Wednesday, 11 October 2017

Theories of Surplus Value, Part II, Chapter 8 - Part 44

A similar thing arises if there is a change in the proportion of productive and unproductive labour. Unproductive labour produces no surplus value, but it may nevertheless be necessary labour, and labour that produces value. All such unproductive labour gets paid wages, that represents a cost, and a deduction from surplus. If this labour becomes productive labour, the wages it is paid, remains the same, but it now produces a surplus value.

Take something like the example Marx gave previously of soldiers. Under certain conditions, it may be necessary to employ soldiers to defend farmers against external threats. The soldiers' labour adds nothing to the value of the farmers' output. But, the soldier must be fed, clothed etc. i.e., must be paid wages, and these wages thereby detract from the surplus product/value. If the external threat disappears, the need for the soldiers' labour disappears.

Suppose the soldier worked for 12 hours per day, guarding the fields, and that their wages were the equivalent of 10 hours labour. Now, the farmer could continue to pay the soldier wages equal to 10 hours of labour, but employ him productively as an agricultural labourer, working for 12 hours, and thereby producing 12 hours of new value per day, whereas previously, they produced none. Previously, the soldier represented a drain of 10 hours from surplus value, and now they represent an addition of 2 hours to it, so that relatively surplus value has risen by 12 hours.

But, Rodbertus is also wrong in equating the rate of profit with the rate of surplus value, because the former also depends upon the value of constant capital, and so on the ratio of constant to variable capital.

“If the rate of surplus-value is given, the amount of surplus-value does indeed depend on the amount of variable capital, but the level of profit, the rate of profit, depends on the ratio of this surplus-value to the total capital advanced. In this case the rate of profit will thus be determined by the price of the raw material (if such exists in this branch of industry) and the value of machinery of a particular efficiency.” (p 87) 

Rodbertus is then wrong, when he says,

““Thus, as the amount of capital gain increases consequent upon the increase in product value, so also in the same proportion increases the amount of capital value on which the gain has to be reckoned, and the hitherto existing ratio between gain and capital is not altered at all by this increase in capital gain” (p. 125).” (p 87) 

That would only be true if the rate of profit itself were held independently constant. In other words, it requires a view of profit as simply a percentage addition to the cost of production, so that as additional capital is laid out, and the cost of production increases, so the amount of profit rises. Whilst the price of production is, indeed, the cost of production plus the average profit, this average profit is not simply added automatically to the cost of production. It results only from competition. In other words, it requires that capital is withdrawn from those sections where the rate of profit is lower than the average, so that the supply of commodities in that sphere falls relative to demand so that the market price rises to the price of production.

Moreover, as the value of constant capital rises or falls, so this causes the general rate of profit to fall or rise, and thereby affects those prices of production.

Back To Part 43

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