Fall In the Value Of The Variable Capital (13)
But, there are other problems with Marx’s comment quoted in Part 28. The assumption here is that alongside the rise in productivity, and the reduction in the absolute number of workers employed, there is no change in the nature of the labour employed itself. That is unlikely to be the case. Even in any given industry, that is unlikely to be the case, when taken at the level of the total social capital, and its changing composition as new industries arise within it, it cannot possibly be the case. The extent to which changes in the composition of the total social capital affect the rate of profit was indicated in Part 13.
But, the same thing could apply in a single industry. This can be demonstrated fairly easily. Imagine an economy with two Departments - one Department produces all of the material consumption goods, the other produces entertainment. 10 million people work in Department I, working a total of 10 billion hours of simple labour-time. 90% of the output of the department is exchanged internally, amongst its workers and capitalists, leaving 10% to be traded with Department II - that is 1 billion hours of output. In Department II, 1 million people work a total of 1 billion hours of simple labour, which they trade with Department I, for consumption goods. These 1 million people are employed in 10,000 music halls around the country, 100 people working in each.
We know that the output of Department II is equal to the traded output of Department I, because both outputs exchange for each other, and is equal to 1 billion hours. Whenever, then, the output of Department II exchanges entirely for the traded output of Department I, we know that to be the case, and we can calculate the value of Department II's output from it, provided that we assume that the labour employed in Department I is entirely simple labour.
Now employment in Department II falls, by 900,000 people, consequent on a rise in productivity, due to technological developments. However, rather than being employed in 10,000 music halls, around the country, they are now, by the magic of technological development, all employed in a single TV company that is able to replicate the output of those 10,000 music halls. The output of these remaining 100,000 people, in Department II, exchanges entirely for the entire traded output of Department I, whose value we know to be equal to 1 billion hours. We know then that the value of the output of these 100,000 people in Department II is also equal to 1 billion hours or else this trade could not occur.
What then do we have. We have a fall in Department 1 workers of 900,000 people. Yet we have the total output of the economy remaining constant, 10 billion hours from Department I, 1 billion from Department II. We also have the output of Department II remaining constant despite employment in Department II falling to a tenth its previous level. The basis of this is that the labour employed in Department II is no longer simple labour, it is complex labour each unit of it being the equivalent of ten units of simple labour.
By the same token, wages paid to this complex labour - if the rate of surplus value remains constant - will be ten times more than that paid to simple labour. In fact, for the reasons already set out, its likely that the rate of surplus value itself will have risen considerably under such conditions, even if the real wages enjoyed by Department II workers rise considerably. Firstly, their real wages could rise considerably, but not by as much as the rise in the new value they create, so the rate of surplus value rises. Secondly, the rise in productivity, symbolised by this development, would also be likely to reduce the value of wage goods, and thereby the value of labour-power, causing a further rise in the rate of surplus value. This in fact, not only reflects phenomenon in the economy of relatively small numbers of people, such as footballers, entertainers, and so on, being paid huge amounts in wages, whilst their employers are able to still make huge rates of profit, from exploiting their labour, but it also reflects the situation, in a range of industries, where levels of productivity are high, and where relatively small numbers of relatively highly paid, and very skilled workers, are employed, who produce high levels of profits. In fact, in these industries, as with the example above, its quite likely that even if the value of fixed capital rises, the quantity and value of materials may not. In fact, relative to the value of output, the value of fixed capital is still likely to fall.
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