Saturday, 21 July 2018

Theories of Surplus Value, Part II, Chapter 17 - Part 23

Marx then turns to the equivalent situation, in relation to machines. That is not machines used in the production of other commodities, but machines used in the production of machines. There are a number of categories here to differentiate. Take a weaving company; it may buy power looms from a power-loom making company. If the latter only produces power-looms, it cannot use any of its surplus product directly, as a means of accumulation, because power looms can only be used for weaving, not for producing other power looms. That would not be the case were the supplier not only a producer of power looms, but of machines in general. However, assume that is not the case. The power loom producer themselves then needs to buy machines which are used to build the power looms, and which thereby form part of its constant capital. So, it may buy lathes, milling machines, drills, presses and so on from one or more companies who produce such machines. If we take one that produces lathes, it will, over a year, produce a surplus product in the form of several lathes, and some of these will be produced in anticipation that some of their customers will require more lathes than just what is required to replace their worn out lathes. In addition, they may anticipate that they will gain new customers for their lathes, and as new businesses are created, as capital accumulates in the economy. 

Just to be clear here then, the surplus product of the lathe producer should be seen as falling into two or more correctly three components. Firstly, as with simple reproduction, a portion of the surplus production is simply what is sold, and produces that portion of the profit of the owner, which funds their consumption. It could be thought of as a number of lathes that the owner exchanges with producers of consumer goods, so as to meet their own personal consumption needs. But, a second part of the surplus production is a quantity of lathes that are sold to firms who are accumulating capital, here in the form of additional lathes. Some of these firms may be suppliers of steel, or other material that the lathe maker also needs in additional quantities, so as to themselves increase their output of lathes. 

However, one of the firms that needs additional lathes, as part of the general accumulation of capital is the lathe maker themselves. So, in the same way that the farmer increases their output by taking a part of their surplus production of grain, and using it directly as additional seed, so the lathe maker, in part, increases their output by taking part of their own surplus production, and adding it to their own stock of lathes, used in their own production. Suppose the lathe maker produces a profit of £100,000, which is the equivalent of ten lathes. The owner may sell six lathes to the producers of consumption goods, for £60,000, which they use, in turn, to buy consumption goods for their personal consumption. They may sell 2 machines to producers of means of production, for example, a power-loom producer, as these producers themselves accumulate capital, and expand their output. But, the lathe maker may then keep one of their surplus lathes, and use if to expand their own output, in the next year. 

That leaves a further machine, which is why I said the surplus had to be divided into three rather than two. In order for the lathe producer to use the additional lathe they add to their own constant capital, they also have to employ additional labour to operate it. The final machine, therefore, also represents a part of the machine maker's own accumulation. They exchange it with the producers of wage goods so that with the proceeds they can pay the wages of the additional worker they require. A part, therefore, of the lathe producer's surplus product is directly accumulated by them as constant capital, i.e. as additional lathes; a further part is accumulated indirectly as constant capital, it is exchanged with steel producers etc. who provide the additional steel and other materials required to increase the production of lathes; and finally a further part is accumulated indirectly as variable-capital, as it is exchanged with the producers of wage goods required by the additional labour to be employed in lathe production. 

“The general law is as follows: 

Where a part of the product, and therefore also of the surplus-product (i.e., the use-value in which the surplus-value is expressed) can re-enter as a means of production—as instrument of labour or material of labour—into the sphere of production from which it came, directly, without an intermediary phase, accumulation within this sphere of production can and must take place in such a way that a part of the surplus-product, instead of being sold, is as a means of production re-incorporated into the reproduction process directly (or through exchange with other specialists in the same sphere of production who are similarly accumulating), so that accumulation and reproduction on a larger scale coincide here directly. They must coincide everywhere, but not in this direct manner.” (p 488) 

Marx refers to the existence of industrial areas of machine builders, who build entire factories for manufacturers. Today, we see commercial and industrial parks, built by property development companies. Particularly where grants are provided by central and local government for such developments, as part of a regeneration programme, the developers may produce a number of such factory units, on the development, speculatively, in the expectation that expanding or newly created companies will occupy them. But, in the same way that Marx describes, the developers themselves, as they expand, need additional facilities, as offices, depots for plant and equipment etc., and so can similarly accumulate their own capital directly from their own surplus production. 

“The only thing that matters here is whether the kind of use-value in which the surplus-labour is expressed, can re-enter as means of production into the sphere of production of the capitalist to whom the surplus-product belongs. This is yet another example of how important is the analysis of use-value for the determination of economic phenomena.” (p 488-9) 

Yet, most modern Marxist economists completely ignore the question of use value in their analysis. 

This direct accumulation of capitals forms an important aspect of the entire process of capital accumulation. In fact, Marx says, “without which no accumulation of capital can take place at all.” (p 489) 

As also described, besides this direct accumulation of constant capital in the form of use values, reproduced and accumulated out of the surplus product of each producer of means of production, there is also the indirect accumulation of use values out of the surplus product of producers of means of production. 

“If, for example, the manufacturer of iron, coal, timber, etc., buys machinery or tools from the machine-builder and the machine-builder buys metal, timber, coal etc. from the primary producer, then they replace or form new constant capital through this exchange of the reciprocal component parts of their constant capital. The question here is: to what extent is the surplus-product converted in this way?” (p 489) 

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