5) Recapitulation
“The absurd formula that the three revenues, wages, profit and rent, form the three “component parts” of the value of commodities originates with Adam Smith from the more plausible idea that the value of commodities “resolves itself” into these three component parts. This is likewise incorrect, even granted that the value of commodities is divisible only into an equivalent of the consumed labour-power and the surplus-value created by it.” (p 389)
Capitalist production is based on the fact that the worker sells his commodity – labour-power – to the capitalist, for whom it constitutes part of his productive-capital. This relation determines its specific character. The capitalist is not interested in buying labour-power to produce use values, but only to extract absolute and relative surplus value.
“For this reason we have seen in the analysis of the process of production that the production of absolute and relative surplus-value determines 1) the duration of the daily labour-process and 2) the entire social and technical configuration of the capitalist process of production.” (p 389)
The laws regulating the extraction of absolute surplus value determine the limits of the length of the working-day, and the intensity of work within it. The laws regulating relative surplus value determine the way machines, new techniques and other means of raising productivity are implemented.
This process results in the conservation of existing value (reproduction of constant capital), reproduction of the labour-power (production of the workers' consumption-fund), and the production of a surplus value (production of the capitalists' consumption fund). But, the fact that the production process creates these separate funds does not at all mean that the total value of production is simply a sum of their parts.
“The substance of value is and remains nothing but expended labour-power — labour independent of the specific, useful character of this expenditure. A serf for instance expends his labour-power for six days, labours for six days, and the fact of this expenditure as such is not altered by the circumstance that he may be working three days for himself, on his own field, and three days for his lord, on the field of the latter. Both his voluntary labour for himself and his forced labour for his lord are equally labour; so far as this labour is considered with reference to the values, or to the useful articles created by it, there is no difference in his six days of labour. The difference refers merely to the different conditions by which the expenditure of his labour-power during both halves of his labour-time of six days is called forth. The same applies to the necessary and surplus-labour of the wage-labourer.” (p 390)
The value of a commodity is determined by the labour-time required for its production, and that comprises two elements. First is the labour-time required to produce the constant capital, the materials etc. Second is the time the worker has to spend processing the materials to create the new product. Once this value of the commodity is determined, then it is possible to talk about how that value, once realised is distributed.
“If I have drawn a straight line of definite length, I have, to start with, “produced” a straight line (true, only symbolically, as I know beforehand) by resort to the art of drawing, which is practised in accordance with certain rules (laws) independent of myself. If I divide this line into three sections (which may correspond to a certain problem), every one of these sections remains a straight line, and the entire line, whose sections they are, does not resolve itself by this division into anything different from a straight line, for instance into some kind of curve. Neither can I divide a line of a given length in such a way that the sum of its parts is greater than the undivided line itself; hence the length of the undivided line is not determined by any arbitrarily fixed lengths of its parts. Vice versa, the relative lengths of these parts are limited from the outset by the size of the line whose parts they are.” (p 390)
The use value of a commodity is entirely the result of the labour process that creates it. But, that is not the same for its value. A large part of the value of the commodity is simply transferred to it along with the use value of the constant capital. That is value that already existed. The only new value created is that created by the worker in the labour process, and which is divided into wages and surplus value.
The constant capital constitutes a stock whereas the new value produced is a flow. Comparing it, for example, with the Profit & Loss Account of a trading company, that begins with the “Opening Stock”, adds the “Purchases”, and then deducts the “Closing Stock”, to obtain the “Cost of Sales”. It deducts the Cost of Sales from its Sales Income to obtain the Gross Profit. The Cost of Sales constitutes a necessary part of the firm's costs that have been recovered in its sales, but forms no part of the revenue that can be distributed as wages, profits or rent. Rather, having been recovered in the value of sales, it has to to go straight back into purchases again.
The same thing is true for constant capital. It forms a necessary element in the value of the commodity, and of national output, but that value, once recovered, goes straight back into its replacement rather than providing a revenue. The revenue can only be paid out of the new value created. The constant capital circulates as capital, the new value circulates as revenue.
“However, if Adam Smith wanted to occupy himself, as he did, with the role of the various parts of this value in the total process of reproduction, even while he was investigating the value of commodities, it would be evident that while some particular parts function as revenue, others function just as continually as capital — and consequently, according to his logic, should have been designated as constituent parts of the commodity-value, or parts into which this value resolves itself.” (p 392)
Smith's problem was that he started his analysis from the wrong point. What Smith analyses is commodity-capital, but to do so adequately involves understanding the process of capitalist production, which in turn requires an understanding of the exchange of commodities, which in turn requires an understanding of the commodity itself. That is why Marx began his analysis with the commodity.
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