Saturday, 15 July 2017

Theories of Surplus Value, Part I, Chapter 6 - Part 6

But, the apologists for capital cannot admit this real basis for the existence of surplus value, because it would be to admit that it rests upon the exploitation of labour. So, all of these various subterfuges must be established to make the actual relation appear to be something which it is not.

So, for example, the matter is presented that the worker has produced a proportion of the total product, and so of value, and effectively sells it to the capitalist, being paid for it accordingly. This is at root what lies behind Smith's cost of production theory of value, but also behind the marginal productivity theory of value. In other words, according to the latter, each factor of production – land, labour, and capital – contribute different quantities of additional physical product, according to their application. The Marginal Revenue Product of each is equal to the physical product contributed by the last unit of that factor, multiplied by the market price of the output. Each factor will then be applied up to the point where its price is equal to its MRP. In this way, each factor gets out of production an amount of value only equal to what it has contributed to production.

But, as Marx sets out, if this actually were the case, it would be devastating for capital.

“He [the labourer] will now say to the capitalist: “Of these 5 lbs. of twist, say three-fifths represent constant capital. They belong to you. Two-fifths, that is, 2 lbs., represent my newly-added labour. Therefore you have to pay me the 2 lbs. So pay me the value of 2 lbs.” And thereby he would pocket not only the wages but also the profit, in short, a sum of money equal to the quantity of labour newly added by him and materialised in the form of the 2 lbs.” (p 316)

The capitalist would complain that they had advanced the constant capital, in the form of cotton and machines, whose value is equal to 60% of the commodity, i.e. 3 lbs of twist. But, says the worker, that is exactly the value you will get back, if you keep 3 lbs, and pay me for the other 2 lbs. The capitalist may then complain that the worker could not spin without the cotton, or the spinning machines. No, says the worker, but without my labour, your cotton would rot, and your machines would rust, and you would have no yarn to sell. As a result of my labour, not only are your cotton and your machines turned into yarn that you can sell, but my very action prevents your cotton and your machines deteriorating, and thereby suffering a depreciation of its value. I am charging you nothing for that beneficial effect of my labour, because it also costs me nothing. I am only asking that you pay me for the portion of the total product that is attributable to my labour.

The capitalist, backed into a corner argues that the 2 lbs of twist have a value of £0.10, but, he says, can I be asked to give you that amount before I have sold it, because I am taking the risk of not selling it, or selling it for less. Of course, in fact, the capitalist has taken on this risk voluntarily, and may also sell this yarn above its value, as well as they might sell it below, but they do not compensate the worker for that fact. Moreover, the real risk here lies with the worker, because they have no control over what and how much is produced with their labour, and they risk not only not being paid for the labour they have advanced, but also of not having employment.

For the capitalist, a failure to sell may result in a failure to realise their profit, or even a loss of capital, but for the worker, it means a loss of their livelihood, and the ability to sustain the life of themselves and their family. But, the capitalist's argument that the worker should sell their portion of the product below its value is again dangerous for the capitalist. The relation being proposed here is that of commodity owners. The workers own a portion of the product, i.e. 2 lbs of twist, with a value of £0.10 and the capitalist owns money. He wants the workers to sell it to him for £0.05. But, in that case, he should say to the capitalists who sell him cotton, or machines that they too should sell him their commodities for half their value! And, in that case, they would lose more because, they would lose 50% of the total value not just the value added. After all, there is the same risk he may not recover their value, when he comes to sell his product either.

Nor can this be justified on the basis that an amount of value of a commodity is less than its money equivalent, on the basis that the commodity does not have to be converted first into money.

“Wouldn’t the sharp cotton jobber and your jovial colleague from Oldham have had a good laugh at you, if you had demanded that they hand over to you for nothing a part of the cotton and spindles, or what is the same thing, sell you these commodities below their price (and their value), on the ground that you were transforming commodities for them into money but they were transforming money into commodities for you, that they were sellers, you buyer? They risked nothing, for they got ready money, exchange-value in the pure, independent form. You, on the other hand, what a risk you were taking!” (p 319)

The capitalist may reply that they bought the cotton on credit via a bill of exchange, and had it spun and sold before payment was due to the Liverpool cotton merchant. Fair enough say the workers, but they had to discount your bill, and that may have cost them 3% p.a., which amounts to much less for the actual period the bill was running. In that case, there are 100 of us, and for a week the total value of the product attributable to our labour is equal to £60. Give us £60, less £0.04 for the interest, and we will call it equal!

The workers point out that if the transaction were conducted on this basis, the capitalist would make nothing worth mentioning, in the way of profit, but they the workers would rapidly accumulate their own capital.

“If—turning the actual relationship upside-down—wages are to be derived from the discount on the part of the value of the total product that belongs to the workmen—that is, from the fact that the capitalist pays them this part in advance in money—he would have to give them very short-term bills of exchange, such as for example he pays to the cotton jobber, etc. The workman would get the largest share of his product, and the capitalist would soon cease being a capitalist. From being the owner of the product he would become merely the workmen’s banker.” (p 320)

In fact, that is the case with worker owned co-operatives, and should be the case with socialised capital in the shape of the joint stock company, except the money-capitalists exert undue influence via the role of their representatives on boards of directors, because their political power has enabled the laws of corporate governance to be framed so as to give shareholders (money-lending capitalists) control over property they do not own.  The shareholders own merely shares, paper certificates to say they have loaned money-capital.  They are free to do with those certificates what they will - sell them, give them away or burn them - but they do not own the actual capital that the firm bought with the money raised from selling those shares, any more than the bank that provides a mortgage owns and has control over a house that is bought with the money borrowed by the homeowner.

By contrast, as Marx points out.

“It never enters anyone’s head to suggest that the farmer, because he has to pay rent in money, or the industrial capitalist, because he has to pay interest in money —and therefore in order to pay them must first have converted his product into money—is on that account entitled to deduct a part of his rent or his interest.” (p 321)

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