Thursday 5 October 2017

Theories of Surplus Value, Part II, Chapter 8 - Part 38

Marx distinguishes this situation, where the commodity's value changes, as a result of a change in productivity, and the situation where the market price of the commodity rises due to an increase in demand.

“It would be a different matter if, as a result of demand, the product rose above its value, and to such an extent that a smaller quantity of product had a higher price than a larger quantity of product did before. But this would be contrary to our stipulation that the products are sold at their value.” (p 76) 

Marx then assumes the opposite situation whereby there is a good harvest producing twice as much cotton.

“In this case the portion of value which is left for the cotton-grower after deduction of wages is greater than before. The rate of profit would rise here just as in the cotton industry.” (p 76)

That, of course, is only possible if this rate of profit is calculated on the basis of this lower current reproduction cost of cotton, and not on its historic price. If the rate of profit were calculated on the historic price paid for cotton seed, fertiliser and so on, this lower current reproduction cost could have no bearing on it.

The proportion of raw material cost would fall as a proportion of the total cost of the end product – calico – whilst the proportion of the manufacturing cost, spinning, weaving dyeing, would rise. If calico sells at £2 per metre, and the cotton it contains amounts to £1, then a fall in the price of cotton of 50%, would mean that the price of calico would fall to £1.50 pre metre, assuming it sells at its value. The cotton would now comprise a third rather than a half of the value of the calico.

But, now the cotton grower has twice as much much cotton to sell. If previously the cotton grower sold 100 kilos of cotton at £1 per kilo, they obtained £100, which bought them 50 metres of calico. They now sell 200 kilos of cotton, and still obtain £100, but at the new lower price of calico, this £100 buys them 66.6 metres of calico.

Therefore,

“On the assumption that the commodities are sold at their value, it is wrong to say that the revenue of the producers who take part in the production of the product is necessarily dependent on the portion of value represented by their products in the total value of the product.” (p 77) 

Rodbertus assumes that surplus value is divided into rent and profit in the value of the whole product in accordance with the proportion of raw product and manufactured product. If that were the case, it should also be true for any particular product.

In that case, as the size of raw material grows as a proportion of total output, that should mean that the proportion of rent to profit rises.

Suppose a working day is 12 hours long, of which 10 hours is necessary labour and 2 hours surplus labour. The value produced in a day is £100. If the value of the agricultural product is £6,000 and of the manufactured product £3,000, then the former equals 60 days, and the latter 30 days.

The agricultural surplus value is then 60 x 2 = 120 hours. If the value of the agricultural product was only £3,000 then the surplus value would be 30 x 2 = 60 hours. If the rent equals 10% of the surplus value it would then equal 12 hours in the first case or 6 hours, in the second case.

“According to this, the volume of rent would in fact alter with the amount of the value of the agricultural product, hence also with the relative value of the agricultural product in relation to the manufactured product. But the “level” of the rent and of the profit— their rates—would have absolutely nothing to do with it whatsoever.” (p 78) 

The rent simply increases in line with the value of the agricultural product. But, we know this is not the case.

“If here with the increased portion of value that falls to agricultural product the volume of rent also rises and with this, its volume, increases its proportional share in the total surplus-value—i.e., the rate at which surplus-value accrues to rent also rises compared to that at which it accrues to profit—then this is only so, because Rodbertus assumes that rent participates in the surplus-value of the agricultural product in a definite proportion. Indeed this must be so, if this fact is given or presupposed.” (p 78-9) 

Moreover, the rate of rent does not rise, but remains at 10%. The amount of rent rises here only because the agricultural product rises and it is assumed that the product yields rent at this rate.

“It amounts to measuring the “level” of rent by a “standard of measurement” that obviates the difficulties of the problem itself.” (p 79)

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