Ricardo’s Theory of Accumulation and a Critique of it. (The Very Nature of Capital Leads to Crises)
[1. Adam Smith’s and Ricardo’s Error in Failing to Take into Consideration Constant Capital. Reproduction of the Different Parts of Constant Capital]
Marx begins this chapter with what could almost have been written as a direct rebuttal of the ideas put forward, more than a hundred years later, by proponents of the Temporal Single System Interpretation, and of historic pricing. So, for example, Marx describes the way that, because capitalist production is a continuous process, based upon co-operative labour, the outputs of one part of the process are simultaneously the inputs of another. That is most clearly visible within the workshop, and more so with continuous assembly lines, but, as Marx described in Capital, the whole economy operates on the same basis, and now, with globalisation, and Just In Time production and stock control systems, the global economy itself operates on this basis.
And Marx, as he did in Capital II and III, and earlier in Theories of Surplus Value, describes the way in which this process of social reproduction revolves around the physical reproduction of material balances, as he puts it “on a like for like basis.” It is the physical elements of constant capital, the raw and auxiliary materials, and worn out fixed capital, consumed at each stage of the production process, that must be physically replaced, for production to continue on the same scale. Similarly, it is the physical elements of variable-capital, i.e. the mass of use values that comprise workers' necessary consumption, that must be reproduced, in order that labour-power can be reproduced.
Moreover, it is the fact of the requirement of this physical replacement of consumed use values that determines that the valuation of this consumed capital must be undertaken on the basis of its current reproduction cost, and not its historic cost, because it is this current reproduction cost which determines the proportion of current social labour-time, what proportion of current production, must be devoted to replacing that consumed capital, and so what proportion is left over as surplus production, and surplus value, or released capital, and, therefore, what the rate of profit, on the total advanced social capital is.
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