Saturday, 6 May 2017

Theories of Surplus Value, Part I, Chapter 4 - Part 61

As described earlier, capitals can always reduce the quantity of constant capital advanced by increasing the variable capital advanced, by vertical integration of production. A weaver, for example, advances constant capital of £100 to buy yarn from a spinner, the value of the yarn comprising £20 cotton and £80 labour. But, if the weaver also becomes a spinner, they advance £20 constant capital for cotton and £80 variable capital for the labour of a spinner.

An example of the second: the mine owners of Birmingham, who took over the complete process of making iron, which had formerly been divided between a number of entrepreneurs and owners.” (p 220)

Ganilh argues,

““So long as the division of labour is not established in all branches, so long as all classes of the labouring and industrious population have not attained their full development, the invention of machines, and their employment in certain industries, only cause the capitals and labourers displaced by the machines to flow into other employments which can usefully employ them. But it is evident that when all branches of employment have the capital and the labourers they require, every further improvement and every new machine that cuts down labour, necessarily reduces the labouring population: and as this reduction does not diminish production, the part which it leaves available accrues either to the profit of capitals or to the rent of land; and in consequence the natural and necessary effect of machines is to diminish the population of the wage-earning classes who live on the gross product, and to increase the population of the classes which live on the net product” (l.c., p. 212).” (p 220)

I have made a similar point elsewhere in analysing the role of the long wave. In relatively new industries, where there is a considerable scope for an extension of the market, machines may reduce prices that stimulates demand. At the same time, they may bring about a rise in surplus value creating the potential for additional accumulation, so that the market for these commodities increases to an extent that both more machines and labour are employed.

In more mature industries, the price elasticity of demand is higher. Consumers will have sated their normal requirement for the commodity so that demand comprises only the need for replacement, and the ability of suppliers to persuade consumers that they need additional units. As a consequence, any reduction in unit prices, brought about by the introduction of machines, results in a smaller rise in demand for the commodity. Under these conditions, producers introduce new machines as a replacement for existing machines (intensive accumulation) with a consequent absolute reduction in labour-power employed.

Its only where there are a sufficiently large number of new industries or new types of commodity that the surplus capital and labour-power can be absorbed productively. In other periods, the surplus product and surplus value may rise, but with no potential for additional productive investment, the surplus value remains as revenue, used to increase consumption of the exploiting classes, to hire unproductive workers, as well as being accumulated as loanable money-capital, and used for financial speculation.

Ganilh argues that it is this process of the displacement of workers by machines that is “... the true cause of the prosperity, the power and the civilisation of modern peoples. The more the lower classes of society decrease in number, the less need it be troubled by the dangers to which the distress, the ignorance, the credulity and the superstition of these unfortunate classes ceaselessly expose it; the more the upper classes multiply, the more subjects the State has at its disposal, the stronger and more powerful it is, the more knowledge, intelligence and civilisation there is in the whole population” (l.c., p. 213).” (p 221)

But, of course, this is to believe that the rise in the surplus value simply results in the creation of more capitals. That does indeed happen, as Marx described in Capital I, and new capitals are continually being created, and grow. However, the natural process of capital accumulation leads to the concentration and centralisation of capital, so that this growth in the mass of surplus value does not result in a continual growth in the numbers of the upper classes (certainly not as a proportion of society), but the opposite.

Capital is increasingly concentrated into the hands of an ever smaller percentage of the population, and even members of the capitalist class get thrown down into the ranks of workers.

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