Monday, 21 November 2016

Capital III, Chapter 50 - Part 14

If the price of a commodity is equal to 100, and this price is determined by the price of labourwages – we might also determine the rate of profit as equal to 10% of wages, and the rent as 15% of wages. In that case, the price of the commodity becomes 100 + 15 + 10 = 125 – equal to wages, profit and rent.

As seen in Capital I, this 25 of profit and rent cannot arise as a result of exchange, or the circulation of commodities because if every commodity owner, with a commodity whose value is 100, sells it for 125, it is no different than had they each sold it at 100. The 25 they gain on the sale of their own commodity, they lose in the purchase of other commodities whose price has been equally inflated.

If the worker has 100 to spend, then if the price of the commodity is 125, the worker can buy 0.80 of it. The capitalist can buy 0.08 of it, and the landlord 0.12 of it. In reality, therefore, its clear that the value of the commodity had not been determined by wages, because wages could only buy 80% of the commodity.

It is just the same here as if the value of the commodity was equal to 100, the amount of labour actually contained in it, but that workers had only been paid wages of 80. The difference between the value of the commodity of 100, and the wages of 80 can then more clearly be seen as a surplus value, and that the profit and rent are then merely components of it.

If this were an agricultural economy, for example, it would be as if the worker had produced 100 units of food, and been given 80 of those units back by the farmer, as wages. The 20 units would then be seen clearly as a surplus product, and when the farmer gives 12 units to the landlord as rent, and keeps 8 units for themselves, as profit, these latter two amounts are merely components of that surplus product.

But, the point here is what determines this division. The output itself cannot be increased to 125, simply on a whim, of saying that the workers should be paid 100 units (and indeed on an historic cost basis may have been paid 100 units, set aside from last year's production), whilst the farmer demands 8 units as profit, and the landlord demands 12 units as rent!

The output is 100 units. That is what, given the level of productivity, and given the labour and capital employed, was actually produced, during that production period. What determines that 12 units can be set aside as rent, and 8 units as profit, is purely that 80 units must be set aside as wages, because objectively that is the amount required to ensure that the labour-power is reproduced. Whether workers were actually paid with 100 units (the historic cost of wages), set aside from last year's harvest, in the current year is irrelevant. If that were the case, then its clear that if workers now only require 80 units, fewer workers are employed to produce the 100 units of output, i.e. productivity has risen.

If the output is 100 units, but the workers require 100 units to reproduce their labour-power then its clear that there is no surplus product, or surplus value. Everything produced must be consumed by the workers, so there is no surplus value, and no possibility, therefore, of profit or rent.

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