Wednesday, 17 January 2018

Theories of Surplus Value, Part II, Chapter 12 - Part 19

This situation where a rise in wages – or a rise in the price of materials – causes a squeeze on  profits, is then the opposite of the condition that Marx describes as leading to  the law of the tendency for the rate of profit to fall. For the latter to operate, social productivity must be rising, so that the  organic composition of capital rises, as a consequence of a rise in the technical as opposed to value composition of capital. It implies that this rising productivity actually reduces the unit value of materials, and fixed capital, as well as reducing the value of labour-power, and thereby increasing  the rate of surplus value. By contrast, the situation that Marx describes here, where effectively productivity has fallen, or else, a sharp rise in demand, as capital expands rapidly, causes the prices of materials, and wages to rise, leads to a squeeze on profits. This is the situation that Marx describes in Chapter 6 of Capital III, and again in Chapter 15, where he sets this out as the basis of a crisis of overproduction of capital.

“There would be absolute over-production of capital as soon as additional capital for purposes of capitalist production = 0. The purpose of capitalist production, however, is self-expansion of capital, i.e., appropriation of surplus-labour, production of surplus value, of profit. As soon as capital would, therefore, have grown in such a ratio to the labouring population that neither the absolute working-time supplied by this population, nor the relative surplus working-time, could be expanded any further (this last would not be feasible at any rate in the case when the demand for labour were so strong that there were a tendency for wages to rise); at a point, therefore, when the increased capital produced just as much, or even less, surplus-value than it did before its increase, there would be absolute over-production of capital; i.e., the increased capital C + ΔC would produce no more, or even less, profit than capital C before its expansion by ΔC. In both cases there would be a steep and sudden fall in the general rate of profit, but this time due to a change in the composition of capital not caused by the development of the productive forces, but rather by a rise in the money-value of the  variable capital (because of increased wages) and the corresponding reduction in the proportion of surplus-labour to necessary labour.” 

In fact, it is in response to these conditions, where social productivity has fallen or become relatively stagnant, and where capital has expanded extensively, on the basis of the existing technologies, and which has thereby led to the situation where labour supplies have been relatively used up, causing wages to rise, that capital turns to the need to develop new technologies, to raise the level of social productivity, and thereby create a condition of relative surplus population, pushing down wages and raising the rate of surplus value, that leads to an actual rise in the technical and consequently organic composition of capital, which then does create the conditions for the law of the tendency for the rate of profit to fall. As Marx puts it, by contrast to the condition where profits are squeezed, as a result of rising wages, and a falling rate of surplus value, the law of the tendency for the rate of profit to fall depends upon rising productivity, falling wages, and a rising rate of surplus value.

“In relation to employed  labour-power the development of the productivity again reveals itself in two ways: First, in the increase of surplus-labour, i.e., the reduction of the necessary labour-time required for the reproduction of labour-power. Secondly, in the decrease of the quantity of labour-power (the number of labourers) generally employed to set in motion a given capital.” (ibid) 

This same process of raising social productivity, via technological innovation, and intensive accumulation, reduces the value of the existing fixed capital stock, and reduces the unit value of materials. It creates the basis for a future rise in profits and increased capital accumulation.

“The increase in the productiveness (which, moreover, we repeat, always goes hand in hand with a depreciation of the available capital) can directly only increase the value of the existing capital if by raising the rate of profit it increases that portion of the value of the annual product which is reconverted into capital. As concerns the productivity of labour, this can only occur (since this productivity has nothing direct to do with the value of the existing capital) by raising the relative surplus-value, or reducing the value of the constant capital, so that the commodities which enter either the reproduction of labour-power, or the elements of constant capital, are cheapened. Both imply a depreciation of the existing capital, and both go hand in hand with a reduction of the variable capital in relation to the constant. Both cause a fall in the rate of profit, and both slow it down. Furthermore, inasmuch as an increased rate of profit causes a greater demand for labour, it tends to increase the working population and thus the material, whose exploitation makes real capital out of capital.” (ibid)

The Law of the Tendency for the Rate of Profit to Fall, therefore, is not a cause of crises of overproduction, according to Marx, but is the means for resolving them, by raising the level of social productivity, creating a relative surplus population, reducing wages, and raising the rate of surplus value, whilst simultaneously depreciating the value of the existing fixed capital stock – moral depreciation – and reducing the unit value of materials, although increasing the mass of materials processed by any given quantity of labour.

Moreover, as Marx also states, reiterating a point made in the Grundrisse, in relation to the Civilising Mission of Capital, by raising productivity, labour and capital is releases to enter new spheres of production, providing both an outlet for capital investment, and new forms of consumption, on which revenue can be expended. The former tend to be in areas where the organic composition of capital is low, and rate of profit high, as set out in Capital III, Chapter 14, whilst the latter resolves the contradiction that at the same time that the mass of existing  use values rises, consumers are prepared to pay less and less for additional quantities of them, so preventing produced surplus value from being realised as profit.

“Indirectly, however, the development of the productivity of labour contributes to the increase of the value of the existing capital by increasing the mass and variety of use-values in which the same  exchange-value is represented and which form the material substance, i.e. , the material elements of capital, the material objects making up the constant capital directly, and the variable capital at least indirectly. More products which may be converted into capital, whatever their exchange-value, are created with the same capital and the same labour. These products may serve to absorb additional labour, hence also additional surplus-labour, and therefore create additional capital. The amount of labour which a capital can command does not depend on its value, but on the mass of raw and auxiliary materials, machinery and elements of fixed capital and necessities of life, all of which it comprises, whatever their value may be. As the mass of the labour employed, and thus of surplus-labour increases, there is also a growth in the value of the reproduced capital and in the surplus-value newly added to it.” (ibid) 

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