Theories of Surplus Value, Part I, Chapter 3 - Part 47

The producers of raw material and other means of production cannot consume their revenue in the commodities they produce. For example, suppose the flax grower adds £10 of new value by their labour. They cannot consume the 100 kg of flax that they produce, because it is means of production, not means of consumption. In order to consume £10 of consumption goods, they must obtain these by exchanging £10 of producer goods for them.

The question remains here what happens to that portion of value that is equivalent to the wear and tear of the machine maker's machine – and the same applies to the seed required by the flax grower etc. The resolution to this problem has nothing to do with an expansion of capital, or the utilisation of a portion of profit for accumulation. Its assumed that there is simple reproduction.

The total of new value created in a year is equal to the labour expended during that year. This new value is equal to the society's revenue, divided into wages, profits etc. equal to National Income. Its physical equivalent is the society's consumption fund, which comprises all those commodities such as food, clothing shelter, entertainment and so on.

“This quantity of labour must be equal to the total labour contained in these products, both the added and the pre-existing labour. In these products not only the labour newly added, but also the constant capital they contain, must be paid for. Their value is therefore equal to the total of profit and wages. If we take linen as the example, then the linen represents for us the aggregate of the products entering into individual consumption annually. This linen must not only be equal to the value of all its elements of value, but its whole use-value must be consumable by the various producers who take their share of it. Its whole value must be resolvable into profit and wages, that is, labour newly added each year, although it consists of labour added and constant capital.” (p 142)

The key, however, to the whole riddle, as suggested above, is that the consumption fund does not constitute the sum total of production. A proportion of production goes neither to the production of consumer goods, nor to the production of means of production used in the production of consumer goods. Rather, it goes only to the production of means of production used in the production of means of production.

Like the seed of the flax grower, the wear and tear of the machine maker, and so on, this is production which never goes into circulation, and never forms a part of revenue, never forms income for anyone. So, the total value of national output must always be greater than the value of national income, and the more developed society becomes, so that the mass of means of production grows, relative to the means of consumption, the more the difference between the value of national output and national income must become. In other words, a growing proportion of society's total output must go simply to reproduce its consumed means of production, rather than be used to produce means of consumption, and to form revenue.

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