Theories of Surplus Value, Part I, Chapter 4 - Part 95

Suppose the capitalist has the £50 once more to spend, and uses £12.50 for their own consumption. They come to advance the remaining £37.50 for labour-power, but find still only 100 workers available. Competition between capitals for labour-power will drive wages higher, from £25 to £37.50. But, the value produced will remain £50, so that the profit will now fall from £25 to £12.50.

But, Marx says, Smith knows that there will be enough labour-power. Partly, that is because of the annual rise in population, but also there are also all of those reserves Marx described in Volume I.

“... partly unemployed paupers, or half-employed labourers, etc. Then the large numbers of unproductive labourers, part of whom can be transformed into productive labourers by a different way of using the surplus-produce. Finally the same number of labourers can perform a greater quantity of labour. And whether I pay 125 labourers instead of 100, or whether the 100 work 15 hours a day instead of 12, would be quite the same thing.” (p 257)

Of course, there are periods where this is not true. Marx describes, in Value, Price and Profit, the ten year period between 1849 and 1859, when agricultural wages rose, for example. There will always be periods when labour-power of the required quality will be in short supply, or may be in the wrong location. But, over the longer-term, these shortages are countered by periods of surplus, when wages fall below the value of labour-power.

In the examples above, constant capital was set to zero, but of course, in reality, it cannot be. Moreover, this is important because the value of the constant capital also acts as a constraint on the accumulation of capital, alongside the value of labour-power. It is not possible to employ more workers without employing more material for them to process, more tools and machines to work with.

As Marx sets out in Volume I, in those industries where the cost of constant capital is more expensive, this limits the amount of labour-power that can be employed. For example, if a capitalist has £10,000 to invest, then if they are working in gold, and the material costs £8,000, this leaves only £2,000 to spend on wages. If they are working in silver, and the material costs £2,000, this leaves £8,000 to spend on wages. This is significant given that it is only the labour that produces surplus value.

For a society, therefore, the lower the value of constant capital, the more capital can be used to employ labour-power, and so the greater the mass of surplus value it can produce. As Marx puts it,

“It is incidentally an error of Adam Smith’s—directly connected with his analysis of the total product into revenue—to say that with the increase of the productive capital—or with the growth of the part of the annual product which is destined for reproduction—the labour employed (the living labour, the part of capital expended in wages) must increase in the same proportion.” (p 257-8)

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