Friday, 9 March 2018

Theories of Surplus Value, Part II, Chapter 14 - Part 5

As Smith says, 

““When those three different sorts of revenue belong to different persons, they are readily distinguished; but when they belong to the same, they are sometimes confounded with one another, at least in common language” ([O.U.P., Vol. I, p. 58; Garnier,] l. I, ch. VI, p. 106).” (p 345) 

Rather than determining the value of the commodity as he had originally done, according to the labour-time required for its production, Smith now argues that where a labourer uses only his labour, the price of the commodity is equal only to wages, that where he also uses a small capital it is equal to those wages plus the profit on this capital, and if he owns the land on which he produces, it also includes the rent on the land. 

“The whole absurdity of Smith’s approach comes to light in one of the final passages of Chapter VI, Book I: 

“As in a civilised country there are but few commodities of which the exchangeable value arises from labour only” (here labour is identified with wages) “rent and profit contributing largely to that of the far greater part of them, so the annual produce of its labour” (here, after all, the commodities are the produce of labour, although the whole value of this produce does not arise from labour only) “will always be sufficient to purchase or command a much greater quantity of labour than what was employed in raising, preparing, and bringing that produce to market” ( [O.U.P., Vol. I, pp. 59-60; Garnier,] l.c., pp. 108-09). 

The produce of labour [is] not equal to the value of this produce. On the contrary (one may gather) this value is increased by the addition of profit and rent. The produce of labour can therefore command, purchase, more labour, i.e., pay a greater value in labour, than the labour contained in it.” (p 345) 

Marx then sets out a wording in which this proposition would be correct. In other words, based on Smith's original theory, whereby value is determined by labour, and only resolves into revenues, what Smith should have said was, 

““As in a civilised country there are but few commodities of which the exchangeable value resolves itself into wages only and since, for a far greater part of them, this value largely resolves itself into rent and profit, so the annual produce of its labour will always be sufficient to purchase or command a much greater quantity of labour than what had to be paid” (and therefore employed) “in raising, preparing, and bringing that produce to market.” (p 345-6.) 

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