Sunday, 25 October 2015

Capital III, Chapter 15 - Part 46

The fact of the need for such state intervention is itself an expression of the degree to which capital as a social power is manifest in the shape of the capitalist, and yet grows in such proportion as to exceed any such individual capitalist. Initially, the industrial capitalists were indistinguishable from their workers. A large part of their income came from their own labour itself. But, rapidly, via the process of secondary accumulation, as surplus value is converted into capital, that stops being the case. The capitalist first then becomes a manager, and then even that function is taken over by professional workers, on their behalf. The capitalists' wealth and power stems then solely from their ownership of fictitious-capital.

“Capital comes more and more to the fore as a social power, whose agent is the capitalist. This social power no longer stands in any possible relation to that which the labour of a single individual can create.” (p 264)

First, the process of concentration and centralisation leads to the various scattered capitals becoming concentrated in the hands of a relatively few big capitalist families who exercise what Marx describes, in Capital I, as a “monopoly of private capital”. But, even this comes to represent a fetter on the further development of capital. This fetter is "burst asunder", as the monopoly of private capital is destroyed by the rise of socialised capital in the form of the joint stock company and the co-operative. By the latter part of the 19th century, this process of the “expropriation of the expropriators”, with the development of these socialised capitals, in the form of the joint stock companies and co-operatives creates the condition, which is the means, Marx says later, by which capitalist private production is abolished within the confines of capitalism itself.

“It becomes an alienated, independent, social power, which stands opposed to society as an object, and as an object that is the capitalist's source of power. The contradiction between the general social power into which capital develops, on the one hand, and the private power of the individual capitalists over these social conditions of production, on the other, becomes ever more irreconcilable, and yet contains the solution of the problem, because it implies at the same time the transformation of the conditions of production into general, common, social, conditions. This transformation stems from the development of the productive forces under capitalist production, and from the ways and means by which this development takes place.” (p 264)

It was earlier indicated that capitalists will only introduce some new machine if it increases their profits. That cannot simply be because this machine is cheaper than the machine it replaces, at least for the industry as a whole, because we know that constant capital only transfers its value to the end product, by means of the gradual transfer of wear and tear, in the case of fixed capital. So, if the machine is cheaper, this would simply reduce the value of the end product, rather than increase the profit. What it would do, of course, is to raise the rate of profit, because the same mass of surplus value would now be produced by a smaller quantity of advanced capital.

On this basis, firms do have an incentive to introduce cheaper machines than the ones they already have, and this is part of the process of moral depreciation. But, the question is why would a firm introduce a more expensive machine?

There are several reasons. Firstly, as Marx sets out, although a new, better machine may be more expensive in absolute terms, than existing machines, it may be cheaper in relative terms, because of its higher level of productivity.

Suppose an existing machine has a value of £1,000 and produces 10,000 pieces per year. It gives up £0.10 of its value to each piece it produces. If a new machine is introduced that has a value of £1,500, but produces 100,000 pieces a year, it only transfers £0.015 of its value per piece. The second machine, therefore, is relatively much cheaper than the first, and would push it out of the production process.

Secondly, the more expensive, but more productive machine also brings about a consequent saving in labour-power. Suppose this is a straightforward swap of one machine for the other. It does not result in any workers being laid off, because this machine requires one worker to operate it just as did the last. The difference is that, just as the new machine now produces 10 times as many pieces as the old machine, and thereby processes 10 times as much material, so does the worker's labour-power that operates it. Put another way, even though this one worker is still employed, they produce as much in 1 hour as previously they produced in 10. It is as though the machine has replaced 90% of their labour-power.

Suppose, the normal quantity of commodities produced for a working period is 10,000 pieces. Previously that required a year to produce. Suppose the workers wage was £10,000 for the year. That is the variable capital that had to be advanced. Suppose also that the material processed for these 10,000 units costs £10,000, so that is the circulating constant capital that must be advanced. But, now, the new machine produces 10,000 units in just a tenth of a year, say 5 weeks. For that period, the wages advanced amount to only £1,000. That is all the variable capital that now needs to be advanced, because assuming no circulation time, at the end of this 5 weeks, the 10,000 units are sold, and their sale, provides the firm with the money-capital with which to pay wages for the next 5 weeks, and to buy the materials for the next 5 weeks.

Because, as much material is now processed in 5 weeks as was previously processed in 50 weeks, the same amount is advanced as circulating constant capital, as before, but now it is advanced for this 5 week period. Assuming a 100% rate of surplus value, the £1,000 advanced will produce £1,000 of surplus value. But, the same £1,000 of surplus value will be produced in each of the other 9 working periods. The total surplus value produced will be £10,000 as it was before, but now it will be made, by advancing just £1,000 of variable capital. In reality, the rate of surplus value, or the annual rate of surplus value, will have increased ten fold. The consequence is that the annual rate of profit rises.

That can probably be best understood if we think about the new machine replacing 10 existing machines. In that case, as the machines are replaced, so the workers that operated them are made superfluous. The new machine replaces 90% of the labour-power previously employed.

But, under what conditions would it be possible for this new machine to increase the amount of profit obtained by the firm, rather than just for the rate of profit to be increased? The cost of the new machine must be lower not just than the value produced by the labour it replaces, it must be less than just the paid part of that labour. That is because it is only the paid part of the labour that is a cost for the firm. If the additional cost of the machine is greater than the saving in wages, the firms cost will rise, and its profit will fall.

“No capitalist ever voluntarily introduces a new method of production, no matter how much more productive it may be, and how much it may increase the rate of surplus-value, so long as it reduces the rate of profit.” (p 264)

No comments: