Wednesday, 18 April 2018

Theories of Surplus Value, Part II, Chapter 15 - Part 21

Marx then sets out the situation resulting from a 25% fall in wages. The results are summarised in the following table.

Rate of profit

[the price of the] product [must be:]
Difference between cost-price and value
I. 84.21 c + 15.79 v
In order
116 (value = 115.79)
II. 66.66 c + 33.33 v
to sell at
116 (value = 113.33)
III. 88.31 c + 11.69 v
the same
116 (value = 111.69)
IV. 96.20 c + 3.80 v
116 (value = 103.82)
Total 400
64 (to the nearest whole number)

The amounts are adjusted to take account, as before, of the capital advanced continuing to be £100, so that the fall in wages releases capital to be used to employ additional means of production and labour-power

“This makes 16 per cent. More exactly, a little more than 16 1/7 per cent. The calculation is not quite correct because we have disregarded, not taken into account a fraction of the average profit; this makes the negative difference in II appear a little too large and [the positive] in 1,111, IV a little too small. But it can be seen that otherwise the positive and negative differences would cancel out; further, it can be seen that on the one hand the sale of II below its value and of III and particularly of IV above their value would increase considerably. True, the addition to or reduction of the price would not be so great for the individual product as might appear here, since in all four categories more labour is employed and hence more constant capital (raw materials and machinery) is transformed into product. The increase or reduction in price would thus be spread over a larger volume of commodities. Nevertheless it would still be considerable.” (p 390) 

This is the point that Marx sets out in Capital III, Chapter 12. It shows that a rise in wages that causes a fall in the rate of profit, results in the price of production for those spheres with high organic compositions to fall, and vice versa, whilst the price of production for those capitals with the average composition is unchanged. Again, the implication is that the former sees an influx of capital, to push down prices, whilst those spheres with lower compositions see an outflow of capital to cause their prices to rise. 

“It is thus evident that a fall in wages would cause a rise in the cost-prices of I, III, IV, in fact a very considerable rise in the cost-price of IV. It is the same law as that developed by Ricardo in relation to the difference between circulating and fixed capital, but he did not by any means prove, nor could he have proved, that this is reconcilable with the law of value and that the value of the products remains the same for the total capital.” (p 390) 

Although, in fact, the divergence in Ricardo's example, relating to fixed and circulating capital, also stems from the different rates of turnover of capital, so that those capitals that turnover faster than the average produce proportionately more surplus value, and have a higher annual rate of profit, and vice versa. Capital then flows to these higher profit areas, reducing prices, and vice versa. Correspondingly, when wages rise, and the average rate of profit falls, capital flows in the other direction.

No comments: