Friday, 27 July 2018

Theories of Surplus Value, Part II, Chapter 17 - Part 29

Marx then describes how, even setting aside the question of the accumulation of capital, a crisis can occur simply in relation to the reproduction of the existing capital. The fundamental requirement of such reproduction, as Marx has set out, following the reproduction model of the Physiocrats, is that the use values that constitute the constant and variable-capital, must be physically reproduced and replaced. Unless this is done, reproduction cannot occur, because the amount of labour employed is dependent on the technical composition of capital. If 100 workers are required to process 1,000 kilos of flax into linen, unless the 1,000 kilos of flax can be physically replaced, there is no basis for being able to employ the 100 workers. Moreover, if the 100 workers require 1,000 units of food to ensure their own reproduction, then, unless this 1,000 units of food can be replaced, it is not possible to reproduce the workforce, or thereby to process the 1,000 kilos of flax. 

But, Marx says, it is, as far as capitalist production and exchange is concerned, not only a matter of ensuring this physical replacement of the use values that comprise the constant and variable capital. In order that a capitalist may, for example, be able to reproduce the 1,000 kilos of flax, they turn into 1,000 kilos of yarn, they must be able to sell the 1,000 kilos of yarn at a price that enables them, once more, to buy the 1,000 kilos of flax. In other words, they must be able not only to reproduce the consumed use value of the flax, but also its exchange value. Suppose the capitalist buys 1,000 kilos of flax for £100. They employ 100 workers, at a cost of £100, who, by their labour, add £150 of new value to the flax, as they spin it into yarn. The yarn now has a value of £250. If it is sold at this value, the capitalist is thereby enabled to use £100 to again buy 1,000 kilos of flax, and a further £100 to engage 100 workers to process it. In the process, they obtain £50 of profit. If the average rate of profit is 25%, they will then have also secured this average profit

But, suppose, for whatever reason, the market price of yarn falls to £200. The capitalist could still replace the 1,000 kilos of flax, and again employ the 100 workers, these are use values are physically available for them to do so, but they would now make no profit. If they thought this situation would persist they would look to employ their capital elsewhere, so as to be able to make the average profit. If they continued in this sphere, it would mean selling their output for £50, or 20% less than its exchange-value. However, if the market price of yarn fell to £150, then not only would the capitalist make no profit, but they would also not be able to reproduce their capital. Although the required quantity of flax and labour-power is available to be reproduced, the yarn producing capitalist now no longer has the capital to be able to employ it. They can only buy 750 kilos of flax, and employ 75 workers to process it. 

No comments: