Friday, 17 October 2014

The Law Of The Tendency For The Rate of Profit To Fall - Part 51

Transformation Of the Nature of Labour (3) 

In Part 50, the consequence of a change in the nature of labour within a given industry was examined. On the one hand, technological development creates a requirement for more technologically advanced, better educated and cultured workers. On the other hand, the means of subsistence required to produce such workers necessarily expand, and become more varied with its own effect on the value of labour-power, reflected in its historical and cultural component. But, this is separate from the change in the value of the product of this labour, which itself is a function of the use value of this labour, the fact that its nature as concrete labour is transformed, so that even the unskilled and semi-skilled labour may appear as complex labour compared to past labour.

But, more significant, perhaps, is the fact that alongside the technological development of capitalism, which is the basis of the process which leads to the tendency for the rate of profit to fall, goes also a transformation of production and consumption itself. As Marx describes, this process necessitates the continual development of new use values, and new industries producing these use values. It requires new types of concrete labour to be developed to produce these new types of use value, and frequently in these new lines of production, not only is it the case that the organic composition of capital is low, but part of the reason for this is that the nature of the concrete labour employed is that it is more skilled. This is particularly, the case, as has been suggested, in relation to many of the new industries today, in the realm of software design, computer games development and so on.

It is the case, as was suggested also, in those new industries, that have become increasingly significant, in the modern economy, in the realm of service production, for example, high quality restaurants, entertainment, fashion design and so on.  But, the recent attempt by Pfizer to take over Astra-Zeneca illustrated the number of very highly skilled workers who are today employed in the high value production area of pharmaceuticals, and many more are employed in the growing areas of biotechnology, gene technology and so on. Marx indicated the extent to which this also applied in relation to the realisation, rather than production, of surplus value in relation to commercial workers. There is, perhaps, no better illustration of that, today, than the vast profits realised by the financial services industry, despite the very high wages paid to some of the very complex labour employed within it.

This indicates how a relatively small, but rapidly growing number of workers, whose labour is highly complex, can represent a massive amount of abstract labour-time in the modern economy, which acts to validate equally large amounts of capital in existing industries. The value, created by this smaller number of highly skilled workers, in these sectors, can thereby exchange against the value produced by much larger numbers of workers, employed in the older industry sectors, including the revenue that can then be spent in a range of retail venues, thereby enabling workers, employed by this merchant capital, to realise large amounts of surplus value, out of which their own wages are paid. The very high value production of workers, in a range of new industries, means that, despite relatively high wages, these industries can produce large amounts of surplus value, and experience high rates of profit, which, thereby, raises the general annual rate of profit. In addition, as Marx sets out in Capital III, Chapter 17, the general annual rate of profit is not simply a question of the surplus value produced, but of the profit realised, which is also a function of the ability of commercial capital, to reduce costs, and increase the rate of turnover. The more effective, the complex labour employed by merchant capital and money-capital, in the process of circulation, the more the actual realised rate of profit rises, because the mass of realised profit rises relative to the total capital advanced.

Examples of this process were outlined in Parts 13,20 and 29

In fact, this very process can be seen as also a necessary consequence of the very process of capitalist production. The basis of the tendency for profit margins to fall, as Marx outlines it, in Chapter 13, and for the organic composition of capital to rise, is based on the need to continually reduce the value of commodities so that each individual capital can gain market share, and thereby win the battle of competition. But, the more this process develops, the more the reduced number of productive workers must themselves become more technologically competent, better educated etc. Moreover, this very process increases the mass of commodities to be circulated, which then increases the mass of labour that must be employed in that process, and these workers, as Marx sets out, tend to be those that require greater skill, and whose labour is complex. 

But, there is another aspect to this, which is that the more many of these basic commodities become produced on a mass scale, and the individual value of these commodities falls, the more all workers can satisfy their requirements for these commodities. In fact, as Marx sets out, it is this basic contradiction that production can expand the quantity of these use values, more or less without limit, whereas the demand for these commodities can only expand within very defined limits, which tends to result in market prices falling below prices of production, and costs of production, that leads to crises of overproduction. It is in order to resolve this contradiction, that capital must continually develop new use values, so as to extend the market.

However, the more the demand and even the need, for an increasing number of these basic commodities is satisfied, the more the range of use values that consumers are persuaded to consume, the less the requirement is that these additional use values have to be produced as commodities whose value is ever lower. On the contrary, it has always been the case that for the rich, a factor in buying luxury goods, was not that they were cheap, but that they were expensive, that, as a result, they were more exclusive, and represented higher quality. In other words, for many new commodities, at least initially, the determining factor is not that their value must be minimised, but their quality, or appearance of quality, should be high.

For a whole range of these commodities, therefore, and this can be seen with the growth of designer labels, high priced restaurants, very high-priced coffee shops and so on, it is not the ability to reduce prices that is decisive in winning market share, but the perception of quality, which tends to be a reflection of the quality of the labour employed, rather than the constant capital employed, even if that labour is not particularly highly paid. It has always been the case, for example, that luxury jewellery had a high value, because it was produced by skilled craftsmen rather than machines. What the craftsmen themselves were paid, by the capital that employed them, was irrelevant to the value it created as complex labour.

It is no surprise that, in Britain, there was a call for 50% of people to go to University, and there are similar calls in the US and elsewhere. This is simply an extension of the principal set out by Marx, above, in relation to commercial workers, that capital seeks, by such methods, to continually increase the value of the product of labour, whilst minimising the value of the labour-power itself.

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