Saturday, 28 January 2017

Theories of Surplus Value, Part I, Chapter 3 - Part 17

Now, we can analyse the situation instead, in terms of value, rather than use value. To do so, we must assign an amount of available social labour-time, for this production. What this amount is does not matter, as the principle remains the same whether we choose 100 hours, or 1 million hours. Let us assume that the workers here work for 900 hours. On this basis, the above use values have the following values. Initially,

c 100 + v 500 + s 400 = 1,000 hours.

As Marx sets out, in Capital I, in analysing such situations, the constant capital as a constant value, can be set to zero, so as to only focus on the variables. The value of the output is equal to 1,000 hours of labour-time, even though only 900 hours of social labour-time is available, precisely because 100 hours of this value is comprised of the constant capital which was produced in previous year's.

However much labour-time was previously expended on its production, i.e. whatever its historic cost, is irrelevant, because it can only transfer an amount of value to current production equal to its own current value, or current reproduction cost. Likewise, in order for social reproduction to occur, this physical quantity of constant capital (100 kg) must be replaced out of the current year's production, and the proportion of current value set aside for this replacement is, therefore, also based on its current value/reproduction cost.

As Marx set out in, Capital I, this constant capital could be set at zero, because the effect is a wash; it adds only an amount of value to current production equal to the amount of value that must be deducted from current value for its reproduction. The value of this constant capital has been set at 100 hours of labour, because the 900 hours of living labour has produced an additional 900 kg of grain, so that 1 kg of grain has a value equal to 1 hour of labour – 1,000 kg of output has a value of 1,000 hours of labour.

If we then analyse the situation where, due to a poor harvest, output falls to 600 kg of grain, we have then 900 hours of new value created by labour, which is represented in 500 kg. of additional output. On the basis of this lower productivity of labour, therefore, 900 hours of labour produce 500 kg. of grain giving a value per kg of 9/5 = 1.80 hours. This means that the value of the commodities (grain) which comprise the constant and variable capital, has risen considerably. More of current production, and so current social labour-time is required for their reproduction.

To reproduce the 100 kg of seed now requires 180 hours of labour, and to reproduce the 500 kg of grain required for wages requires 900 hours. All of the new value created by labour, equal to 900 hours, is now required simply to reproduce that labour-power, leaving nothing left over for surplus value. The 100 kg of seed consumed as constant capital, is physically reproduced out of the current production, but its value is now equal to 180 hours of labour, rather than 100 hours. This illustrates Marx's point that the value of the commodities that comprise the constant and variable capital are not determined by the labour-time previously used in their production, but the labour-time currently required for their reproduction. 

“If the price of raw material, for instance of cotton, rises, then the price of cotton goods — both semi-finished goods like yarn and finished goods like cotton fabrics — manufactured while cotton was cheaper, rises also. So does the value of the unprocessed cotton held in stock, and of the cotton in the process of manufacture. The latter because it comes to represent more labour-time in retrospect and thus adds more than its original value to the product which it enters, and more than the capitalist paid for it...

The reverse takes place when the price of raw material falls. Other circumstances remaining the same, this increases the rate of profit.”

(Capital III, Chapter 6) 

Here, its clear that, on a value basis, as opposed to the physical basis of use value, used by the Physiocrats, the fall in output, which means a reduction in social productivity, results in a rise in the value of each kilogram of output. Although the physical quantity of use values required for social reproduction to occur does not change here, the value of both the constant and variable capital does rise, (by 80%), precisely because of the rise in value of the commodities that comprise it. The amount of new value created by labour does not rise, it remains constant at 900 hours, but now the value of the labour-power that creates this new value, has risen to 900 hours, leaving no surplus value.

Marx describes this situation of falling productivity, which causes the value of labour-power to rise, in Capital III, Chapter 50.

“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. The increased wages of 150 would not represent any more product than the wages of 100 did before; the reduced surplus-value of 100 would represent merely ⅔ the former product, i.e., 66⅔% of the mass of use-values formerly represented by 100. In this case, the constant capital would also become dearer to the extent that this product would enter into it.” 

That is the case above, because the product of the labour in question is grain, and this grain also comprises the seed, which represents the constant capital. Its value rises, because that value is determined by its current reproduction cost, not its historic price. We have 600 kg of output, and each kg has a value of 1.8 hours, giving a total value of output of 1,080 hours. That is comprised of 900 hours of new value, and 180 hours value of constant capital. In the terms of the Physiocrats, the amount of value would have fallen, because for them value is measured by the quantity of use values, but in reality, although the mass of use values has fallen from 1,000 kg. to 600 kg., the value of this output has risen, because it represents a greater quantity of current social labour-time.

For social reproduction to continue on the same scale, as Marx says in Capital III, Chapter 49

“In so far as reproduction obtains on the same scale, every consumed element of constant capital must be replaced in kind by a new specimen of the same kind, if not in quantity and form, then at least in effectiveness.”

(Capital III, Chapter 49, p 849)

100 kg of grain is physically removed from current output to replace, “in kind”, the 100 kg consumed in production. It has a value of 180 hours. That leaves 500 kg, which is required to replace, in kind, the grain required to reproduce the consumed labour-power. It, and so the labour-power, now has a value of 900 hours. That accounts for all of the physical production, and all of its value, leaving no surplus product, and no surplus value. That means that no accumulation of capital can occur, but similarly, no contraction of capital arises either.

If we then relate this to the other situations discussed, if output fell to 700 kg, this would mean that the 900 hours of labour would have produced an additional 600 kg. The value of each kg would then be 1.50 hours. The total value of output would be 1,050 hours. The value of the 100 kg of constant capital would rise to 150 hours, and the value of labour-power would rise to 750 hours. That gives a cost of production of 900 hours, leaving 150 hours of surplus value, which is contained in the remaining 100 kg of output.

In the case where output falls to just 500 kg, that means that 900 hours of labour produces an additional 400 kg, giving a value per kg of 2.25 hours. The total value of output is then 1125 hours. The value of the consumed constant capital is 225 hours, and the value of the consumed labour-power is 1125 hours. In other words, the cost of production here is greater than the value of the output, so the capital makes a loss, equal to 225 hours, which is represented by 100 kg of grain. In order to continue production, on the same scale, this capital would have to inject an additional capital, in the form of 100 kg of grain, with a value of 225 hours. As Marx put it, in Capital III, Chapter 49.

“This entire portion of constant capital consumed in production must be replaced in kind. Assuming all other circumstances, particularly the productive power of labour, to remain unchanged, this portion requires the same amount of labour for its replacement as before, i.e., it must be replaced by an equivalent value. If not, then reproduction itself cannot take place on the former scale.” 

(Capital III, Chapter 49, p 835)

Its important to note here that the living labour, in all cases, has worked for 900 hours and thereby, in each case, created 900 hours of new, positive value. The fact that, in this last case, the capital makes a loss is not due to the labour creating a negative value! It is due to the fact that the positive new value it creates, is less than the value of the labour-power itself. Indeed, as Marx states in Capital III, all surplus value, even absolute surplus value, comes down ultimately to relative surplus value, because it is only when social labour reaches a minimum level of productivity that it can begin to create a greater quantity of output than is required for its own reproduction.

In the last case, the productivity of labour has fallen to such a degree that this no longer applies. The labour-time required just to reproduce the labour-power is greater than the labour-time undertaken by that labour, the necessary labour exceeds the labour performed.

Unless, the additional 100 kg of seed is injected as constant capital, social reproduction does not take place. The capital shrinks, in just the same way that inversely accumulated surplus value causes it to grow. Some of the grain paid to workers as wages would have to be withheld, and used as seed, but not all of the 100 kg. could be made up this way. If 100 kg was withheld from wages, then only 80% of the previous labour-power could be bought with the remaining 400 kg. That would be insufficient to cultivate the 100 kg. of seed. The technical composition of the capital requires that c:v is equal to 1:5, so of the available 500 kg, 83.33 could be used as seed, leaving the remainder to pay as wages. Because less labour-power is then employed, the surplus value produced in the following year would be reduced, even if productivity returned to its original level.

For the Physiocrats, the source of the surplus value is Nature, and so the form of surplus value is rent, payable to the landowner, who provides this gift of nature. For Smith, the source of the surplus value is social labour, and it assumes the form of profit, or rent dependent upon whether it is the owners of capital or land which set to work this labour, and thereby appropriate their surplus labour. It assumes the form of interest only as a secondary form, as a portion of profit or rent.

“When I speak of surplus-value, in relation to the total sum of capital advanced, as profit on capital, this is because the capitalist directly engaged in production directly appropriates the surplus-labour, no matter under what categories he has subsequently to share this surplus-value with the landowner or with the lender of capital. Thus the farmer pays the landowner directly. And the manufacturer, out of the surplus-value he has appropriated, pays rent to the owner of the land on which the factory stands, and interest to the capitalist who has advanced capital to him.” (p 85-6)

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