Thursday, 5 June 2014

The Law Of The Tendency For The Rate of Profit To Fall - Part 14

The Fall In The Value Of The Circulating Constant Capital (4)

In Part 12, it was shown that rather than the value of the circulating constant capital rising relative to the variable capital there are a number of reasons for it to fall. It could fall because, like fixed capital, rises in productivity reduce the value of each element of that circulating capital; it can also fall because the physical quantity of material processed falls per unit of output; it can fall relative to the variable capital, because the nature of social production changes so that the commodities produced require relatively large amounts of abstract labour in the form of complex labour, rather than large amounts of materials. The latter is particularly the case in relation to service industries, but is at least as equally true to large sections of the “new economy”.

But, as Marx points out in Capital III, Chapter 17, this process operates for all capital as it becomes larger too. The very process of its expansion, requires that more capital is allocated to those functions, which do not produce value or surplus value, but facilitate its realisation – those functions which tend ultimately to become the sphere of activity of commercial and money capital. The workers employed in these functions, are by nature more educated and skilled. Their labour is complex in this sense. Its true that these workers do not produce additional value with this complex labour, but from the perspective of capital this is irrelevant. It is interested not in the theoretical surplus value it has extracted in the production process, but only with the actual profit it realises by selling its production. As complex labour, the workers so employed would then tend to be better paid, they make up the growing middle class that Marx says is a feature of the more mature capitalism. But, for this very reason, capital seeks to reduce the value of their labour-power.

“The office is from the outset always infinitesimally small compared to the industrial workshop. As for the rest, it is clear that as the scale of production is extended, commercial operations required constantly for the circulation of industrial capital, in order to sell the product existing as commodity-capital, to reconvert the money so received into means of production, and to keep account of the whole process, multiply accordingly. Calculation of prices, book-keeping, managing funds, correspondence — all belong under this head. The more developed the scale of production, the greater, even if not proportionately greater, the commercial operations of the industrial capital, and consequently the labour and other costs of circulation involved in realising value and surplus-value. This necessitates the employment of commercial wage-workers who make up the actual office staff...

… the larger the scale of production, the greater the quantity of value and surplus-value to be realised, the greater the produced commodity-capital, the greater are the absolute, if not relative, office costs, giving rise to a kind of division of labour. To what extent profit is the precondition for these outlays, is seen, among other things, from the fact that with the increase of commercial salaries, a part of them is frequently paid by a share in the profit. It is in the nature of things that labour consisting merely of intermediate operations connected partly with calculating values, partly with realising them, and partly with reconverting the realised money into means of production, is a labour whose magnitude therefore depends on the quantity of the produced values that have to he realised, and does not act as the cause, like directly productive labour, but rather as an effect, of the respective magnitudes and masses of these values...

The commercial worker produces no surplus-value directly. But the price of his labour is determined by the value of his labour-power, hence by its costs of production, while the application of this labour-power, its exertion, expenditure of energy, and wear and tear, is as in the case of every other wage-labourer by no means limited by its value. His wage, therefore, is not necessarily proportionate to the mass of profit which he helps the capitalist to realise...

The commercial worker, in the strict sense of the term, belongs to the better-paid class of wage-workers — to those whose labour is classed as skilled and stands above average labour. Yet the wage tends to fall, even in relation to average labour, with the advance of the capitalist mode of production. This is due partly to the division of labour in the office, implying a one-sided development of the labour capacity, the cost of which does not fall entirely on the capitalist, since the labourer's skill develops by itself through the exercise of his function, and all the more rapidly as division of labour makes it more one-sided. Secondly, because the necessary training, knowledge of commercial practices, languages, etc., is more and more rapidly, easily, universally and cheaply reproduced with the progress of science and public education the more the capitalist mode of production directs teaching methods, etc., towards practical purposes. The universality of public education enables capitalists to recruit such labourers from classes that formerly had no access to such trades and were accustomed to a lower standard of living. Moreover, this increases supply, and hence competition. With few exceptions, the labour-power of these people is therefore devaluated with the progress of capitalist production. Their wage falls, while their labour capacity increases. The capitalist increases the number of these labourers whenever he has more value and profits to realise. The increase of this labour is always a result, never a cause of more surplus-value.”

Of course, its not just the kind of labour involved in the process of circulation of commodity-capital, described here by Marx, that fulfils this function. Those involved in the banking and financial system, that facilitate the circulation of money and money-capital, fulfil the same function of increasing the realisation of produced surplus value. In 21st century capitalism, the highly complex labour employed in the Financial Services industry, be it in futures markets, credit markets or whatever, carry out the same function not of producing surplus value, but in ensuring the maximisation of its realisation. For the reasons Marx describes, therefore, their labour-power is at least as significant for the production of profit for the specific capital that employs them, as is that of the productive labourer for the productive capitalist. Their labour acts to greatly increase both the mass and rate of realised profit within the economy.

But, in addition to these workers, there are those that Marx refers to who worked in the small office that accompanies the workshop, but now not in the circulation process, but in the production process itself, as technicians, researchers, designers, developers etc. As modern capital develops this section of workers grows rapidly.

This is one reason that capital develops the welfare state, so as to be able to produce the increasing quantities of these forms of labour-power that modern capitalism increasingly requires, and thereby to reduce the wages paid to those workers, by reducing the value of their labour-power. But, if as Marx says, the labour provided is complex, and becomes increasingly more complex, rather than simple, that is it produces – or here helps realise - more value than simple labour, and yet the value of these particular forms of labour-power is progressively reduced, this is a powerful means of raising the rate of surplus value, and therefore of the realised profit.

No comments: