Saturday, 26 September 2015

Capital III, Chapter 15 - Part 17

The total mass of profit is equal to the mass of surplus value. But, the total mass of surplus value depends both on the rate of surplus value and the mass of labour employed. So, if the rate of surplus value is 100%, then 100 hours of labour-power produces 100 hours of new value, divided into 50 hours of necessary labour and 50 hours of surplus labour. However, if productivity rises so that relatively less labour-power is employed, the mass of surplus value may still rise. If the labour-power employed falls to 90 hours, but the rate of surplus value rises to 133%, then 60 hours of surplus will be produced. The proportion of labour-power may fall, so that even with the same rate of surplus value, the mass of surplus value would fall. Yet, this same process, by expanding the mass of capital, would still result in an increase in the mass of surplus value.

If a capital is made up of c 1000 + v 1000 + s 1000, and the capital expands to c 5000 + v 2000 + s 2000, the quantity of labour-power employed has fallen relative to the constant capital, from 1:1 to 5:2, and as a proportion of the total capital from 50% to 28.57%. The rate of surplus value has remained unchanged, and yet the mass of surplus value has doubled. The effect of rising productivity, caused by a rising organic composition of capital, resulting from an increase in the mass of capital, is therefore, on the one hand, to tend towards a lower rate of profit, because v shrinks, as a proportion of C (the total advanced capital), but on the other hand to tend towards a higher rate of profit because s rises relative to v, and therefore, relative to C.

The rise in productivity reduces v relative to C, but raises s relative to v, and, therefore, C. Whether the rate of profit rises or falls, as a result of this process, which raises the organic composition of capital, depends on the relative strength of each force. A reduction in v, for example, might arise, not due to any change in the technical composition of capital, but simply due to a cheapening of wage goods.

For example, when the Corn Laws were abolished that cheapened food, meaning wages could be reduced. But, the same quantity of labour-power was required to process any given quantity of material. The ratio of v to c and C fell because wages fell, but the ratio of c to v+s remained unchanged. But, that means that s rose relative to c+v, because c remained constant whilst v fell. So, the rate of profit rose.

If we have,

c 1000 + v 1000 + s 1000, then s' = 100%, r' = 50%.

If capital accumulates and social productivity rises, we may have,

c 5000 + v 2000 + s 2500. s' = 125%, r' = 35.71%.

or

c 5000 + v 2000 + s 4000. s' = 200%, r' = 57.14%.

In other words, the rise in the rate of surplus value must outweigh the relative fall in the proportion of variable capital. Of course, this assumes that the same processes that raise the rate of surplus value by cheapening wage goods do not also reduce the value of constant capital. But, of course, they will. When the Corn Laws were abolished, then, as Marx described, this also significantly reduced constant capital costs. That was true not just in industries like bakery, where Corn was used as a raw material. It was also true in the textile industry where huge amounts were used as an auxiliary material for size. But, it was not just on corn that tariffs were removed. They were removed on many other raw materials such as cotton.

The very process of raising productivity also reduces the value of constant capital. That is the process involved in moral depreciation of fixed capital. However, it also applies to the reduction in value of materials, the reduction in the quantity of materials consumed, as a consequence of more efficient methods of production, and in the case of auxiliary materials, used to produce energy etc. more efficient machines etc. It applies to the development of more durable, cheaper materials and so on, and to new types of products that require less materials than their predecessors. It applies also to the development of new industries where the organic composition of capital is lower.

The process of increasing social productivity will then tend to raise the mass of material processed relative to the fixed capital and the variable capital, but will also reduce the value of that material. Whether the total value of the circulating constant capital (raw and auxiliary materials) rises or falls will then depend on the extent to which its mass rises or falls as a result of this process, compared with the rise or fall of the value of the commodities of which it is composed. If the fall in the latter is greater than the rise in the former, the total value of the circulating constant capital will fall, causing the rate of profit to rise and vice versa.

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