Sunday, 15 July 2018

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

The Internet speeds up circulation in other ways too. In order for the circuit to be completed, the produced commodities must be sold, which means consumers having to go to stores to buy them. But, the Internet, via online shopping, speeds up that part of the circulation process too. The consumer may never see any money paid to them as wages, dividends, interest or rent, as it gets transferred electronically into their account. They may even have a standardised weekly shopping list that gets filled by the supermarket, and delivered to them, and nor will they see the money paid for those commodities, as its electronically, and immediately transferred from their own account to that of the store. Not only does this hugely speed up the process of circulation, by increasing the velocity of commodity transactions, as well as money transactions, but it also hugely reduces the quantity of money that must be thrown into actual circulation, which represents a significant reduction in the costs of circulation for capital

The role of the Internet in massively increasing the speed of circulation is manifest in another way too. That is related to the shift in the patterns of production and consumption. Not only is it the case that 80% of the economy of developed nations is today comprised of the production of service industries, but this shift in production is symptomatic of a corresponding shift in consumption. Although, the bubble in property prices in the UK, blown up over the last 30-40 years, has massively increased the proportion of household budgets that must be devoted to shelter – particularly for those in rented accommodation – the massive reduction in commodity values that the aforementioned rise in social productivity has brought, alongside the shift of production of many manufactured goods to low wage economies, such as China, means that the proportion of the budget spent on such consumer goods has continually fallen in real terms, and often even in absolute terms – for example the price of computers etc.   The ONS provided this breakdown of UK family spending in 2012, the figures for spending on services, is likely to be greater now.

Recreation and culture
Housing (net)1, fuel and power
Food and non-alcoholic drinks
Restaurants and hotels
Miscellaneous goods and services
Household goods and services
Clothing and footwear
Alcoholic drinks, tobacco and narcotics

Total COICOP expenditure 

Other expenditure items

Total expenditure 

Similar improvements in productivity, and the increase in global agricultural land under cultivation, notably now also in Africa, means that food prices have also continually fallen in real terms, apart from short term price spikes caused by temporary failures to meet sharply rising demand. In fact, in Britain, food has become so cheap, that the average family is calculated to throw away a third of the food it buys. A significant proportion of the average family spending on food, is actually made up of what is really leisure activity, or entertainment, i.e. eating out at restaurants, rather than the actual purchase of food. This shift also has a significant effect on the rate of turnover, both in terms of the time of production and of circulation. Take some manufacturing business. It buys labour-power, and materials, and sets them to work with machines to produce motor cars. Even allowing for modern production techniques, the cars do not go from the initial arrival of engines, body panels, gearboxes and so on through to assembly, finishing, and transport to showrooms in less than several days. Selling the cars to final consumers could take several days more. But even assuming the average turnover period for such industrial capital, is just a week, this compares badly with the situation for these new forms of capital. 

Take a fast food restaurant. It daily advances productive-capital in the form of means of production (burgers, onions, salads, buns etc.) and labour-power. It is even likely to obtain the return of this capital, plus surplus value before this advanced capital has even been paid for! Even if a certain amount of means of production are bought one day and used the next, this does not change anything, because this capital held as a productive-supply only counts as advanced when it enters the production process; what has been bought yesterday, does not have to be bought again today, if it has not been used. The produced output, as commodity-capital is also sold daily to customers, who pay by cash or card, thereby completing the circuit of the capital within the same day. 

In other words, instead of this new more prevalent form of capital turning over once a week, or 50 times a year, it turns over once a day, or 365 times a year! The increase in the rate of turnover, and consequent rise in the annual rate of profit arise not just because of a shortened production period, but a much curtailed circulation period. As Marx points out, if two capitals of the same size are employed one in this sphere, and the other in the old form of manufacturing industry, then, although they have the same rate of surplus value, the annual rate of surplus value for the former will be more than seven times that of the latter, and, all other things being equal, the annual rate of profit will be seven times higher too. 

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