Capital III, Chapter 49 - Part 3

By tightening down the definition to the realised surplus value, Marx ensures the division of the total annual social product must thereby be divisible into these revenues of wages, profit (interest plus profit of enterprise), and rent – we could for completeness add in taxes.

In other words, the total annual social product is equal to the amount of new value created by labour, during the year. This new value is now defined only in terms of that labour-time which is socially necessary, and thereby realised in the total of prices for that commodity-product. Irrespective of the total amount of actual labour performed during the year, therefore, the total social working day is divided into two components – that portion required to reproduce the labour-power, and the remainder thereby comprising surplus labour, and surplus value.

This forms the revenue of the society. The necessary labour component of the total social working day funds its equivalent in wages whereas the surplus component funds its equivalent in profits, interest and rent.

“The entire remaining portion of the working-day, the entire excess quantity of labour performed above the value of the labour realised in his wages, is surplus-labour, unpaid labour, represented in the surplus-value of his total commodity-production (and thus in an excess quantity of commodities), surplus-value which in turn is divided into differently named parts, into profit (profit of enterprise plus interest) and rent.” (p 834)

But, this appears to create a problem, as previously discussed in Capital II, which is, if the annual product is divisible into just wages, interest, profit and rent, what about the value of the constant capital used in that production. If the value of a commodity, and therefore, the total commodity-capital, is made up of c + v + s, how then can this be bought by just v + s (wages, profit, interest and rent)? 

The simple answer, as set out in Capital II, is that it can't, and isn't. The annual product only comprises the new product, and does not include the value of the constant capital. The only commodity-product which is bought is equal to this new value, which is equal to the sum of revenues – wages, profit, interest and rent – v + s – and which consequently is equal only to the labour expended, this year, in Department I and II, and consequently includes no value of constant capital, even though it appears that the value of constant capital has been taken into account, as “intermediate production”. In fact, this intermediate production value is only equal to the value of new labour performed in Department I, i.e. I(v+s) = II(c).

As Marx says in Capital II, Chapter 20,

“It must be noted in the first place that no portion of the social working-day, whether in I or in II, serves for the production of the value of the constant capital employed and functioning in these two great spheres of production.” (p 431)

The value of the total output for the year, however, is equal to C + V + S, not just V + S. Of the total output value, the value of C is not traded. It does not form a part of revenue. This portion of the total output value, goes to reproducing the constant capital consumed. Nor is this changed by the fact that with expanded reproduction, a portion of S is used, not as revenue, but for the purchase of additional constant capital. This is a purchase of commodities to be used as productive-capital rather than for consumption. But, this is in addition to the portion of total output value that goes simply to reproduce the consumed constant capital.

“Evidently, therefore, the value of the constant portion of capital is not reproduced in the annually created value of product, for the wages are only equal to the value of the variable portion of capital advanced in production, and rent and profit are only equal to the surplus-value, the excess of value produced above the total value of advanced capital, which equals the value of the constant capital plus the value of the variable capital.

It is completely irrelevant to the problem to be solved here that a portion of the surplus-value converted into the form of profit and rent is not consumed as revenue, but is accumulated. That portion which is saved up as an accumulation fund serves to create new, additional capital, but not to replace the old capital, be it the component part of old capital laid out for labour-power or for means of labour. We may therefore assume here, for the sake of simplicity, that the revenue passes wholly into individual consumption.” (p 834)

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