The underlying assumption here is that the purpose of production is consumption rather than the production of surplus value. In other words, it assumes that the aim is the maximisation of production, so that every increase in consumption drives this additional production, rather than that the actual drive of the industrial capitalists is only the maximisation of the surplus value, a drive which itself stems from a need to expand their own productive potential, which in turn is the means to maximise their production of surplus value.
Marx's terminology has to be read carefully here, for later readers, where he talks about “overproduction”. He is not talking, in the following passage, about an overproduction of capital or commodities, in the sense of a crisis of overproduction, but of the overproduction of the worker, in terms of what is required for his own consumption. In other words, the creation of a surplus product and surplus value.
“The labourer’s consumption on the average is only equal to his costs of production, it is not equal to his output. He therefore produces the whole surplus for others, and so this whole part of his production is production for others. Moreover, the industrial capitalist who drives the labourer to this overproduction (that is, production over and above his own subsistence needs) and makes use of all expedients to increase it to the greatest extent possible—to increase this relative overproduction as distinct from the necessary production—directly appropriates the surplus-product for himself. But as personified capital he produces for the sake of production, he wants to accumulate wealth for the sake of the accumulation of wealth. In so far as he is a mere functionary of capital, that is, an agent of capitalist production, what matters to him is exchange-value and the increase of exchange-value, not use-value and its increase.” (p 282)
This is a further illustration of the earlier discussion, in relation to the difference between Smith and Ricardo. As Marx stated, Ricardo was correct to point out that Smith gave too much importance to the value of the gross output, and not enough to the net output, i.e. the surplus value. The same thing could be seen today with an over concentration on the growth of the GDP figure.
As Marx and Ricardo point out, it is better to have 200 workers producing enough to sustain a population of 300 than to have 300 workers producing enough to sustain 400 workers. In the first instance, the output (GDP) may be only £300, and therefore, less than the latter, where it would be £400, but the amount of surplus value in both case is £100, which represents 50% in the first case, and only 33.3% in the second case. The reason is a higher level of productivity in the first case. For this reason, as Marx and Ricardo state, it is not the size of the GDP that is important, but the size of the surplus product.
On this basis, a country could even see the value of its GDP fall, and yet its economic position may have strengthened. If productivity in the country rises sharply, the value of its gross output may fall, or more likely the extent of its rise will be less than it otherwise would have been, for the reasons Marx and Ricardo describe. But, this same rise in productivity, which reduces values, at the same time, increases the surplus product relative to the gross product.
For the individual capital, this increase in the size of the surplus product is manifest in a higher rate of profit, and the ability, therefore, to employ a greater quantity of labour-power so as to produce even more surplus value. The actual need for less labour-power, to produce a given quantity of output, therefore, leads to the actual employment of more labour-power, made possible by the higher rate of profit.
The same applies to a country. The higher its surplus product, relative to its gross product, the more rapidly it can accumulate capital. The fewer productive workers it needs to produce a given mass of output – and so the lower the value of that gross output – the more capital it can create, so as to set more workers to work.
Rather than the purpose of production being consumption,
“If the labourer’s overproduction is production for others, the production of the normal capitalist, of the industrial capitalist as he ought to be, is production for the sake of production. It is true that the more his wealth grows, the more he falls behind this ideal, and becomes extravagant, even if only to show off his wealth. But he is always enjoying wealth with a guilty conscience, with frugality and thrift at the back of his mind. In spite of all his prodigality he remains, like the miser, essentially avaricious.” (p 282)
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