Machines, Value, Labour and Labour-Power
Paul describes the fact that information requires energy to produce, and material to store it on. But, the most recent theories indicate that both matter and energy are nothing but information, at a fundamental level.
Paul's faulty understanding of the Labour Theory of Value affects his argument again, here. He says,
“In the Grundrisse, Marx says if a machine costs 100 days' worth of labour-power to make, and wears out in 100 days, its not improving productivity. Much better to have a machine that costs 100 days, but wears out over 1,000.” (p 166)
But, that is not what Marx says. In fact, in Capital and in Theories of Surplus Value, Marx sets out what is wrong with this concept, based upon the durability of fixed capital. Paul confuses two different things, here. This is what Marx actually says, in the Grundrisse.
“We have still to note in regard to fixed capital – and its durability, as one of its conditions which does not enter in from the outside: To the extent that the instrument of production is itself a value, objectified labour, it does not contribute as a productive force. If a machine which cost 100 working days to make replaced only 100 working days, then it would in no way increase the productive power of labour and in no way decrease the cost of the product. The more durable the machine, the more often can the same quantity of product be created with it, or the more often can the circulating capital be renewed, its reproduction be repeated, and the smaller is the value-share (that required to replace the depreciation, the wear and tear of the machine); i.e. the more is the price of the product and its unit production cost decreased. However, we may not introduce the price relation at this point in the development. The reduction of the price as condition for conquest of the market belongs only to competition. It must therefore be developed in a different way. If capital could obtain the instrument of production at no cost, for 0, what would be the consequence? The same as if the cost of circulation = 0. That is, the labour necessary for the maintenance of labour capacity would be diminished, and thus surplus labour, i.e. surplus value, [increased], without the slightest cost to capital. Such an increase of the force of production, a piece of machinery which costs capital nothing, is the division of labour and the combination of labour within the production process.”
What Marx says is that the labour-time required for the production of the machine (not the value of labour-power used in its production) must be less than the value of the paid labour (value of the labour-power/wages) it replaces, by which he means also that labour that would have been required to achieve the output that the machine makes possible. So, a machine that requires 100 days of labour to produce (which might divide into 50 days paid labour/value of labour-power, and 50 days surplus value/unpaid labour) could raise productivity, even if it lasts for only 100 days. All that is required is this: suppose in this 100 days, previously, 50 workers are employed, each paid the equivalent of 0.5 days labour as wages, per day. So, wages/paid labour is equal to 25 days per day = 2500 days. Now, the machine is able to produce this output with just 30 workers. It replaces 20 workers = 10 x 100 = 1,000 days of paid labour, at a cost of just 100 days for the machine. It is ten times more productive than the labour it replaces.
Paul confuses this with the fact that, the more output the machine produces, the more its cost is spread across that output. In fact, the volume of output and durability of the machine are not necessarily connected. Moreover, there is a disadvantage in having machinery that is too durable. What a machine gives up to output is a part of its use value, as a result of wear and tear, resulting from the production process. If that wear and tear is intensive, machines need regular repairs, or replacement. So, machines that were previously constructed from wood, get replaced with machines that are made from iron or steel. But, in addition to transferring value in wear and tear to production, as a result of that production process, machines and other fixed capital can also suffer depreciation. Indeed, other forms of capital, such as materials and labour-power can also suffer depreciation.
Unlike wear and tear, depreciation is a result of a reduction in use value arising outside the production process. So, unlike wear and tear, it cannot be recovered in the value of output. It represents a capital loss. Raw materials, in a store room, can deteriorate, workers left idle lose skills, and so on. But, machines and other fixed capital also suffer moral depreciation. If in the 1980's, you had just kitted out your offices with a number of PC's, all using the CP/M operating system, only to find that, within weeks, Intel had just produced a new processor that IBM were rolling out in their machines, and which was seen to be the standard used by other PC makers, as well as running all of the software compatible with the MS-DOS operating system, also then accepted as the standard, you would see durability of your equipment as a plague.
These two factors, wear and tear, caused by use, as opposed to depreciation, caused by time, and non-use, are continually at odds. As Marx demonstrates, the fixed capital that loses value as a result of wear and tear, thereby results in a higher annual rate of profit. If the employed fixed capital has a value of £100, but loses £10 in wear and tear in the first year, if the profit is £9, the rate of profit is 9/100 = 9%, but in year 2, it is 9/90 = 10%. This fall in the value of the fixed capital stock, due to wear and tear enables such a capital to offset some of the capital loss it would face, due to depreciation, as for example, newer machines are introduced. But, it gives an incentive for the firm to use this fixed capital, as intensively as possible, so as to recover the wear and tear, in the value of its output as quickly as possible, to thereby also devalue its fixed capital, and thereby to raise its rate of profit.
Marx describes this in Theories of Surplus Value. He describes the situation where a coal producer has fixed capital of £50, variable-capital of £50, which produces £50 of surplus value. In the first year, its annual rate of profit is 50/100 = 50%, but the fixed capital loses 10% (£5) due to wear and tear, so, in the second year, the capital advanced has a value of £45 + £50 = £95, whilst surplus value remains £50.
“In the second year, the fixed capital of the coal producer would amount to 45, variable capital to 50 and surplus-value to 50, that is, the capital advanced would be 95 and the profit would be 50. The rate of profit would have risen, because the value of the fixed capital would have declined by one tenth as a result of wear and tear during the first year. Thus there can be no doubt that in the case of all capitals employing a great deal of fixed capital—provided the scale of production remains unchanged—the rate of profit must rise in proportion as the value of the machinery, the fixed capital, declines annually, because wear and tear has already been taken into account. If the coal producer sells his coal at the same price throughout the ten years, then his rate of profit must be higher in the second year than it was in the first and so forth.”
(Theories of Surplus Value, Chapter 23)
Incidentally, this shows again clearly that, for Marx, the rate of profit is calculated on the basis of the value of the capital advanced to production (its current reproduction cost), and not on the basis of its historic price.
Incidentally, this shows again clearly that, for Marx, the rate of profit is calculated on the basis of the value of the capital advanced to production (its current reproduction cost), and not on the basis of its historic price.
So, capital has an incentive to utilise fixed capital intensively, because in that way it quickly devalues this fixed capital providing some protection against depreciation and moral depreciation. For fixed capital like machines that is more prone to moral depreciation, it has more incentive to do so than for things such as rail lines, where such depreciation is less likely.
As Marx says in Capital, when firms feared that the machines they had installed might any day become obsolete, and thereby morally depreciated, what they attempted to do was not to have those machines last for as long as possible – which increased the chance they would become obsolete before the end of their normal life – but to use them as intensively as possible, so as to transfer as much of their value, in wear and tear, in the shortest possible time. That is why, at the dawn of machine industry, the working-day was extended to extraordinary lengths, and indeed as Marx sets out, the rate of profit rose, due to the extension of absolute surplus value.
Where they did seek to extend durability was in those kinds of fixed capital that had naturally long lifespan. For example, a railway line was unable to change very much, so making it out of a more durable steel, rather than iron, reduced the cost in the long-term. There is no point building a PC out of durable material that would last for 50 years, when every firm has a three year upgrade cycle, geared to improvements in hardware and software.
If we take Paul's quote from Marx, where he says,
“If capital could obtain the instrument of production at no cost, for 0, what would be the consequence? The same as if the cost of circulation = 0. That is, the labour necessary for the maintenance of labour capacity would be diminished, and thus surplus labour, i.e. surplus value, [increased], without the slightest cost to capital.” (p 166)
what does this mean? Clearly what Marx does not mean is that such a free machine directly increases surplus value. As I've already set out, and as Marx describes in Theories of Surplus Value, Chapter 22, as against Ramsay, when the value of constant capital falls, this releases capital as revenue (as also described in Capital III, Chapter 6). If this released capital is not accumulated, but is instead converted into revenue, it gives the illusion of an increase in profit, but it is only that – an illusion. It represents no additional surplus value. What applies to a fall in the value of constant capital, applies to constant capital becoming free.
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