This confusion, in relation to constant and variable capital, extends to modern economists who think that by taking into account the value of “intermediate production” they have included the value of constant capital, in their calculation of national output. In fact, they have only taken into account the new value (v + s) produced in Department I. If we take the £50 million of output value that Marx describes above, it includes all of the variable capital, used in the production of the intermediate goods that form the constant capital of the final output. It does not, however, include the value of the constant capital used in the production of the constant capital component of final output (Department I, c), which forms a revenue for no one, and must simply be reproduced out of final output on a like for like basis, as an exchange with capital rather than revenue.
“But the position is different with that part of constant capital which is used up in order to replace the constant capital consumed in industry and agriculture—with the consumed part of the constant capital employed in those branches of production which produce constant capital, raw material in its primary form, fixed capital and auxiliary materials. The value of this part reappears, it is reproduced in the product. In what proportion it enters into the value of the whole product depends entirely on its actual magnitude—provided the productivity of labour does not change; but however the productivity may change, this part of the constant capital will always have a definite magnitude.” (p 415)
In other words, this is the same point as was reiterated by Marx many times in his dismissal of Smith's “absurd dogma” that the value of output resolves entirely into revenues, and which modern orthodox economics has inherited in the shape of factor income theories of value. As Marx says here, irrespective of changes in productivity, which affect current reproduction costs, and so values, the use values, consumed as means of production, must be reproduced on a “like for like basis”, and so this mass of use values to be reproduced out of current production is a “definite magnitude”. The only thing that changes is the value of this definite magnitude, because changes in social productivity mean that a greater or smaller proportion of social labour-time is required for its reproduction.
So, a farmer might begin with 110 kilos of corn. They may use 10 kilos as seed, and pay the other 100 kilos as wages to their workers, during the year. The output is 150 kilos. But, the farmer can only sell 140 kilos, and thereby derive a revenue from them to pay as wages, and to consume as profit, because 10 kilos of that output has to be set aside as seed. It comprises a part of the output value, but no part of revenue. And, as capitalist production develops, a greater and greater part of output has to be set aside from production to replace what was consumed in this way. If the farmer employs a machine to increase the productivity of their labourers, instead of a given amount of labour, sowing 10 kilos of corn as seed, it may sow 50 kilos of seed. The value of this 50 kilos enters into the value of the output, but forms no part of revenue. Each year, a growing physical mass of material, waiting to be processed, forms the basis of the production cycle, and forms a growing mass of output that is simply set aside for its own replacement, adding nothing to revenues.
“On the average, apart from certain exceptions in agriculture, the amount of the product, i.e., the riches—which Ricardo distinguishes from the value—produced by one million men will, indeed, also depend on the magnitude of this constant capital which is antecedent to production.” (p 415)
The million workers' labour would not be possible unless this great mass of materials already existed, having been produced in the previous period – indeed, the million workers would not be able to live, so as to work, unless, also, a great mass of means of consumption, equal to the variable-capital, did not already exist, in the hands of the capitalists. But, similarly, the value of this great mass of means of production would not exist unless that value was preserved and transferred into the final product by the labour of this million workers.
“It enters into the labour-process as a condition of production but not a single additional hour is worked in order to reproduce the value of this part. As value it is, therefore, not the result of the year’s labour, although its value would not have been reproduced without this year’s labour.” (p 415)
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