Saturday, 12 November 2016

Capital III, Chapter 50 - Part 5

In other words, whatever the illusion created by the historic prices paid for constant capital, and paid out as wages, and appearing as profit and rent, the reality of the underlying value relations shows that the rate of profit has fallen. A greater proportion of the current total social production must be handed back to workers in the following cycle, in order for reproduction to continue, on the same scale, and a correspondingly smaller proportion of the total social output is available as surplus product, available as profits and rent, and consequently to be consumed by capitalists and landlords, or accumulated as additional capital.

“The change in the value of wages, in the rate of profit, and in the rate of rent, whatever the effect of the laws regulating the proportions of these parts to each other, could only move within the limits set by the newly produced commodity-value of 250.” (p 855)

In the case of individual commodities, this might be different, if the price was based on a monopoly price, which gives rise to a monopoly rent. This would then affect the proportion allocated to rent rather than profit, but it could only do this by transferring a portion of the surplus value produced by other capitals, which did not benefit from the monopoly price.

“This would no wise alter the law, but merely complicate the analysis. For if we consider only the product itself in this case, then only the division of surplus-value would be different. But if we consider its relative value as compared with other commodities, then we should find solely this difference — that a portion of the surplus-value had been transferred from them to this particular commodity.” (p 855)

Marx summarises the situation.

Value of the Product
Rate of
Rate of
Gross Profit
First Case:
400c + 100v + 150s = 650
Second Case:
400c + 150v + 100s = 650
  • The mass of surplus value falls by a third, from 150 to 100 
  • The fall in the rate of surplus value (55.6%), however, is much greater than the fall in the rate of profit, because the rise in the value of the advanced variable capital is greater than the rise in the value of the total capital. 
“We find, furthermore, that value, as well as mass of products, remains the same, so long as the same quantity of labour is employed, although the advanced capital has increased due to the augmentation of its variable component. This increase in advanced capital would indeed be very much felt by a capitalist undertaking a new enterprise. But considering reproduction as a whole, augmentation of the variable capital merely means that a larger portion of the value newly created by newly added labour is converted into wages, and thus, in the first place, into variable capital instead of into surplus-value and surplus-product. The value of the product thus remains the same, because it is limited on the one hand by the value of the constant capital = 400, and on the other by the number 250, in which the newly added labour is represented.” (p 856)

But, in fact, the same quantity of labour-time is performed, and the same quantity of products are produced, in Marx's example. Its just that real wages rise so that workers obtain a larger share of those products leaving a smaller share as surplus products.

“The matter would be different if wages were to rise not because the labourer received a larger share of his own labour, but if he received a larger portion of his own labour because the labour productivity had decreased. In this case, the total value in which the same labour, paid and unpaid, would be incorporated, would remain the same. But the mass of products in which this quantity of labour would be incorporated would have decreased so that the price of each aliquot portion of this product would rise, because each portion would contain more labour.” (p 856)

In other words, in a 10 hour day, that previously produced 1,000 commodity units, 4 hours, or 400 commodity units may be required to reproduce the labour-power, leaving 600 commodity units as a surplus product. If now productivity falls by 20%, only 800 commodity units are produced per day. But, 400 units are still required to meet the consumption needs of workers. If the value produced by an hour's labour is equal to £10, then £100 of value is produced per day. Initially then, the value of each commodity unit was £100/1000 = £0.10, but now it is £100/800 = £0.125.

Previously the labour-power could be reproduced in 4 hours = £40 = 400 commodity units. But now, it requires 5 hours = £50 = 400 commodity units. Previously, it had a value of £40, leaving £60 of surplus value, but it now has a value of £50, leaving £50 of surplus value. In fact, this change in productivity would not just affect the labour-time required to reproduce the variable capital, but also the constant capital. But, its not a rise in wages that causes the rise in prices. Rather, it is a rise in prices which causes a rise in the value of labour-power, and thereby of wages.

“It appears here as though the increase in wages had made the product dearer; however, this increase is not the cause, but rather the result, of a change in the value of the commodities, due to the decreased productivity of labour.” (p 856-7)

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