[5. Smith’s Identification of Surplus-Value with Profit. The Vulgar Element in Smith’s Theory]
Adam Smith essentially derives the actual basis of surplus value, although he presents it only in the form of its specific manifestation as profit and rent, with interest being merely a revenue paid secondarily out of them.
“As he presents it, the part of capital which consists of raw material and means of production has nothing directly to do with the creation of surplus-value. The latter arises exclusively from the additional quantity of labour which the labourer gives over and above the part of his labour which forms only the equivalent for his wages. Therefore it is only that part of the capital advanced which consists in wages from which surplus-value directly arises, since it is the only part of capital which not only reproduces itself but produces an overplus.” (p 89)
However, because Smith analyses the surplus value immediately as profit, this creates a series of contradictions in his theory, which he cannot resolve. So, he has discovered that surplus value arises because the value of the product of labour is greater than the value of the labour-power which produces that product.
In Smith, it is not presented in this way, because he does not distinguish between labour and labour-power. Because he does not recognise the existence of labour-power as a commodity, this difference between the value of labour-power, and the value of the product of labour appears, for him, rather as a deduction from wages, or that commodities buy a greater quantity of living labour than they themselves contain.
But, its clear that the labour-time required for the reproduction of labour-power is a knowable quantity. The fact that it is knowable does not mean that it is fixed. Capital accumulates along with a growth of population, so that the size of workforce grows, and over time, what constitutes the necessaries that are required for the reproduction of labour-power also changes, in scope and quantity. At the same time, changes in social productivity reduce the amount of labour-time required for the production of these necessaries.
When Marx talks about the variable capital being a fixed amount, he is only talking about it being fixed in the short term. In other words, if we know the size of the current workforce to be reproduced, and we know the basket of commodities required for their reproduction, and the labour-time required for their reproduction, we know the quantity of labour-time required to reproduce that labour-power. But, we also know the quantity of social labour-time expended by that labour-power, in the current year, in producing commodities, so we know the amount of new value created by that labour-power. By deducting the labour-time required to reproduce the labour-power from the total new value created by that labour-power, we know the amount of surplus labour-time undertaken, and thereby the quantity of surplus value produced.
For the first time then, we have a means of objectively determining the quantity of surplus value produced. Moreover, in addition to objectively determining the quantity of new value created, and the quantity of labour-time required to reproduce the labour-power, by the same token, it is possible to calculate the amount of labour-time required to reproduce “in kind” the means of production consumed in production. On this basis, not only can the surplus value be related to the value of the variable capital, so as to determine the rate of surplus value, but it can be related to the value of both the variable capital and constant capital, so as to establish the rate of profit.
For the first time, Marx has uncovered an objective basis not just for the mass of surplus value, but also for the rate of profit. It is now possible to understand that, out of the total current production, an objectively determined proportion, and consequently of available social labour-time, must be set aside to reproduce, in kind, the consumed means of production; a further objectively determined portion must be set aside for the reproduction of the consumed labour-power; and only what is then left constitutes the surplus product and surplus value, a quantity which is itself, therefore, objectively determinable.
But, it is this fact, given that Smith goes straight to the identification of profit with surplus value, which causes him to run into problems and contradictions.
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