Monday, 28 November 2016

Capital III, Chapter 51 - Part 1

Distribution Relations and Production Relations

If we take the total social output, it divides into that part which must physically reproduce the consumed means of production (c), plus the part which must physically reproduce the workers' means of consumption (v), plus a part which represents surplus production. This latter part must itself be used to provide an insurance fund to physically replace those elements of capital that are destroyed by accidents, and of the remainder, a portion is required to meet the consumption of non-producers, and a part is required for the accumulation of additional means of production.

Each of these different physical components of the total output has a value, and in order for it to be purchased, the potential purchasers must obtain a corresponding amount of value as revenue to do so.

But, in fact, its clear that if the total value of this output is comprised of c + v + s, then it cannot all be purchased from revenue, because these revenues – wages, profit, interest and rent – comprise only v + s, i.e. the amount of new value produced by labour during the year.

In fact then, the total output can be divided into a portion that is bought not by revenue but by capital. That is the value of the consumed means of production. In reality, the consumed means of production must be physically reproduced out of the current physical production. The value of those means of production are also reproduced at their current reproduction cost in the value of the current output, and this value is thereby automatically reproduced and forms the means by which the commodities that comprise the constant capital are bought.

In addition to the total output being divided into this portion bought by capital, it comprises a second portion bought by revenue. This portion is equal to the new value created by labour during the year. It can, therefore, be seen why the value of this output must be based on current reproduction costs rather than historic prices, because otherwise a disproportion necessarily arises between the value created in production, and the value distributed as revenue and capital.

The means of production consumed must be physically reproduced for social reproduction to occur on the same scale, and for this to occur, for this portion of the total current social output to be bought, it must be valued in accordance with its value, not its historic cost. If not, either too much or too little value will be allocated for its reproduction, which means that accordingly, either too much or too little value will exist in the respective fund to reproduce that portion of the total output.

Of the portion of this total value that is distributed as revenue, it is divided into wages, profit, interest and rent, and must be equal to the new value produced by labour, and is incorporated in the new physical product.

“The new value added by the annual newly added labour — and thus also that portion of the annual product in which this value is represented and which may be drawn out of the total output and separated from it — is thus split into three parts, which assume three different forms of revenue, into forms which express one portion of this value as belonging or falling to the share of the owner of labour-power, another portion to the owner of capital, and a third portion to the owner of landed property. These, then, are relations, or forms of distribution, for they express the relations under which the newly produced total value is distributed among the owners of the various production factors.” (p 877)

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