Thursday, 13 September 2018

Paul Mason's Postcapitalism - A Detailed Critique - Chapter 8(4)

Cyber Stalinism

Cockshott and Cottrill's proposals for the EU also fail miserably, because they fail to deal with the property question, and also fail to understand the actual process of the formation of an average rate of profit, and prices of production. Paul describes their proposal as to have currency over printed with a figure of labour-time. The idea is that workers would be able to compare how much labour they had to provide relative to the amount of labour they were paid for. But, all this shows is that workers are exploited. If we take the whole economy, and so the amount of labour provided in total, and deduct what workers are paid in wages, reduced to its labour-time equivalent, we get the amount of surplus labour, or unpaid labour-time. The relation of this total unpaid labour to the paid labour is the rate of surplus value. 

If then, we simply give an hour's labour (abstract labour) the name Pound, if the rate of surplus value is 20%, all that would be seen is that, on average, a worker would have to work 1.20 hours, in order to obtain £1.00. As Marx points out, in The Critique of the Gotha Programme, even in a socialist society, this difference is vital, and indeed the rate of surplus value would probably need to be higher, in order to provide the surplus product required to expand production, and raise productivity and living standards. 

Its impossible to see how the proposal would lead consumers to choose to buy commodities that were closer to their exchange-value, because they could never know that true value, so long as commodities sell at prices of production. The only way they might know that is if the commodities themselves were priced in labour-time, as well as a monetary price. But, again, that reflects a lack of understanding of the foundation of prices of production. Suppose the exchange value of commodity A is £10, and its price of production is £12. What this signifies is that the organic composition of capital used in its production is higher than average (or alternatively the rate of turnover of the capital is lower than average). It uses relatively less immediate labour than the average commodity, and so produces proportionately less surplus value than capital used in the production of the average commodity. But, because the capital involved in producing A is only invested in order to obtain, at least, the average profit, the average market price, i.e. its price of production, must be £12, or capital will not be invested in this sphere. 

The average rate of profit, and price of production arise on precisely this basis. In other words, in those spheres where commodities sell at average market prices that produce above the average rate of profit, capital will move in and accumulate more rapidly. The supply of those commodities will rise, and their average market prices will then fall, until it reaches the price of production, where only the average rate of profit is made. Now, if we take Cockshott and Cottrill's proposal whereby consumers would then stop buying commodities where the price of production exceeds the exchange value, what would be the consequence? As the demand fell, the demand curve shifts to the left, the average market price, or what orthodox economics calls the equilibrium price, would fall as supply exceeds demand. But, then, capital in this sphere would no longer make the average rate of profit. In the short run, no new capital formation would take place in this sphere, so that the rate of growth would lag the rest of the economy; in the medium term, the existing capitals, in this sphere, would cut back, or cancel, their own investment plans; in the longer term, capital would quit this sphere, and move to other spheres where higher rates of profit were available. 

If we consider the second round consequences of this it is that, as capital in sphere A is cut back, the supply of A falls, the supply curve shifts to the left, as a consequence of the Cockshott and Cottrill induced reduction in demand, and fall in market price. As the supply of A now falls, the average market price of A once more rises, as the supply-demand imbalance is corrected. But, then we have a third round effect, which is that, as the average market price of A is restored to its previous level, i.e. the price of production of A, consumers, acting on the Cockshott and Cottrill inducement, are again led to reduce their demand for A, and so the whole process goes around, until production of A either ceases altogether, or its production is reduced to levels whereby it has to be undertaken on the more primitive, labour-intensive basis as the other less developed sectors of the economy, i.e. that its own organic composition of capital is reduced to a more primitive level of development, so that its exchange value rises accordingly. 

This kind of economic model, whereby an incentive is created to reduce production to more primitive levels is certainly not one that a Marxist should support. It is more appropriate to the kind of economic model proposed by Pol Pot. 

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