Friday, 24 February 2017

Theories of Surplus Value, Part I, Chapter 3 - Part 44

Marx reviews this analysis so far.

“We said at the start that in the different spheres of production there are different proportions as between the newly-added labour (which partly replaces the variable capital laid out in wages, and partly forms the profit, the unpaid surplus-labour) and the constant capital to which this labour is added. We could however assume an average proportion, for example, a—labour added, b—constant capital; or we could assume that the proportion of the latter to the former is 2 : 1 = 2/3 : 1/3.” (p 133)

In that case, the workers and capitalists in any particular sphere, only have enough income as wages and profit to buy a third of their output. But, the capitalists of this sphere own the remaining two-thirds of the output of that sphere. If they are to continue in business, they must sell this remaining output, so as to realise its value, and so be able to reproduce the constant capital used in its production, whose equivalent value it represents.

But, the analysis so far has raised the question of to whom these other two-thirds are to be sold? If the workers and capitalists in each can only together buy a third of their own output, from their incomes, the answer clearly cannot be that this remainder can be bought from the incomes of workers and capitalists from other industries.

If the value of output from industry A is £3,000 and from B £9,000, then incomes in A will buy £1,000, and in B £3,000. If all of A is bought, because its workers and capitalists buy £1,000, and workers and capitalists from B buy £2,000 worth, A's problem is resolved only at the expense of making B's worse, because it can now sell only £1,000 of its total output, rather than £3,000.

We also saw that introducing additional industries only makes this problem worse. Here, A's output was £3,000, and the shortfall of demand was £2,000. If B's output was £6,000, giving combined income for its workers and capitalists of £2,000, this could now fill the gap. But, now there is a lack of demand, equal to £6,000 required for B's output.

Clearly, it is untenable to look for a solution that requires the amount of output to continue to expand, so as to provide additional revenues, when that very process increases the value of output even further, beyond what existing revenues can buy.

“So from this it became clear that the shifting of the difficulty from Product I to Product II, etc., in a word, merely bringing in to the problem the exchange of commodities, was of no avail.” (p 134)

The problem was then considered from the other angle, whereby the value of final production – twelve metres of linen, thirty-six hours labour, £36 – divided into £12 new value added by the weaver, plus £24 of value transferred by constant capital. But, it was equally clear here that this £24 of value of the constant capital, itself could only represent the value of new labour added by the spinner, machine maker, flax grower, wood producer, iron maker and so on, and that for each of these additional producers, we had to take account of the fact that, in addition to the new value added by their labour, they in turn used constant capital, which formed part of the value of their output.

Yet, it was obvious for some of these producers that although this value of constant capital formed a part of the value of their output, it did not form a part of their product that was exchanged, or for which they obtained an amount of value in exchange, as revenue, therefore. A portion of the flax growers output was not exchanged but used to physically reproduce their seed, as manure and so on; a portion of the machine maker's output was not sold, but was used to reproduce their own machines; a portion of the wood grower's output would similarly be used to grow replacement trees, and of the iron producer would be required to repair their own equipment, even if it passed first through the hands of the machine maker.

If the weaver buys yarn from the spinner with six metres of linen, and a loom from the machine maker with two metres of linen, this may appear as income for the spinner and machine maker. But, of course, they can only use a portion, a third, of this linen as income, because two-thirds of the value of the yarn and the machine they sold to the weaver comprised their own constant capital. They must use two-thirds of the linen they receive not as revenue, but to reproduce their own constant capital. Similarly, when they pay for the flax, the wood, iron, leather and so on that they receive as inputs, the linen thereby obtained by their own suppliers does not represent all revenue for them either, because only that portion which represents the new value added constitutes their revenue, and the remainder must be used to reproduce their own constant capital.

“Something would always be left over and a progression to infinity.” (p 138)

If we consider the position of the flax grower, or machine maker, a portion of the output used to reproduce their constant capital – seed and machines – itself constitutes new labour as well as constant capital. The flax grower must exert labour to produce that portion of their output that replaces their seed, as much as for that portion, which produces flax supplied to the spinner, and the machine maker must exert new labour to produce the machines required for their own use, as much as in the production of looms, spinning machines and agricultural equipment. This component of value, therefore, is revenue, and is used as such.

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