Capital III, Chapter 37 - Part 12

Even in economies based on peasant production, some producers will tend to produce food, whilst others will produce raw materials. For the individual producer of food, their day is divided into necessary labour and surplus labour. The surplus food they produce may be exchanged for raw materials, say cotton. But, from the perspective of society, the totality of the labour-time of those producing food, and those those producing raw materials is equally divisible into a portion of necessary labour and surplus labour.

The total surplus product of the food producers is what enables the raw materials producers to produce raw material rather than food.

“Although the labour of the direct producers of means of subsistence breaks up into necessary and surplus labour as far as they themselves are concerned, it represents from the social standpoint only the necessary labour required to produce the means of subsistence. Incidentally, the same is true for all division of labour within society as a whole, as distinct from the division of labour within individual workshops. It is the labour necessary for the production of particular articles, for the satisfaction of some particular need of society for these particular articles.” (p 635)

So long as these different articles are produced in the correct proportions, so that, for example, only sufficient food supply is thrown on to the market, to meet the demand of the raw material suppliers, and vice versa, then these commodities will exchange at their values – and later under capitalism at their prices of production. If this proportion is not met, however, then the demand for some commodities will not coincide with the supply and so market prices will diverge from exchange values, and prices of production.  This is one of the causes of crises of overproduction described by Marx and Engels, as I have set out in my book, Marx and Engels' Theories of Crisis.

“It is indeed the effect of the law of value, not with reference to individual commodities or articles, but to each total product of the particular social spheres of production made independent by the division of labour; so that not only is no more than the necessary labour-time used up for each specific commodity, but only the necessary proportional quantity of the total social labour-time is used up in the various groups. For the condition remains that the commodity represents use-value. But if the use-value of individual commodities depends on whether they satisfy a particular need then the use-value of the mass of the social product depends on whether it satisfies the quantitatively definite social need for each particular kind of product in an adequate manner, and whether the labour is therefore proportionately distributed among the different spheres in keeping with these social needs, which are quantitatively circumscribed. (This point is to be noted in the distribution of capital among the various spheres of production.) The social need, that is, the use-value on a social scale, appears here as a determining factor for the amount of total social labour-time which is expended in various specific spheres of production. But it is merely the same law which is already applied in the case of single commodities, namely, that the use-value of a commodity is the basis of its exchange-value and thus of its value.” (p 635-6)

The importance of this is that unless this proportion is maintained, either at the level of the individual commodity, the industry or the total social capital, the value of the commodity cannot be fully realised, and so the capital used in its production will have been overproduced, forming one basis for the outbreak of crisis.

“For instance; let us assume that proportionally too much cotton goods have been produced, although only the labour-time necessary under the prevailing conditions is incorporated in this total cloth production. But in general too much social labour has been expended in this particular line; in other words, a portion of this product is useless. It is therefore sold solely as if it had been produced in the necessary proportion. This quantitative limit to the quota of social labour-time available for the various particular spheres of production is but a more developed expression of the law of value in general, although the necessary labour-time assumes a different meaning here. Only just so much of it is required for the satisfaction of social needs. The limitation occurring here is due to the use value. Society can use only so much of its total labour-time for this particular kind of product under prevailing conditions of production.” (p 636)

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