The greater the value of this constant capital, produced in the previous period/s, and productively consumed in this period, the greater the value it transfers to current output, but similarly, the greater the value of current output that must be set aside for its like for like replacement, and so which does not form revenue. The value of this constant capital, produced in the previous period/s, and consumed in current production, must be determined by its current reproduction cost, thereby taking account of changes in productivity, not on the basis of historic prices.
“With the growth in the proportion of constant to variable capital, grows also the productivity of labour, the productive forces brought into being, with which social labour operates. As a result of this increasing productivity of labour, however, a part of the existing constant capital is continuously depreciated in value, for its value depends not on the labour-time that it cost originally, but on the labour-time with which it can be reproduced, and this is continuously diminishing as the productivity of labour grows.” (p 415-6)
So, to use one of the arguments of the proponents of historic pricing, it may not be possible to build the houses of today with the bricks the builder buys tomorrow, but that only applies to the bricks as use values. It is always the case that current labour depends upon the use values produced by past labour, and it is that fact that the apologists for capital base their argument upon that this past labour (capital as they define it in purely material terms as buildings, machines and so on) is thereby also productive of value. But, as Marx makes clear here, and in many other places, the fact that current labour depends upon the existence of the products of this past labour (use values) is irrelevant in terms of the value of the products of that past labour. Each of the individual use values/commodities that constitutes that past labour is only an example of the other commodities of its class, and their value is determined by their current reproduction cost. It is clearly absurd to claim that commodities of the same class simultaneously have different values (as commodities rather than as capital) simply on the basis that some of them are employed as means of production. That was the argument that people like McCulloch tried to use to rescue the Ricardian theory.
So, to use one of the arguments of the proponents of historic pricing, it may not be possible to build the houses of today with the bricks the builder buys tomorrow, but that only applies to the bricks as use values. It is always the case that current labour depends upon the use values produced by past labour, and it is that fact that the apologists for capital base their argument upon that this past labour (capital as they define it in purely material terms as buildings, machines and so on) is thereby also productive of value. But, as Marx makes clear here, and in many other places, the fact that current labour depends upon the existence of the products of this past labour (use values) is irrelevant in terms of the value of the products of that past labour. Each of the individual use values/commodities that constitutes that past labour is only an example of the other commodities of its class, and their value is determined by their current reproduction cost. It is clearly absurd to claim that commodities of the same class simultaneously have different values (as commodities rather than as capital) simply on the basis that some of them are employed as means of production. That was the argument that people like McCulloch tried to use to rescue the Ricardian theory.
Marx also says here that whilst this rise in productivity reduces the value of the constant capital, its total value, relative to the variable-capital, still grows, because the rise in the technical composition is greater than the fall in the value composition. So, for example, the value of a kilo of cotton may fall by 20%, as a result of a rise in productivity. If 100 kilos of cotton with a value of £10 are processed by 1 worker paid wages of £10, the composition is 1:1. And, after the fall in value of the cotton it is 0.8:1. However, if this fall in value of the cotton is part of a general rise in social productivity, it may be that now 1 worker processes 150 kilos of cotton, giving a value of £12, so that now the composition rises to 1.2:1.
But, Marx gives no justification of why this must be the case. There seems no reason why the rise in social productivity should not reduce the value of materials by a greater proportion than their usage increases. In fact, Marx himself sets out, in relation to the moral depreciation of fixed capital, that it is not only that technological developments result in better machines, which thereby devalue their predecessors, but the development of technology itself reduces the labour-time required to produce every machine. The same is true with materials. Improved steam engines facilitated producing coal with less labour-time, and thereby reduced the value of coal, but these same improved steam engines also required less coal, in order to produce a given amount of energy. The reduction in the value of coal went along with a proportional reduction in the amount of coal consumed. The same thing has been seen with oil consumption, which, since the 1980's has risen by only about a seventh of the rise in global GDP, during that period.
Technological developments not only reduce the value of materials, but result in more efficient ways of using them, or in replacement, more effective materials. Marx himself refers to the introduction of steel rails that lasted much longer than iron rails, on railways, for example.
Moreover, this increase in the mass of circulating constant capital, which thereby exceeds the fall in the unit value of the raw material, only has significance, in this respect, in economies where the dominant feature is the manufacture and processing of such raw material. In economies such as those of today, where 80% of new value creation arises in service industry, where the processing of material plays only a minor role, the quantity of output, and value of output can increase massively, as a result of rising productivity, without any corresponding increase in the quantity of processed raw materials.
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