Wednesday, 20 May 2015

Capital III, Chapter 5 - Part 2

Marx then sets out a series of what today would be called economies of scale. The modern large factory enjoys all the benefits that arise from the rise of co-operative labour. The cost of the motive power provided, and scope on which it can then operate, number of machines it can drive etc. is reduced. The transmission mechanisms do not become proportionately more expensive the more equipment it controls. Machines do not become proportionately more expensive the larger they are, and the number of tools they contain. Buildings do not become proportionately larger or more expensive, the more equipment they contain, and further economies are made for storage etc.

“The same applies to expenditures for fuel, lighting, etc. Other conditions of production remain the same, whether used by many or by few.” (p 79)

All of these savings arise because of the social nature of labour.

“Even the continual improvements, which are here possible and necessary, are due solely to the social experience and observation ensured and made possible by production of aggregate labour combined on a large scale.” (p 79)

The same is true with the use of what formerly would have been waste production. Many of these items on a large scale can be utilised in either the same or some other industry. 

“It is only as waste of combined production, therefore, of large-scale production, that it becomes important to the production process and remains a bearer of exchange-value.” (p 79-80)

Its use effectively reduces the cost of raw material, and by reducing the value of the constant capital increases the rate of profit.

“If the surplus-value is given, the rate of profit can be increased only by reducing the value of the constant capital required for commodity-production. So far as constant capital enters into the production of commodities, it is not its exchange-value, but its use-value alone, which matters. The quantity of labour which flax can absorb in a spinnery does not depend on its value, but on its quantity, assuming the productivity of labour, i.e., the level of technical development, to be given. In like manner the assistance rendered by a machine to, say, three labourers does not depend on its value, but on its use-value as a machine.” (p 80)

The process by which the value of the constant capital is reduced involves a rise in the productivity of those industries producing the constant capital. When a rise in productivity is cited here, this does not just mean that workers in Department I themselves produce more efficiently, for example, as a result of having better machines to work with. That is part of it. But, what is really meant is that the labour-time required for the production of the constant capital falls, for a variety of reasons. But, also firms using this constant capital can achieve savings themselves.

Machine A may require as much labour-time to produce as machine B. But, if machine A produces twice as many use values as B, it represents a saving compared to B. If A lasts twice as long as B, because of its construction, it represents a saving compared to B. If material A contains as much labour-time as B, but it is higher quality etc. it represents a saving. If firms can replace some materials with others, they may obtain savings in their advance of constant capital.

“Other savings of constant capital arising from the shortening of the time of circulation in which the development of means of communication is a dominant material factor will be discussed later. At this point we shall deal with the savings yielded by continuous improvements of machinery, namely 1) of its material, e.g., the substitution of iron for wood; 2) the cheapening of machinery due to the general improvement of machine-building; so that, although the value of the fixed portion of constant capital increases continually with the development of labour on a large scale, it does not increase at the same rate; 3) special improvements enabling existing machinery to work more cheaply and effectively; for instance, improvements of steam-boilers, etc., which will be discussed later on in greater detail; 4) reduction of waste through better machinery.” (p 80-81)

All of these are significant items in relation to the later discussion of the tendency for the rate of profit to fall, because they indicate the extent to which the same factors that contribute towards a rising physical quantity of constant capital to be employed, at the same time act powerfully to reduce the value of that constant capital thereby acting to bring about a rising rate of profit.

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