Saturday, 30 June 2018

Theories of Surplus Value, Part II, Chapter 17 - Part 2

Ricardo, like Adam Smith, believed that the value of a commodity resolves entirely into revenues (wages, profit, interest, rent, taxes). This led Ricardo into a false view, in relation to the accumulation of capital that such accumulation takes the form of an accumulation of variable-capital. Marx quotes Ricardo's statement, 

““All the productions of a country are consumed; but it makes the greatest difference imaginable whether they are consumed by those who reproduce, or by those who do not reproduce another value. When we say that revenue is saved, and added to capital, what we mean is, that the portion of revenue, so said to be added to capital, is consumed by productive instead of unproductive labourers.” (This is the same distinction as Adam Smith makes.) “There can be no greater error than in supposing that capital is increased by non-consumption. If the price of labour should rise so high, that notwithstanding the increase of capital, no more could be employed, I should say that such increase of capital would be still unproductively consumed” (l.c., p. 163, note).” (p 470) 

So, Ricardo makes the same distinction as Adam Smith, in relation to productive and unproductive consumption, i.e. consumption of means of consumption by workers, who themselves create value, as opposed to consumption by all those who do not. But, as seen in the discussion of Smith's theories of productive and unproductive labour, there is a difference between labour which may be unproductive of surplus value, and labour which is nevertheless productive of value. 

Ricardo essentially makes the definition of productive consumption by the labourer into only that which results in the production of surplus value. And, on that basis, he also arrives at a definition of overproduction of capital similar to that produced by Marx, whereby he says, 

“If the price of labour should rise so high, that notwithstanding the increase of capital, no more could be employed, I should say that such increase of capital would be still unproductively consumed”. (p 470) 

This is essentially the same definition of overproduction of capital that Marx uses in Capital III, Chapter 15, where he says, 

“As soon as capital would, therefore, have grown in such a ratio to the labouring population that neither the absolute working-time supplied by this population, nor the relative surplus working-time, could be expanded any further (this last would not be feasible at any rate in the case when the demand for labour were so strong that there were a tendency for wages to rise); at a point, therefore, when the increased capital produced just as much, or even less, surplus-value than it did before its increase, there would be absolute over-production of capital; i.e., the increased capital C + ΔC would produce no more, or even less, profit than capital C before its expansion by ΔC. In both cases there would be a steep and sudden fall in the general rate of profit, but this time due to a change in the composition of capital not caused by the development of the productive forces, but rather by a rise in the money-value of the variable capital (because of increased wages) and the corresponding reduction in the proportion of surplus-labour to necessary labour.” 

Yet, Ricardo himself, as we shall see, argues that overproduction of capital cannot occur. 

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