Tuesday, 23 May 2017

Theories of Surplus Value, Part I, Chapter 4 - Part 78

The miller sells flour to the baker with a value of 20 hours, made up of 10 hours of grain (c) and 10 hours of new value added by their labour. Let us assume that instead of money payments we have an actual exchange of commodities. In that case, the baker gives bread to the miller with a value of 20 hours. But, now, the miller cannot consume all of this bread, any more than the baker could previously. The miller can consume half of the bread they have received with a value of 10 hours, but they must set aside the other half of the bread because they must exchange it with the farmer for the grain they require. In other words, the value of the flour that the miller exchanged with the baker comprised two parts, a part equal to the value of the constant capital (grain) and a part equal to the value of the labour added (revenue).

It is only this latter part that can be consumed. The miller exchanges bread with a value of 10 hours with the farmer for grain with a value of 10 hours. 

Because we have assumed the farmer uses no constant capital, the value of his product is wholly attributable to the new value created by his labour. It all constitutes revenue, and so he can consume all of the bread received. For the baker, the two-thirds of his product he exchanges constitutes his commodity-capital. In exchanging it with the miller for flour, it is for him an exchange of capital for capital. Commodity-capital is exchanged for productive-capital. The portion of his product that he exchanges, two-thirds, is equal to the value of constant capital consumed in his production.

For the farmer, and the miller, however, it is an exchange of capital with revenue. The miller provides the baker with means of production, with a value of 20 hours, but this value is comprised of 10 hours of new value created by the miller, and 10 hours of new value created by the farmer. When the miller exchanges with the baker, therefore, he exchanges both these revenues, for revenue in another form, i.e. in the form of bread. Half of the bread he consumes as revenue, the other half being exchanged with the farmer, who consumes it as revenue.

If we consider the farmer and miller as one producer of means of production one one side (B) and the baker on the other side as producer of consumption goods (A), then,

“If we look at the relation from both sides there, A exchanges his constant capital for B’s revenue, and B exchanges his revenue for A’s constant capital. B’s revenue replaces A’s constant capital, and A’s constant capital replaces B’s revenue.” (p 237) 

As Marx describes in Capital II, what is sold or exchanged is not capital but only commodities. For the farmer, his grain constitutes his commodity-capital, but he does not sell it as capital, i.e. as self expanding value. He sells it only as grain, as a commodity whose value is determined by the labour-time required for its production. The miller who buys the grain also does not buy it as capital, but only as a commodity – grain. The use value they purchase is not that of capital, as self-expanding value, but only the use value of grain, which can be turned into flour. Once purchased, it does become a part of their productive-capital, but it is neither bought nor sold as capital.

The flour represents the commodity-capital of the miller, but likewise it is not sold to the baker as capital, but only as a commodity. It is bought for its use value as flour, of being capable of being turned into bread. As Marx sets out in Capital III, in describing the development of interest-bearing capital, in all of these exchanges, it is not capital that is bought and sold, but only commodities. It is only the use value of capital as capital, as self-expanding value, that can be sold as a commodity, and whose market price is the rate of interest. But, this use value has no value, because it is not the product of labour. Its market price, the rate of interest, is determined solely on the basis of the demand and supply for money-capital.

“In the exchange itself only commodities confront each other—and a simple exchange of commodities takes place—the relation between which is merely that of commodities, the designations of revenue and capital having no significance here. Only the different use-value of these commodities shows that one lot can only serve for industrial consumption, and the other only for individual consumption, can only enter into this consumption. The various practical uses of the various use-values of various commodities, however, concern their consumption and do not affect the process of their exchange as commodities.” (p 237-8)

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