Theories of Surplus Value, Part I, Chapter 3 - Part 53

According to Adam Smith, the value of commodities and also of society's total output is equal to revenue, i.e. wages, profit, interest and rent. This is one of the first things, even today, which students of orthodox economics are taught. It is also the basis upon which National Income and Expenditure data is collated, and along with the figures for economic growth, and the derivative figures for the rate of profit. But, it is quite clear from Marx's analysis that the whole foundation of that data is false, because the value of society's output is much greater than the value of its consumption fund, which is the equivalent of National Income and Expenditure. These latter figures are only equal to the new value created by labour during the year, and thereby exclude the value of constant capital used in production and replaced directly out of it.

Marx has shown that this fundamental concept, on which orthodox economic theory is based, is quite obviously wrong. It is impossible for the value of a commodity to be reduced simply to the revenues of the factors of production involved in its production, because those revenues can only be equal to the new value added by labour in its production, whereas the value of the commodity also includes the value of the constant capital used in its production.

Nor can this be got round, as Smith tries to do, by claiming that the constant capital used in production, and comprising the intermediate production, itself can be reduced to the revenues of the factors of production used in its production, because, as Marx has demonstrated, quite clearly it cannot, because these too require constant capital for their own production.

The same is true for the national output. It is not and cannot be the same as National Income, because National Income can only be the same as society's consumption fund, or the value newly-added by labour. But, an increasing proportion of the value of society's output never enters revenue for anyone, because it only ever functions to simply reproduce the constant capital consumed in production.

“It is not true that the annual product of labour, of which the product of the annual labour forms only one part, consists of revenue. On the other hand, it is correct that this is the case with the part of the product which each year enters into individual consumption. The revenue, which consists only of added labour, is able to pay for this product, which consists partly of added and partly of preexisting labour; that is to say, the labour added in these products can pay not only for itself but also for the pre-existing labour, because another part of the product—which also consists of labour added and pre-existing labour—replaces only preexisting labour, only constant capital.” (p 150)

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