Thursday, 3 November 2016

Capital III, Chapter 49 - Part 17

Marx quotes Storch who sets out the situation as against Say.

“It is true that the wages of the labourer, like that portion of profit of enterprise which consists of wages, if we consider them as a part of the means of subsistence, also consist of goods bought at current prices and which likewise comprise wages, interest on capital, ground-rent and profit of enterprise.... This observation merely serves to prove that it is impossible to resolve the necessary price into its simplest elements.’, (ibid, Note.) — In his Considérations sur la nature du revenu national(Paris, 1824), Storch indeed realises in his controversy with Say to what absurdity the erroneous analysis of commodity-value leads — when it resolves value into mere revenues. He correctly points out the folly of such results — not from the viewpoint of the individual capitalist, but from that of a nation — but himself goes no step further in his analysis of the prix nécessaire from that presented in his Cours, that it is impossible to resolve it into its actual elements, without resolving it into a spurious advance ad infinitum. "It is evident that the value of’ the annual product is divided partly into capitals and partly into profits, and that each one of these portions of value of the annual product regularly goes to buy the products needed by the nation, as much to preserve its capital as to renew its consumption fund (pp. 134, 135).... Can it" (a self-employed peasant family) "live in its barns or stables, eat its seed and forage, clothe itself with its draught cattle, dispense with its agricultural implements? According to the thesis of M. Say one must answer all these questions in the affirmative (pp. 135, 136) .... If it is admitted that the revenue of a nation is equal to its gross product, i.e., if no capital has to be deducted from it, then it must also be admitted that a nation can spend the entire value of its annual product unproductively without impairing its future income in the least (147). The products which constitute the capital of a nation are not consumable" (p.150).” (Note 54, p 846)

No additional labour need be expended in relation to the value of the constant capital, whose value is transferred to the end product. The value of the constant capital is transferred to the end product as part of the labour process, in its entirety, so far as the circulating constant capital, and in part, in the value of wear and tear, as far as the fixed constant capital is concerned.

However, this constant capital, be it fixed or circulating, is exposed to various risks that mean that its use value, and so its value may be reduced or destroyed, before it ever enters the production process. Some of these were considered in Capital II. Grain produced by a farmer may be eaten by mice, ruined by rain and so on. As a consequence, the social labour-time expended on its production is lost. In order to minimise such losses, the farmer must undertake various forms of insurance. For example, he may build grain silos to store the grain. These involve an expenditure of social labour-time that adds no extra value to the grain, but provides a measure of insurance against its loss.

Goods in every form of transit are subject to damage or loss, as a result of accident. In order to cover such potential loss, insurance is taken out to compensate the owner of the goods. This compensation again has a value, it is the equivalent set aside by society, of a portion of its social labour-time to cover such risks. Those involved in such activities must be able to recover this cost of taking out the insurance, or else they would not make the average profit, capital would then not be invested in these areas, supply would fall, and the prices of these commodities would rise. The cost of such insurance must always, therefore, be one born by society as a whole.

“This is the sole portion of revenue which is neither consumed as such nor serves necessarily as a fund for accumulation. Whether it actually serves as such, or covers merely a loss in reproduction, depends upon chance. This is also the only portion of surplus-value and surplus-product, and thus of surplus-labour, which would continue to exist, outside of that portion serving for accumulation, and hence expansion of the process of reproduction, even after the abolition of the capitalist mode of production.” (p 847)

It doesn't matter, Marx says, therefore, whether this insurance fund is managed as a separate business, by insurance companies, or not. In fact, that is not strictly true. Take the example of the farmer and the grain. An individual farmer may find the cost of building adequate silos prohibitive, and take out insurance against loss as an alternative. Although the farmer may thereby cover themselves financially against loss, from the standpoint of society, the labour-time involved in producing adequate silos for its total grain production is likely to be much less, over a period of years, than the value lost in destruction of badly stored grain.

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