Unit Values, Gross and Net Revenue
Paul continues his error in relation to the Labour Theory of Value in the final section of this chapter. Capitalism has always reduced the value of inputs by raising productivity, he says. This would pose a problem for it, unless it also continually expanded markets. That is correct, and in the Grundrisse and Theories of Surplus Value, Marx describes that it does that both by deepening existing markets (getting people to buy more of the existing stuff) and by widening markets (opening up markets in new locations, creating markets for new types of commodities in existing locations).
Often these two things go together. As workers are encouraged to consume new types of commodity – fashion instead of rags, TV instead of magazines – so this increases the amount of necessary labour they must perform in a day to be able to buy all these commodities, so as to reproduce their labour-power. But, in fact, that is never the case, because productivity rises so that all of these commodities become cheaper. In fact, they become cheaper to the extent that despite raising their living standard, they require lower wages to achieve it, so the necessary labour falls, and surplus value rises.
But, because Paul confuses labour with labour-power – quantity of labour and value of labour-power/wages – he again concludes that a rise in necessary labour-time means a rise in the labour content of commodities. That is completely wrong. He says,
“... this in turn raises the amount of labour-time embodied in each machine, product or service.” (p 172)
Absolutely not. If it did result in a rise in necessary labour/wages, it could have absolutely no impact on the quantity of labour undertaken, and quantity of new value produced by that labour. If, yesterday, I worked for 10 hours, and produced 10 hours of new value, whilst my necessary labour was 5 hours, then, if the necessary labour today has risen to 6 hours, it is irrelevant to the fact that I again work 10 hours, and produce 10 hours of new value! The only relevance is that, yesterday, the new value I produced got divided up as 5 hours wages, and 5 hours of surplus value, whereas today the new value produced is divided up 6 hours for wages, and 4 hours of surplus value.
If rising productivity continually cheapens inputs, it releases capital as revenue, and raises the rate of profit. If it cheapens wage goods, it cheapens labour-power, increases surplus value, and the rate of profit. All of this seems the opposite of the conclusions that Paul draws.
Its possibly because Paul is drawn along by the Smithian cost of production theory, and Smith's concentration on gross revenues rather than net revenues that Paul is so obsessed with the idea that capitalism needs to avoid falling prices. Capitalism certainly does not like rapidly falling nominal prices, because they spark price wars between oligopolies, where firms do not follow each other in raising prices, but always follow each other in reducing them, so as not to lose market share. But, that is the role of central banks, to prevent such falls in nominal prices. But, contrary to Paul's argument, capital continually seeks to reduce values, to reduce input costs, so as to maximise net revenue relative to gross revenue, and to maximise the rate of profit.
Paul says info-capitalism would have to create new markets and new jobs. True, but it has. We have vast numbers of new commodities and global employment at record levels, with low levels of unemployment. The global working class has more than doubled in the last thirty years, and is now the largest class on the planet. In the 19th century, as Marx points out, when machines threw workers out of the factories, the capitalists employed some of them in their houses as cooks, or valets, and others as mistresses. And, as Marx points out, for those workers still in employment, as commodities are cheapened they may have money to spend on these other things themselves. Again, Paul confuses himself, here, saying,
“These could not be in the majority low-paid jobs because the traditional escape mechanism needs lower labour costs to rise” (p 173),
once again confusing the quantity of labour with wages/value of labour-power. Indeed, the lower the value of wage goods becomes, the more of them, even relatively low wage workers can buy, whilst their low wages, in high labour intensive spheres, creates even larger profits. The problem would arise where we reach the point, as in Humans, where androids can also fulfil all of these other functions of domestic servant, nurse, surgeon, sex worker, and so on, and we may not be far away from that position.
Paul's obsession with gross revenue rather than net revenue also leads him to think that,
“... the normal escape route – innovation creates expensive new technologies that replace info-tech – is blocked.” (p 173)
Why? Look at Spacex, the Hyperloop, a Mission to Mars and so on. Many of these new spheres of activity are not just fixed capital intensive, they also use little proportionally in the shape of raw materials, but use lots of abstract labour, in the shape of very complex labour, producing high levels of value and surplus value. And, contrary to Paul's expectations, it's unlikely a trip into space, on a hyperloop etc. will be free!
Paul brings up the question of property rights,
“To capture the externalities in an information-heavy economy, capital has to extend its ownership rights into new areas; it has to own our selfies, our playlists, not just our published academic papers but the research we did to write them. Yet the technology itself gives us the means to resist this, and makes it long-term impossible.” (p 175)
But, of course, it doesn't because here we are, placing all of this stuff, be it blogs, cat videos, selfies or whatever, at the disposal of capital for free, and from which it derives vast revenues from advertising, subscription or whatever.
He says that we should be going through a third industrial revolution, but it has stalled. Yet, Paul has himself described the massive expansion of new products seen even since the 2008 crash. I think we've seen nothing yet, in that regard. But, the reason things stalled after 2010 have everything to do with Neo-liberalism and the world it created, following the 1980's, and not the revolutionary role of information technology.
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