Tuesday, 8 November 2016

Capital III, Chapter 50 - Part 1

Illusions Created By Competition

If we take the value of the total social commodity-capital, or national output, this breaks down, whether it is considered as either its total value, or its total price of production (because for the total social output both amount to the same thing) into three component funds.

Firstly, there is the fund which must replace, in kind, the constant capital, used in this year's production. A portion of the year's physical production goes solely to making possible this replacement in kind. As the value of this consumed constant capital (measured, as Marx does, on the basis of its current reproduction cost, rather than its historic cost) is exactly transferred into the value of the year's total output, not only is the necessary replacement physical product created, but so too is the value of this replacement, within the total output value. 

It should be noted that this is not possible on the basis of historical cost pricing, because changes in social productivity bring about consequent changes in the value of constant capital, relative to its historic price. If productivity has risen, the current value of constant capital will have fallen, and consequently also the value component of the total social capital, corresponding to the consumed constant capital, will have fallen.

However, if the value of the consumed constant capital is measured on the basis of its historic prices, this value component would appear larger. It would mean that a greater value component of gross output is attributed to constant capital than it, in fact, contributed, and a larger fund of value is allocated for the replacement of constant capital than is actually required.

The second fund consists of all those commodities required for the reproduction of the variable-capital. In other words, all of those commodities required to reproduce the labour-power consumed in the production of the total output. These commodities, like those that reproduce the constant capital are also physically reproduced, as part of the year's production, that forms the gross output. Consequently, the value of those commodities is also reproduced, as part of the value of the total social output.

However, unlike the value of the constant capital, which is reproduced in the value of the current year's output, only because the value of the existing, and consumed constant capital is transferred to it, the value of the variable capital is created completely anew. It is not the value of labour-power, or of the commodities required to reproduce that labour-power which is transferred to the value of the year's output. Rather it is the expenditure of labour which creates entirely new value, and only thereby is a portion of this newly created value able to then be allocated to ensure the necessary reproduction of the variable capital, with the remaining portion of physical output, and corresponding portion of output value left over as surplus product and surplus value.

It is the physical output corresponding to this newly added labour, which corresponds to the society's consumption fund, and the value of this newly added labour, which is equal to the National Income and Expenditure.

The remaining portion of the physical production, and the corresponding value portion of the total social production, comprises the third component – the surplus product, and surplus value, which is divided into the revenues profit, interest and rent, just as the portion of new value created by labour, which goes to reproduce the variable capital, creates the revenue paid out as wages.

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