If we take the value of A as 3000, then 2000 represents the value of the constant capital, and 1000 represents wages and profits of workers and capitalists involved in A. Likewise, 1000, in the shape of these wages and profits forms part of the demand for A.
The rest of the demand for A comes from the workers and capitalists of B, which produces means of production. These wages and profits also form a part of the value of B. This part of the value of B, 2000, is required by A as constant capital.
If the value of B is 6000, then this is made up of 4000 constant capital and 2000 new value created by labour. So, now all of A is accounted for. It amounts to 3,000, and this demand has come 1,000 from A and 2,000 from B.
In the process of this exchange, 2000 of B has been accounted for, because it has been exchanged with A, to replace the constant capital it has consumed.
But, that leaves 4000 of output from B that has not been accounted for. The reason, as previously stated is that this 4000 of value has not been created by labour in the current period, and so forms a revenue for no one. Yet, this value is part of the value of current production.
Likewise, however, for production to continue, at its current scale, this constant capital must be replaced on a like for like basis, our of current production. In the same way that the farmer replaces the seed used in production, directly from the product of that seed, and the coal producer directly replaces the coal consumed in producing coal out of the coal produced, so the producers of B, in total, directly replace the constant capital used in their own production, out of their own product.
This part of total output, therefore, plays no part in satisfying consumption, just as it creates a revenue for no one. The total output of society exceeds the total income of society by this amount. This is a fact that Adam Smith and subsequent economists failed to grasp.
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