Tuesday, 31 July 2018

Theories of Surplus Value, Part II, Chapter 17 - Part 33

What capital requires, in order to grow rapidly, is to be able to utilise existing value to create new value, and to do that most effectively, it requires that existing value to be small compared to the new value it creates. Put another way, it requires that as small a proportion of current labour-time be needed to physically reproduce the consumed productive-capital, as possible, leaving as large a portion of current labour-time as possible left over as surplus labour-time.  Consider a capitalist with £1 million of money-capital to invest. What would they prefer - to have to have, a factory built, new machines produced, and materials supplied to them, or to be able to buy all of those things, at a fraction of the price, from a liquidation sale of some bankrupted business? The answer is obvious. They prefer the latter, because what they need, to produce profit, is the use value of the factory, machines and material. The less they have to pay to obtain that use value, the higher the rate of profit they can make. But, the same is true for the economy as a whole. What the economy needs, in order to grow rapidly is the use value of all these elements of the constant capital, because it is the productive use of all these elements, by workers, that enables the new value to be produced, and the surplus value created. The lower the value of the constant capital, the higher the proportion of the surplus value to it, and therefore, the higher the rate of profit. What capital requires is not a destruction of those use values, which only imposes an additional cost for its replacement, but a destruction of the value of those use values. 

And, it is this distinction that Marx makes here. The physical destruction “means that the process of reproduction is checked and that the existing means of production are not really used as means of production, are not put into operation. Thus their use-value and their exchange-value go to the devil.” (p 495-6) 

But, whilst this physical destruction of use values is deleterious to accumulation, and growth, it is precisely the destruction of exchange-value that is beneficial. 

“A large part of the nominal capital of the society, i.e., of the exchange-value of the existing capital, is once for all destroyed, although this very destruction, since it does not affect the use-value, may very much expedite the new reproduction.” (p 496) 

This is why the moral depreciation of the fixed capital stock, as a result of rapid technological development, and increasing social productivity acts to raise the rate of profit. In other words, all of these factories, machines, material, and commodity-capital that gets devalued, as firms go into liquidation, becomes available at knock-down prices that other capitalists are able to buy and utilise. It is precisely because they buy this capital at these knock-down prices that, in their hands, it becomes profitable. In fact, as soon as economic activity picks up again, the buyer may find that, not only are they able to operate profitably, but the value of the factory, the machines etc., they bought at the knock-down price, rises to its previous level, or more, so that they also make a capital gain. 

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