“The definite form in which the parts of value confront each other is presupposed because it is continually reproduced, and it is continually reproduced because it is continually presupposed.” (p 872)
For the capitalist, the only manifestation of value is market price. These market prices may fluctuate, but over a long period do so around an average figure, and this average figure is then simply determined by the market price of labour, land and capital. However, the individual capitalist cannot get away from the fact that his cost-price is not comprised solely of wages, but also of the elements of constant capital. But, the resolution here seems obvious to the individual capitalist. His commodity-capital resolves into wages, profit and rent, but these commodities are also sold to other capitalists for whom they represent elements of their constant capital.
If the constant capital of other capitalists can thereby be resolved into his wages, profit and rent, that comprise the value of his commodity-capital, so too then can his constant capital be resolved into the wages, profit and rent of some other capital. So, then we are back to the “absurd dogma” of Adam Smith, whereby the value of the commodity and of national output can be resolved into wages, profit and rent – v + s – rather than c + v + s.
A fourth reason for the illusion that it is the individual value of the factors of production, which determine the commodity value is the fact that for the individual capitalist, the real process of value creation goes on behind his back, and the determination of market prices by prices of production gives a false impression.
For the individual capitalist, a rise in productivity results in a relative reduction in the labour employed, and this reduction seems to go along with a reduction in his own production costs. At the same time, this rise in productivity brought about by the introduction of new machines etc. appears to result in no reduction in the value, i.e. the market price of the commodity.
The fall in the value contributed by labour appears to be equally compensated by the rise in the value contributed by capital – wages fall, but profits rise.
For the functioning capitalist, concerned to make at least the average profit, his cost of production, which includes wages, rent and interest then appears as a limiting factor.
“Apart from the constant portion of capital-wages, interest and rent appear to him, therefore, as the limiting and thereby productive determining elements of the commodity-price. Should he succeed, e.g., in depressing wages below the value of labour-power, i.e., below its normal level, in obtaining capital at a lower interest rate, and in paying less lease money than the normal amount for rent, then it is completely irrelevant to him whether he sells his product below its value, or even below the general price of production, thereby giving away gratis a portion of the surplus-labour contained in the commodities.” (p 873-4)
He may want to do so, in order to obtain greater market share. The same applies to the means of production which the individual capitalist will try to buy cheaper than his competitors, and the success in doing so will be another reason for believing that the portion of value added to the commodity, in the form of profit of enterprise derives from the specific skill of the entrepreneur.
“Profit of enterprise, from this standpoint, seems to be either determined by the excess of market-prices, dependent upon accidental conditions of competition, over the immanent value of commodities determined by the above-mentioned elements of price; or, to the extent that this profit itself exerts a determining influence upon market-prices, it seems itself, in turn, dependent upon the competition between buyers and sellers.” (p 874)
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