Theories of Surplus Value, Part II, Chapter 10 - Part 21

So in essence, what we have, in this example, based on durability, is the same as in the previous example, where, in the one case, a high proportion of fixed capital is employed, relative to labour, and vice versa. Marx reserves his further comments on Ricardo's analysis of machinery until Chapter XXXI “On Machinery”, which he deals with in Chapter XVIII of this volume.

Ricardo almost hits upon the solution, in his comment,

““It will be seen, then, that in the early stages of society, before much machinery or durable capital is used, the commodities produced by equal capitals will be nearly of equal value, and will rise or fall only relatively to each other on account of more or less labour being required for their production” [l.c., p. 40].” (p 197) 

But, he lets it go again, and returns to the idea of the determining role of changes in wages.

““but after the introduction of these expensive and durable instruments, the commodities produced by the employment of equal capitals will be of very unequal value; and although they will still be liable to rise or fall relatively to each other, as more or less labour becomes necessary to their production, they will be subject to another, though a minor variation, also, from the rise or fall of wages and profits. Since goods which sell for £5,000 may be the produce of a capital equal in amount to that from which are produced other goods which sell for £10,000, the profits on their manufacture will be the same; but those profits would be unequal, if the prices of the goods did not vary with a rise or fall in the rate of profits” (l.c., pp. 40-41).” (p 197-8) 

Capitals of equal size and composition produce commodities of equal value, Ricardo says, but where the organic composition is different, they produce commodities of different values. But, Ricardo defines composition in terms of fixed and circulating capital.

“Firstly, only a part of the fixed capital enters into the commodity as a component part of value, consequently the magnitude of their values will greatly vary according to whether much or little fixed capital is employed in the production of the commodity. Secondly, the part laid out in wages—calculated as a percentage on capital of equal size—is much smaller, therefore also the total [newly added] labour embodied in the commodity, and consequently the surplus-labour (given a working-day of equal length) which constitutes the surplus-value. If, therefore, these capitals of equal size—whose commodities are of unequal values and these unequal values contain unequal surplus-values, and therefore unequal profits—if these capitals because of their equal size are to yield equal profits, then the prices of commodities (as determined by the general rate of profit on a given outlay) must be very different from the values of the commodities. Hence it follows, not that the values have altered their nature, but that the prices are different from the values.” (p 198) 

Its surprising that Ricardo himself didn't reach this conclusion, Marx says, because he understands that a change in the rate of profit affects the prices of production, k + p. As Marx sets out, in Capital III, Chapter 11, therefore, if wages rise in general, so that the rate of profit overall falls, an average rate of profit continues to exist in all spheres, but in some where lots of labour is used, k will rise by more than the fall in p, so that k + p will rise. In other spheres, where little labour is used, k will rise by less than the fall in p, so that k + p will fall.

“How much more therefore must the establishment of a general rate of profit change unequal values since this general rate of profit is in fact nothing other than the levelling out of the different rates of surplus-value in different commodities produced by equal capitals.” (p 198-9) 

Ricardo essentially sets out all of the necessary elements in coming to the right solution, but fails to do so. He concludes,

““Mr. Malthus appears to think that it is a part of my doctrine, that the cost and value of a thing should be the same;—it is, if he means by cost, ‘cost of production’ including profits” (l.c., p. 46, note). (That is, outlay plus profit as determined by the general rate of profit.)” (p 199)

Back To Part 20

Forward To Part 22