Thursday, 11 January 2018

Theories of Surplus Value, Part II, Chapter 12 - Part 13

[c)] Observations on the Influence of the Change in the Value of the Means of Subsistence and of Raw Material (Hence also the Value of Machinery) on the Organic Composition of Capital

Marx then discusses the fundamental basis of this difference.

“In this case the rate of rent rose because the rate of profit fell. Now did it fall because there was a change in the organic composition of the capital?” (p 275)

As Marx goes on to elaborate, and as he had explained in Capital I, the actual relation of the value of constant capital to variable capital can change for two very different reasons. If we assume, as Marx does here, that the value of c is 80, and of v is 20, then this ratio could rise to 85:15, if, for example, the price of materials rises. Suppose the capital here spins cotton, each worker spins 16 kilos of cotton. This ratio of cotton to labour may remain exactly the same, i.e. the technical composition, but, if the price of cotton rises, while wages remain the same, the ratio becomes 85:15. It is then not the organic composition that has changed but merely the value composition of the capital. In fact, the basis of this change is a fall in social productivity that causes the price of cotton to rise. There are a number of ways this might be manifest.

“Firstly, an increase may occur in the price of the means of subsistence, hence reduction in surplus-labour and surplus-value. Secondly, constant capital may become more expensive because, as in the case of coal, the auxiliary material, or in the case of wheat, another element of constant capital, namely seeds, rises in value or also, [because] due to the increased price of wheat, the cost-price of other raw produce (raw material) may rise. Finally, if the product was iron, copper etc., the raw material of certain branches of industry and the raw material of machinery (including containers) of all branches of industry would rise.” (p 276) 

I have set out a whole series of such inter-related factors in examining  the fall in the price of oil after 2014.

As Marx says, in Capital I, a change in the organic composition of capital requires a change in its technical composition. Otherwise, any change in the proportion merely reflects a change in the value composition.

“The composition of capital is to be understood in a two-fold sense. On the side of value, it is determined by the proportion in which it is divided into constant capital or value of the means of production, and variable capital or value of labour power, the sum total of wages. On the side of material, as it functions in the process of production, all capital is divided into means of production and living labour power. This latter composition is determined by the relation between the mass of the means of production employed, on the one hand, and the mass of labour necessary for their employment on the other. I call the former the value-composition, the latter the technical composition of capital.

Between the two there is a strict correlation. To express this, I call the value composition of capital, in so far as it is determined by its technical composition and mirrors the changes of the latter, the organic composition of capital. Wherever I refer to the composition of capital, without further qualification, its organic composition is always understood.”

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