Monday, 26 June 2017

Theories of Surplus Value, Part I, Chapter 4 - Part 111

Marx quotes Sismondi's comment that workers become ever more productive, and so capable of more easily meeting all their needs, but that if they were to consume all of this production, it would “ make him little fitted for labour” (Note p 282) But, similarly, Marx says, “the industrial capitalist becomes more or less unable to fulfil his function as soon as he personifies the enjoyment of wealth, as soon as he wants the accumulation of pleasures instead of the pleasure of accumulation.” (p 282-3)

This problem is resolved once the capitalists themselves are released from their social function in production, and become money-lending capitalists, owners only of fictitious capital. The function then of acting as the personification of productive-capital falls to the day to day professional managers. The requirement for abstinence is then more easily achieved for these “functioning capitalists” because the extension of public education, and creation of a welfare state, means they are increasingly drawn from the ranks of the working-class, and are paid an appropriate wage.

At the same time, the laws that apply to the increase in the price of the fictitious capital in the hands of the money-capitalists are not at all the same as those which apply to productive-capital. Above a certain minimum level, there is no advantage in accumulating more fictitious capital, so as to make even more, because every share, every bond is homogeneous and pays the same rate of interest to its owner, irrespective of the quantity they own. The owner of £1 million of shares in Tesco gets the same dividend yield on their shares as the owner of £10 million of the same shares, just as the owner of £1 million of UK 10 year Gilts gets the same yield as the owner of £10 million of the same bonds. The difference amounts rather to one of power. The owner of £10 million of Tesco shares gets ten times as many votes in how Tesco is run, including its dividend policy, as the owner of only £1 million of shares.

The industrial capitalist is, therefore, also driven into an overproduction, like the worker, a production for others. In this respect, Marx says, the landlords, state, clergy money-lenders, who live off revenue, siphoned from the surplus value of the capitalists, perform this function of consuming the overproduction. On the one hand, their consumption represents a direct drain of the wealth of the industrial capitalist, on the other, that same consumption provides a spur to the industrial capitalist to produce even more, so as to make even more profit.

Moreover, if the landlords etc. were to use their revenues productively, they would themselves become industrial capitalists, they would add to this potential for overproduction by increasing productive capacity, whilst restraining consumption. Marx refers in a note here to “... an extremely comical dispute between a Ricardian and a Malthusian.” (p 283) 

This is one of the four potential causes of economic crises referred to by Marx, i.e. the separation of production and consumption. In Capital III, Chapter 15, Marx sets out that the production of surplus value, and its realisation are two different things, and are even contradictory to each other.

“The conditions of direct exploitation, and those of realising it, are not identical. They diverge not only in place and time, but also logically....

This internal contradiction seeks to resolve itself through expansion of the outlying field of production. But the more productiveness develops, the more it finds itself at variance with the narrow basis on which the conditions of consumption rest. It is no contradiction at all on this self-contradictory basis that there should be an excess of capital simultaneously with a growing surplus of population. For while a combination of these two would, indeed, increase the mass of produced surplus-value, it would at the same time intensify the contradiction between the conditions under which this surplus-value is produced and those under which it is realised.” (Capital III, Chapter 15)

He also points out that the issue of this realisation comes down to demand, but demand under capitalism is the demand of different classes and class fractions, each of which has their own source of revenue, and each of which has different consumption needs arising from these revenues. As he says, echoing his point here, a large part of consumption depends upon the consumption of these non-productive elements.

On one level, production and consumption are inseparable. Yet, commodity production and exchange does separate them, creating the potential for crises. Industrial capitalism takes that separation to a qualitatively higher level, and by creating this dichotomy, in terms of the sources of these different revenues, in production, and their expenditure as demand, in the realm of circulation, it creates the inevitability of crisis.

“Production and consumption are in their nature [an sich] inseparable. From this it follows that since in the system of capitalist production they are in fact separated, their unity is restored through their opposition—that if A must produce for B, B must consume for A. Just as we find with every individual capitalist that he favours prodigality on the part of those who are co-partners with him in his revenue, so the older Mercantile system as a whole depends on the idea that a nation must be frugal as regards itself, but must produce luxuries for foreign nations to enjoy. The idea here is always: on the one side, production for production, therefore on the other side consumption of foreign production.” (p 283)

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