Sunday, 27 September 2015

Capital III, Chapter 15 - Part 18

To the extent that the quantity of labour-power is reduced, this acts to reduce the quantity of surplus value and rate of profit. But, to the extent that this is a consequence of a rise in productivity, which reduces the paid portion of labour, and so raises the rate of surplus value, it increases the quantity of surplus value and rate of profit.

“Two labourers, each working 12 hours daily, cannot produce the same mass of surplus-value as 24 who work only 2 hours, even if they could live on air and hence did not have to work for themselves at all. In this respect, then, the compensation of the reduced number of labourers by intensifying the degree of exploitation has certain insurmountable limits. It may, for this reason, well check the fall in the rate of profit, but cannot prevent it altogether.” (p 247)

Which, of course, is true if nothing else changes. But, of course, as has been seen, in the course of Marx's elaboration here, this contradictory process means that not only may it be the case that other things change, but it must be the case that other things change. Specifically, what changes here is the nature of the labour itself and the social context in which it operates.

Let us take these two workers and compare them, in reality, to the 24 workers whose labour they now replace. As Marx sets out in Capital I, if this is in the context of a single firm, which employs some new machine, that can produce as much with 2 workers as was previously produced with 24, the situation is that the higher productivity of these workers makes it as though their labour were complex labour, in other words, it is as though each worker produced as much value in an hour as the workers in other firms produce in 12 hours.

The consequence here is that the rate of profit rises rather than falls. The labour employed produces 12 times as much new value as that of other firms, and yet is paid the same amount. So, in the industry, we have,

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

but, in this firm we have

c 12,000 + v 1,000 + s 23,000. s' = 2300%, r' = 176.92%.

The same situation applies, Marx sets out in Capital I, in relation to the higher productivity in more developed economies compared to less developed economies. For example, as was set out in relation to Marx's example in Capital III, Chapter 13.

He sets out that, in the one case, the capital is comprised 80 c + 20 v, and in the other 20 c + 80 v. In the former country a total of 40 hours of labour processes £80 of constant capital. In the latter, 120 hours of labour process just £20 of constant capital. On that basis 1 hour of labour in the first country processes 12 times as much constant capital as an hour of labour in the second. On a purely value basis then, labour in the first country is 12 times as productive as that in the latter. But, this underestimates the difference. As Marx repeatedly points out, as the technical composition of capital rises, the organic composition rises but not in the same proportion, because the constant capital becomes cheaper, it is used more efficiently, and fewer, better machines replace a larger number of less efficient machines.

But, let us proceed on the basis that labour in the former country is just 12 times more productive than in the latter, and that, therefore, on the basis of what Marx sets out in Volume I, the value of an hour's labour in country 1 is equal to 12 hour's of labour in country 2. In that case what we would actually have is.

Country 1

c 80 + v 20 + s 460 = 560, s' = 2300%, r' = 460%

Country 2

c 20 + v 80 + s 40 = 140, s' = 50%, r' = 40%.

So, in other words, the workers in country 1 undertake 40 hours of labour, but because the value of an hour's labour for country 1 is equal to 12 hour's of labour in country 2, this 40 hours creates a value equivalent to 480 hours of labour in country 2.

If the workers in country 1 were only paid the value of their labour-power they would be paid £20, which, as with the example Marx gives, of the firm that enjoys the advantage of being the first to introduce a machine, means that the capitalists in country 1 would make an even greater rate of surplus value.

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