Sunday, 20 November 2016

Capital III, Chapter 50 - Part 13

If we take wages, we might then argue that wages are the product of competition, of demand and supply. But, the demand for labour is a function of capital. In other words, the demand for labour rises when capital expands, and requires more of it.

But then, what is capital in this sense? It consists of commodities be it those that comprise the constant capital, or the money-capital.

“But the value of commodities, according to our assumption, is determined, in the first instance, by the price of the labour producing the commodities, by wages.” (p 863)

The variation in the demand for labour by capital is a function of the ratio of the supply of capital and labour. But, the capital is itself comprised of a given quantity of commodities at a given price, and that price is determined by the price of labour. Yet, the price of labour here is a function of the demand for labour by capital.

“In order to determine wages, we cannot, therefore, presuppose capital, for the value of the capital is itself determined in part by wages.” (p 864)

And, in fact, as shown previously, the price of labour, as with any other commodity, cannot be accounted for by competition. Competition, which creates a fluctuation in supply and demand, can explain why prices move up or down, but not why they settle at a particular equilibrium price.

“Nothing remains but to determine the necessary price of labour by the necessary means of subsistence of the labourer. But these means of subsistence are commodities, which have a price. The price of labour is therefore determined by the price of the necessary means of subsistence and the price of the means of subsistence, like that of all other commodities, is determined primarily by the price of labour.” (p 864)

Which seems to leave us in exactly the same conundrum.

“Therefore, the price of labour determined by the price of the means of subsistence is determined by the price of labour. The price of labour is determined by itself. In other words, we do not know how the price of labour is determined. Labour in this case has a price in general, because it is considered as a commodity. In order, therefore, to speak of the price of labour, we must know what price in general is. But we do not learn at all in this way what price in general is.” (p 864) 

The same thing applies with profit. Competition can act to equalise profits by ensuring that producers of each type of commodity charge the same price for their commodities, and by capital moving from where the rate of profit is low to where it is high. But, this competition cannot create this profit or determine its total magnitude. The competition which shares this profit out presupposes that this profit already exists of a particular magnitude, and so the question then is where this profit came from, and what determined that it was of this particular magnitude?

“Thus, nothing remains but to declare rate of profit, and therefore profit, to be in some unaccountable manner a definite extra charge added to the price of commodities, which up to this point was determined by wages. The only thing that competition tells us is that this rate of profit must be a given magnitude. But we knew this before — when we dealt with general rate of profit and "necessary price" of profit.” (p 865)

This same absurd circular argument applies in the case of rent, Marx says, which leaves the price of commodities being determined by the price of labour, and with profits and rent then being some extra charges added on to this price, and whose magnitude is determined by some unaccountable laws.

“In short, competition has to shoulder the responsibility of explaining all the meaningless ideas of the economists, whereas it should rather be the economists who explain competition.” (p 866)

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