Tuesday, 23 June 2015

Capital III, Chapter 9 - Part 2

Its only capitals with average organic compositions whose exchange values will be the same as their price of production, and which will obtain the average rate of profit.

“Thus, although in selling their commodities the capitalists of the various spheres of production recover the value of the capital consumed in their production, they do not secure the surplus-value, and consequently the profit, created in their own sphere by the production of these commodities. What they secure is only as much surplus-value, and hence profit, as falls, when uniformly distributed, to the share of every aliquot part of the total social capital from the total social surplus-value, or profit, produced in a given time by the social capital in all spheres of production. Every 100 of an invested capital, whatever its composition, draws as much profit in a year, or any other period of time, as falls to the share of every 100, the Nth part of the total capital, during the same period. So far as profits are concerned, the various capitalists are just so many stockholders in a stock company in which the shares of profit are uniformly divided per 100, so that profits differ in the case of the individual capitalists only in accordance with the amount of capital invested by each in the aggregate enterprise, i. e., according to his investment in social production as a whole, according to the number of his shares.” (p 158)

But, this is a bit misleading, because, whilst, on the one hand, it shows, which was Marx's intention, that the capitalist class have a material interest, which binds them together as against the workers, who produce the surplus value, it suggests that the sharing out of this surplus, by those capitalists, is some kind of conscious act of co-operation.

But, it isn't. Its the opposite. Capitals of equal magnitude do not obtain the same share of profits because of some collective decision to share out the spoils amongst them, but, on the contrary, because of sharp competition between them to obtain the biggest share of those profits they can obtain!

The cost-price, of each commodity, is equal to the circulating capital and wear and tear of fixed capital in the particular sphere of production. Though, under capitalism, even this is no longer equal to the socially necessary labour-time required for its production. That is because the means of production, which it uses as inputs, are themselves sold at their prices of production rather than at their exchange value.

Consequently, even those commodities that appear to be produced with the average organic composition of capital, may not be so, in terms of values, because the amount laid out for its constant capital may be higher or lower depending upon whether the price of production of that constant capital is above or below its exchange value. Once some commodities begin to exchange at prices of production, rather than at their exchange value, the value of all commodities is no longer determined by the socially necessary labour-time required for their production, precisely because it now includes more or less surplus value, more or less social-labour time.

That is the point Engels was making, when he wrote that the Marxian Law of Value only applies from 7,000 B.C. to the 15th Century.

In fact, the real process by which those commodities, with a low organic composition of capital, and higher than average rate of profit, are brought back towards the average is precisely that capital invades that sphere so that supply increases. Market prices fall, because supply then exceeds demand at the market-value, i.e. the equilibrium market-price determined by exchange value. Put another way, more labour is expended than is socially necessary.

The same is true in reverse. In those industries where the organic composition of capital is high, and profits are below average, capital migrates. As it leaves, supply falls. The amount of social labour-time devoted to this sphere falls below what had previously been the socially necessary labour-time required for equilibrium at market value. Because less less social labour-time is now devoted to this production than is socially necessary, market prices rise. Demand falls, and profits move up towards the average.

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