Thursday, 24 September 2015

Capital III, Chapter 15 - Part 15

2) Conflict Between Expansion Of Production And Production Of Surplus-Value

As already shown, the process which tends towards a lower rate of profit – the rise in social productivity – is contradictory. It leads not only to a tendency for the rate of profit to fall, but also for it to rise; it leads to an inevitable rise in the rate of surplus value; it necessitates a rise in the mass of profits and of capital. So, the mass of the existing means of production increases in quantity and in value, even as the value of each building, machine, piece of material falls. But, this increase in mass also implies a rise in the organic composition of capital, spurred on by competition. Each capital, to be competitive, seeks to reduce costs. The bigger capitals, for the reasons set out in Chapter 11, have an even bigger incentive to reduce the costs of their fixed and circulating constant capital than do the smaller capitals. They seek to develop better, cheaper machines, so that one machine replaces many, and the cost of machines itself falls – the process of “moral depreciation”.

The same process raises productivity so that not only does one machine process as much or more material as several did before, but, by the same token, only one worker is needed to operate that one machine, whereas previously several workers were required to operate the several machines.

The increase in productivity means that a relatively smaller quantity of labour-power is then required to mobilise any given size of capital. But, as the quantity of material processed thereby increases, in mass and value, proportionately, so then capital seeks to reduce the cost of that material – bringing in cheaper material from overseas, reducing tariffs and other impediments to access; developing new more productive sources of supply; and raising productivity of existing sources.

The same process reduces the value of labour-power. Higher productivity means that the workers means of subsistence become cheaper. A smaller portion of the working day is required for their production. So, wages can fall whilst living standards remain constant. A greater portion of the working day, therefore, constitutes surplus labour-time. This is just like Robinson Crusoe using his surplus 2 hours to produce a fishing net, which meant his consumption could rise, but the time he spent catching fish fell so much that his surplus labour-time then more than doubled. Under capitalism, this increase in the rate of surplus value, and in the mass of surplus value, is appropriated by capital, and the additional surplus value is then thrown into yet further accumulation of means of production, increasing the quantity of output even further.

But, the corollary of this, as was seen above, is that less labour-power is then required to process any given quantity of material. The quantity of labour-power continues to rise, because the mass of capital continues to increase – existing industries continue to expand, new industries with low organic compositions are continually being created as new capitals – but the proportion of labour-power continues to fall.

The result of Robinson Crusoe creating his net was that instead of it taking him 8 hours to catch the fish he needed, it only required 4. His surplus labour-time rose from 2 hours to 5.75, as a result. He could choose to use this additional time to catch more fish, and thereby increase his consumption, or to reduce his working day, or to produce some other means of production or consumption. For example, he may decide to increase his consumption by varying his diet, collecting roots and berries, or to increase his future consumption by producing more means of production, creating stock pens, and cultivating an area of land.

He might spend time producing another fishing net, but this might constitute over production if he can only use one net at a time. Yet, such an additional net could be productive if it could be used by Friday. Even if Robinson could use the additional net himself, it could still constitute over production, because the additional fish he catches with it may be surplus to his requirements. He can only stomach so many fish in a day, even if he has caught them in a fraction of the time.

As Marx put it in its capitalist context.

"The same value can be embodied in very different quantities [of commodities]. But the use-value—consumption—depends not on value, but on the quantity. It is quite unintelligible why I should buy six knives because I can get them for the same price that I previously paid for one.”

(Theories of Surplus Value III)

Robinson will tend not to make such mistakes because he will know, in advance, to allocate his available labour-time to the production of those things that will provide him with the most use value. He may have accidental over production, in the same way that peasant producers have bumper harvests some times, but unlike overproduction under capitalism, such events are not a source of crisis.

But, for capitalism, because it is production for profit and not for consumption, production always proceeds consumption, and production decisions always proceed consumption decisions, and the allocation of available social labour-time – though this is not necessarily the case for big industrial capital today, which only develops its investment and production plans on the basis of detailed understanding of what future consumption patterns are likely to be, much as would socialist planning of the economy.

Particularly, in the era that Marx is describing, the many individual capitals, without this kind of future knowledge of the market, simply responded to what was currently profitable, and invested additional capital in expanding that production. Small capital today, which is still numerically predominant, still bases its decisions on that foundation, which is why when any crisis erupts it is this small capital that suffers most and first.

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