“Ricardo, like Adam Smith, does not take constant capital into account here.” (p 417)
The reason being, as Marx has described previously, that neither Smith nor Ricardo have a concept of constant capital, confusing it with fixed capital, but also because Ricardo follows Smith in his “absurd dogma” that the value of commodities resolves itself entirely into revenues, which ultimately means the value created by labour. In other words, they make no distinction between the congealed labour and the living labour.
Ricardo then argues that it must follow that, if wages rise, profit must fall, but, as Marx showed in the previous section, that only follows if, like Ricardo and Smith, you believe the length of the working-day is fixed. If the length of the working-day rises from 10 hours to 12 hours, then its clear that profit (surplus value) can double from 2 hours to 4 hours, whilst wages remain constant at 8 hours.
Labour is then the precondition of value, but there can be no labour without the worker, who must consume some minimum of commodities, in order to live, and so the workers wages must then be equal to the value of their labour, which is equal to the value of these commodities, required for their subsistence. And so, if the value of the commodity is divided into wages and profit, with each moving inversely to the other, it must be wages that determine this relation. In other words, wages cannot rise or fall because of an increase or fall in profits, because wages are fixed according to the physical minimum of means of subsistence required by the worker. If the workers' wages are represented by corn, and the worker needs 10 kilos of corn to live, if the value of corn rises from £10 per kilo to £12 per kilo, then the workers' wage must rise accordingly, and as profit moves inversely to wages, profit would fall. It is only what is left over from the value created by the worker, after the wages have been paid that can form profits.
Ricardo correctly concludes that a rise or fall in wages cannot, therefore, result in a rise in the value or price of the commodity, because a rise in wages simply causes a reduction in profit of the same amount, leaving the value of the commodity unchanged. And, as Marx showed, in the previous section, this is not altered where the working-day is extended, so that more absolute surplus value is produced. The commodities produced in this period contain the same proportion of material and labour, and so have the same values as those produced in the rest of the working-day; it is only that the proportion of paid and unpaid labour, of wages and profit are changed.
Ricardo cites some exceptions to this, in which a rise in wages causes the exchange-values of some commodities to rise, relative to those of others. However, as Marx points out, repeating what was said in Capital III, Chapter 12, this is only true in relation to prices of production, not values or exchange values.
Ricardo's argument then is that the working-day is fixed in length. The worker must consume a certain minimum of use values, to reproduce their labour (power), and so wages are determined by the value of this minimum. Profit then moves higher or lower dependent on the movement of wages. Consequently, Ricardo argues, anything that reduces the value of those use values reduces wages, and consequently raises profits. This was one of the arguments raised in favour of repeal of the Corn Laws. But, Ricardo is able to make a wider point that the general development of capitalism sees a rise in productivity, which, in turn, causes the value of commodities to fall, which then results in a fall in wages, and rise in profits. Even if, as part of a general social development, alongside this development of capitalism, workers are enabled to consume a greater quantity and range of use values, the value of these, and so of wages, can still fall, and so profits can rise. As Marx puts it,
“It is possible that, reckoned in terms of use-values (quantity of commodities or money), his wages rise as productivity increases and yet the value of the wages may fall and vice versa. It is one of Ricardo’s great merits that he examined relative or proportionate wages, and established them as a definite category. Up to this time, wages had always been regarded as something simple and consequently the worker was considered an animal. But here he is considered in his social relationships. The position of the classes to one another depends more on relative wages than on the absolute amount of wages.” (p 417)
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