Monday, 14 August 2017

Theories of Surplus Value, Part I, Addenda - Part 14

[9. Glorification of the Landed Aristocracy by Buat, an Epigone of the Physiocrats] 

Marx writes of Buat

“This feeble and diffuse writer, who takes the outward form of Physiocracy for its essence and glorifies the landed aristocracy— and in fact accepts it [Physiocracy] only in so far as it serves this purpose—would not have to be mentioned at all, but for the fact that the brutal characteristics of the bourgeois emerge so sharply in his work; quite as sharply, perhaps, as in Ricardo’s writings later. His error in restricting the net product to rent makes no difference to this.” (p 321) 

This concept that it is only the net product, or surplus value that is the object of production is set out both by Buat and Ricardo, and for both, therefore, the productive workers, who produce this surplus are seen as an incidental expense. 

“The free labourer’s lot is conceived as only a changed form of slavery; but this is necessary so that the higher strata may form “society”.” (p 381) 

This was referred to previously by Marx in relation to Ricardo's difference with Smith over the gross and net product, and Ricardo's view that because the position of labourer was an unfortunate one, who produces a surplus for someone else, the number of people placed in that unfortunate position, should be kept to a minimum. 

[10. Polemics Against the Landed Aristocracy from the Standpoint of the Physiocrats (An Anonymous English Author)] 

Marx examines the work The Essential Principles of the Wealth of Nations, illustrated, in Opposition to some False Doctrines of Dr. Adam Smith, and others, London, 1797, which, he says, is the only important work supporting the Physiocratic Theory. Marx did not know the author of the work, but it has been subsequently identified as John Gray, of whom little is known, and not to be confused with John Gray the socialist pamphleteer. 

“He is right in tracing the origin of this view to Locke and Vanderlint, and he describes the Physiocrats as those who “very systematically, though not correctly, illustrated” the doctrine (p. 4).” (p 382) 

Marx says that the Physiocrats, by explaining industrial profits on the basis of Mercantilism, thereby create the basis for the explanation of the formation of capital as resulting from abstinence. That conception, put forward by Smith, Senior and apologists for capital, explains the origins of capital not by the appropriators of surplus value, but by the abstinence from consumption of the capitalist. 

As Marx describes in Capital I, although some industrial capitalists may initially have been workers, who acquired their original capital in that way, it does not explain the vast amount of capital formation. Primary capital accumulation arose from a variety of sources from piracy to colonial exploitation, to usury, and the creation of large national debts. Even where individual capitalists did accumulate their initial capital from saving, its further accumulation arose from the appropriation of surplus value. 

However, if the Physiocratic Theory is adopted, no profit is created in the industrial sector, and so if capital is accumulated there, it cannot be from an accumulation of profit, but only as a result of abstinence by industrial capitalists. 

““ The expence laid out in employing and maintaining them” [handicraftsmen, manufacturers and merchants] “does no more than continue the existence of its own value, and is therefore unproductive” (because unproductive of surplus-value) “The wealth of society can never in the smallest degree he augmented by artificers, manufacturers, or merchants, otherwise than by their saving and accumulating part of what is intended for their daily subsistence; consequently it is by privation or parsimony alone, that they can add any thing to the general stock” (Senior’s theory of abstinence, Adam Smith’s theory of savings). “Cultivators, on the contrary, may live up to the whole of their income, and yet at the same time […] enrich the State; for their industry affords a surplus-produce called rent” (p. 6).” (p 383) 

But, says Marx, this is the great merit of Physiocracy, because it does not begin by asking how this capital can be augmented by increased surplus-value, but rather asks first what is the origin of the surplus value. The argument of the Physiocrats that surplus value is created in production and not in exchange, is then echoed by Gray. 

““When the question is about the production of revenue, it is altogether illogical to substitute for that the transfer of […] revenue, which all commercial dealings are […] resolvable into” (p. 22). “What does the word commerce imply but commutatio mercium sometimes more beneficial to the one than the other; but still what the one gains the other loses, and their traffic really produces no increase” (p. 23). “Should a Jew sell a crown-piece for ten shillings, or a Queen Anne’s farthing for a guinea, he would augment his own income, no doubt, but he would not thereby augment the quantity of the precious metals; and the nature of the traffic would be the same, whether his virtuoso customer resided in the same street with himself, or in France, or in China” (p. 23).” (p 383)

But, as described earlier, this leads to a Mercantilist explanation of the profit obtained by industry. And that leads Gray into a Mercantilist conclusion too.

““No man, as a manufacturer, however he may gain himself, adds any thing to the national revenue, if his commodity is sold and consumed at home; for the buyer precisely loses…what the manufacturer gains… There is an interchange between the seller and the buyer, but no increase” (p. 26). “To supply the want of a surplus…the master-employer takes a profit of 50 per cent upon what he expends in wages, or sixpence in the shilling on each manufacturer’s pay; … and if the manufacture is sold abroad … [this] would be the national profit” (p. 27) of so and so many “artificers ”.” (p 383-4)

The Physiocratic view that manufacturers only modify the form of what is produced in agriculture is also echoed by Gray.

““Manufacturers are […] a necessary classbut not a productive class” (p. 35). They “occasion a commutation or transfer of the revenue previously provided by the cultivator, by giving a permanency to that revenue under a new form” (p. 38).” (p 384)

According to Gray there are four essential classes – The Productive Class or cultivators, Manufacturers, Defenders, and Instructors. The latter take the place of the Physiocrats priests. The basis is that “every civil society must be fed, […] clothed, defended and instructed” (pp. 50-51).” (p 384) 

Gray also discusses the role of the landlords in taxing improvements on the land, as described by Marx in his analysis of rent. On this basis, he is in favour of long leases.

The limitations of Physiocracy show, Marx says, in Gray's discussion of a producer of clocks or calico, who cannot sell their commodities. They only make profits to the extent they can sell, Gray says, but a farmer can live off their product without the need to sell. But, as Marx says, a farmer who is a commodity producer makes no profit either if they cannot sell, and whilst they can consume their own product without needing to sell it, they can only do so if they also then become a producer of manufactured goods, because they can only buy the latter by selling their own commodities.

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