Tuesday, 3 April 2018

Theories of Surplus Value, Part II, Chapter 15 - Part 6

[2. Changes in the Rate of Profit Caused by Various Factors] 

In Chapter XIII, Ricardo says, 

““rent being not a creation, but merely a transfer of wealth” (l.c., p. 221).” (p 379) 

But, neither rent nor profit, nor wages, nor interest are creations of wealth. They, like taxes, are only revenues, made possible by a prior creation of wealth by labour. Profit, as much as rent, represents a transfer of that wealth from the labourer that created it. The same applies to interest and taxes, even if this transfer first involves a transfer from the worker to the capitalist, as profit, before them being transferred from the capitalist to the money-lender, and the state. 

Wages are not a transfer of wealth, but only an appropriation, by the worker, of a portion of the wealth they have previously created. Ricardo also says, 

““A tax on raw produce from the surface of the earth, will…fall on the consumer, and will in no way affect rent; unless, by diminishing the funds for the maintenance of labour, it lowers wages, reduces the population, and diminishes the demand for corn” (l.c., p. 221).” (p 379) 

Whether his contention that such a tax falls on the consumer, rather than the farmer or landlord, is correct or not, is not of interest here. However, Marx says, if the contention is correct, then it will not raise the rent, contrary to what Ricardo believes. Ricardo believes that it could only affect rent if, by raising the cost of means of subsistence (value of labour-power) it reduces the amount of capital employed, and the population, along with the demand for corn. Ricardo, because he conflates surplus value and profit, can only see the effect of a rise in corn prices on the rate of surplus value, and this effect on the rate of profit. But, the raw produce of the Earth forms a large part of the constant capital. As Marx says, in Capital III, Chapter 6, the rate of profit moves inversely to changes in the price of raw materials. A tax on such raw materials thereby increases the price of a large component of constant capital, and thereby raises the organic composition of capital. For any given mass of surplus value then, in other words, even without Ricardo's assumption of a reduction in surplus value, the rate of profit would fall. The same applies to import duties on such materials, for example, with Trump's imposition of duties on steel and aluminium imports. 

But, rent arises from the difference between the value of agricultural/mineral production, and its price of production, i.e. cost of production plus average profit. If the average rate of profit falls, as described above, the price of production of agricultural/mineral production also thereby falls. The result is then a larger difference between these prices of production, and their value, i.e. an increase in the surplus profit, and consequently in rent. 

Ricardo's argument is only correct, Marx says, 

“... if the values of variable and constant capital change in the same proportion, whether the change is caused by a rise in the price of raw materials or by taxes, etc. In this case the rate remains unaffected, because no change has occurred in the organic composition of the capital. And even then it must be assumed—as is the case with temporary changes—that wages remain the same, whether the price of raw produce rises or falls (in other words wages remain the same, that is, their value remains unchanged irrespective of any rise or fall in the use-value of the wages).” (p 380) 

What is actually determinant here is not the organic composition of capital c:v, per se, but the relation of c/(v + s). In other words, its not only that c and v would have to change in the same proportion, but that c and (v + s) must change in the same proportion. Otherwise, the rate of profit itself must change. If a rise in prices causes c and v to rise in the same proportion, say from 100:80 to 110:88, it will only be the case that this has no effect on the rate of profit, if, for example, the surplus value rises from 90 to 99, so that the rate of profit remains constant at 50%. 

No comments: