Friday, 19 May 2017

Theories of Surplus Value, Part I, Chapter 4 - Part 74

Provided that production of all of these different consumable commodities takes place in the correct proportions, however, then a part of total production can now be said to have been dealt with. The revenue of the producers of these consumable productswages and profits – has been used to buy a proportion of the output of those consumable products, equal to the new value added in their production.

But, not all of the consumable product is accounted for solely on the basis of the new value created by labour. The value of this product as with every other is c + v + s. That is, in addition to the new value created (v + s) the value of the product also comprises the value of the constant capital used in its production, which must be reproduced.

If we consider a farmer, their corn does not arise just on the basis of their current labour. It also depends upon the performance of past labour, which at the very least produced the seed used to produce the corn, but which in reality also produced the tools used for cultivation, planting, and harvesting, produced fertiliser and so on, and whose mass and contribution to current production tends to grow over time, as a consequence of capital accumulation.

But, the labour required for the production of this constant capital did not spring from nowhere, and nor can the replacement of this constant capital be effected without a portion of current production being set aside for that purpose. The same principle as that previously outlined applies. If we consider Robinson Crusoe, he may find that having produced an enclosure for the animals he and Friday require for their consumption, an amount of their labour-time must be expended to maintain this enclosure, or else their food production would decline.

Once established, therefore, as part of their constant capital, it must be maintained, and that means that labour-time used for this purpose is not then providing goods for immediate consumption. But, again, whilst both Robinson and Friday may both engage in this activity, experience shows there is a benefit from specialisation. If Friday specialises in maintaining the enclosures, then Crusoe has time released to spend on the production of products required for immediate consumption. But, Friday will only do this if the time spent on maintenance of enclosures is compensated by the provision of their consumption needs that would have been conducted during that time.

In other words, if previously Crusoe and Friday spent 10 hours per day each catching fish and rabbits, and collecting fruit, they may have enhanced the quantity of these things produced by also producing tools, traps and other equipment. But, once introduced, they have to be maintained. Friday may then spend all of his time doing this maintenance work, but then produces no consumption goods for himself. That is only then possible if Crusoe is able to produce all of the consumption goods required by both of them. In essence, Crusoe obtains the means of production ("capital") he requires to do this by providing Friday with the consumption goods he requires.

Where previously both only produced goods for consumption, so that they exchanged revenue for revenue, now there is also an exchange of revenue for capital. Suppose we think of an economy where the only two things produced and required are food and clothing. The producer of food works 10 hours per day, and so does the producer of clothing. They only use labour. Each then gives half their production to the other, so that the needs of each are met. We have an exchange not only of revenue with revenue (new value produced with new value produced) but of consumable product with consumable product.

Now, suppose both producers require means of production. The food producer needs tools, and the clothing producer is provided with tools and materials. This producer of means of production produces nothing consumable, yet they must consume food and clothing. They obtain that consumption from the producers of food and clothing, now in exchange for providing them with the means of production they require. This is possible both because those producers are now freed from spending time on that themselves, and because these means of production increase their productivity so that more use values are produced.

If previously we had food (A) and clothing (B) production made up

A (v + s) = 10 hours = 100 units

B (v + s) = 10 hours = 100 units

We may now have:-

A c = 5 hours + (v + s) = 10 hours = 200 units

B c = 5 hours + (v + s) = 10 hours = 200 units

C (v + s) = 10 hours = 100 units.

So, now C the producer of means of production, works 10 hours, producing 10 hours of new value, represented by 100 units of means of production. They sell this 10 hours of value in means of production to A & B. Previously, A required half of their production of food for themselves = 50 units, and exchanged the other 50 units with B for clothing, and vice versa. A still requires 50 units for their own consumption, as does B, in relation to clothing. None of C's production is required by A, B or C for consumption, because it can only be used as means of production.

If we examine the value of A and B's production, it is made up in both cases of c 5 + (v +s) 10 = 15, and in both cases produces 200 units, or 0.075 per unit. The total value of production is equal to 40, but the total value of revenue, i.e. the new value added, is equal to 30 (10A + 10B + 10C). 

Putting A and B together, as producers of consumption goods, we have:-

c 10 + (v + s) 20 = 30 = 400 units.

A and B have exchanged their own products to meet their needs, but this accounts for only ⅔ of the value of their output, and correspondingly, therefore, only 266 units of their production. They sell the other 133 units to C, in exchange for the means of production they require.

The total value of production is then equal to 40 hours, whilst the total value of revenue (wages, profits, rent, interest), new value created, is equal to 30, 10 each in A, B, and C. In turn, this is equal to the value of the consumption fund, i.e. the value only of that part of production that is available for consumption rather than as means of production.

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