear in the market for another year. So, B workers may have potatoes produced by A workers, but the money paid as wages to A workers from that sale, may find no wheat, for example, produced by B workers, to buy, for another year. Given that exchange, as we saw at the beginning of Volume I, is really the exchange of an amount of labour-time by A, for an equal amount of labour-time from B, it can be seen how this situation can lead to crises and disproportions. 

“If we conceive society as being not capitalistic but communistic, there will be no money-capital at all in the first place, not the disguises cloaking the transactions arising on account of it. The question then comes down to the need of society to calculate beforehand how much labour, means of production, and means of subsistence it can invest, without detriment, in such lines of business as for instance the building of railways, which do not furnish any means of production or subsistence, nor produce any useful effect for a long time, a year or more, while they extract labour, means of production and means of subsistence from the total annual production.” (p 318-9)

One of the reasons the USSR collapsed was that it invested huge amounts of social labour-time in this way, that sucked value out of its economy in the short term, but only put it back in the long-term. Its industry was massively geared to heavy capital goods production, with long turnover periods. It also operated as a massive sort of Welfare State, as a means of reconciling the fact that the workers were the ruling class, and yet control was in the hands of a workers bureaucracy. It had large numbers of doctors, scientists, teachers, as well as the hospitals, schools and universities to go with them, and virtually free public transport. Not only did this suck value out of the rest of the economy to provide the necessary means of production for these enterprises, as well as to provide the means of subsistence for those that worked in them, but the costs of building these facilities, and of educating and training those that worked in them, required yet more resources to be sucked out of the economy. Although, all these things put value back in the economy, they do so only over long periods of time.

In short, too few workers were employed in productive activity that put value into the economy in the short term – let alone the problems of that value being diminished because of poor quality etc. - and too many were involved in activities that only returned value in the long term. Democratic rather than bureaucratic planning may make that problem worse rather than better. If asked, most workers would vote for more, better hospitals, schools, teachers, doctors etc. Its not so easy to get across what the real cost of achieving that is. When you are expressing a preference in a vote, rather than actually spending your money, its easy to vote for things you'd like rather than things you can afford.

In fact, when workers express their real preferences for what they wish to consume, i.e. how they vote with their wallets, they frequently demonstrate a higher preference for allocating available social labour-time in the production of motor cars, football and other forms of entertainment, TV's and electronic equipment, more than for education or healthcare.

That is because, when individuals verbally express a preference it is usually a preference for what they think 'society', i.e. everyone else should do. So, individuals might vote for an increase in public transport, because they think everyone else should use it, leaving the roads clear for them! The consequence is that such democratic planning at a detailed level, would almost certainly result in major dislocations because these macro decisions, allocating available social labour-time would inevitably be at variance with the millions of micro decisions of consumers of how they wished to spend their money. It would lead to the emergence of a black market economy, as a means of meeting the needs of consumers that were not being met, as a result of inadequate production, as well as waste of resources in all those areas that were likewise over produced.

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