Theories of Surplus Value, Part I, Chapter 4 - Part 27

If we take any individual product, say a ton of coal, its value will comprise a third constant capital, and two-thirds newly added labour, or £0.33 and £0.66. In the same way, the total output of coal of £120 will comprise £40 constant capital and £80 new value created by labour. But, we could view this also as 40 tons of the total output that is required just to reproduce the constant capital. We could also take the total value of output from each sector - £660 – and say that £220 is required just to reproduce the constant capital, or alternatively, 40 tons of coal, 50 tons of steel, 60 tons of wood, and 70 machines are never thrown into circulation, because they are withdrawn simply to replace all of these elements of constant capital consumed by these four industries, as part of their own production.

“But if I divide the total product into two parts, putting one-third on one side and two-thirds on the other, it is the same as if the one-third represents only pre-existing labour and the other two-thirds only the labour of the day. In fact the first one-third represents all past labour which entered into the total product, the full value of the means of production consumed. After deducting this one-third, therefore, the other two-thirds can represent only the product of the day’s labour. The two-thirds in fact represent the total amount of the day’s labour that was added to the means of production.” (p 189)

If we think just in terms of the coal and steel producer, the former needs to exchange coal for steel and vice versa. Suppose the coal producer sells £40 of their £120 of output to the steel producer. The steel producer pays this £40 to the coal producer. But, this £40 does not constitute revenue for the coal producer. In reality, there has simply been an exchange of capital with capital, disguised by the fact of the money sale.

The £40 does not constitute revenue for the coal producer, i.e. it does not comprise an income as wages, profit, rent or interest, because no sooner has it been received than it must be handed back to the steel producer to buy £40 of steel, required to replace the coal miners constant capital. So, out of the £120 output, it is only the £80 of new value created by labour that can form revenue.

Similarly, the steel producer sold £40 of steel to the coal producer, but this only replaced the £40 consumed as part of their own constant capital, and so this too for them could not form revenue. In addition, they had to set aside 10 tons of their own steel production to replace 10 tons of steel used as part of their own constant capital, and so this too was not available as a revenue.

Once again, only the 100 tons of steel left was available for sale at £100, and only this, equal to the new value created by labour, during the day, could form revenue, as wages, profit etc.

“The last two-thirds are therefore equal to the producer’s revenue (profit and wages). He can consume them, that is, spend them on articles which enter into his individual consumption. Suppose that these two-thirds of the coal produced daily were bought by the consumers or purchasers not with money, but with the commodities which they have previously transformed into money in order to buy coal with it. A part of these two-thirds of the coal will enter into the individual consumption of the coal producers themselves, for heating, etc. This part therefore does not enter into circulation, or if it does first enter into circulation it will be withdrawn again from it by its own producers. Minus this part of the two-thirds which the producers of coal themselves consume, they must exchange all the rest of it (if they want to consume it) for articles which enter into individual consumption.” (p 189)

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