Wednesday, 31 October 2018

Theories of Surplus Value, Part II, Chapter 18 - Part 34

Barton says the accumulation of capital only increases the demand for labour slowly, unless the population has grown rapidly in the previous period, so that wages are low. This applies also where the relative surplus population has grown, thereby reducing wages. In a period of crisis (Autumn phase of the long wave) the existing supply of labour-power may be largely fully employed, wages are high, profits are squeezed, and accumulation becomes restricted. Capital begins to look for new labour-saving technologies, not so as to accumulate and expand output (gross output/revenue), but so as to reduce costs of production of the existing output, and thereby expand the net product/revenue. With output sold at prices of production, rather than exchange values, the greater the proportion of the cost of production comprising constant capital rather than variable-capital, i.e. the higher the organic composition of capital (usually, therefore, with the larger capitals) the greater the incentive to seek means of reducing the prices of fixed capital, and material costs. The pressure to reduce labour costs falls more acutely on the smaller firms with a lower organic composition, i.e. those which are more labour intensive, and whose profits are squeezed more by high wages. Capital also tends to leave these latter spheres, as the rate of profit falls more in them, and migrates to those areas where the organic composition is higher, and which find that a higher level of wages, makes it easier to realise their profits. It is a period of intensive rather than extensive accumulation that also sees increased concentration and centralisation of capital

But, the consequence of this intensive accumulation is that labour is displaced, and economic growth is sluggish. Gross output increases slowly, whilst net output increases more rapidly. Less additional labour is required for any given increase in gross output. As the relative surplus population expands, wages are depressed, and with growth of the labour force reduced, the demand for wage goods grows at a slower pace. And so, during this period of stagnation (Winter phase) it is not necessary that the actual population rises, but only that the relative surplus population rises, so wages are low, profits are high, and an available supply of labour-power makes a new expansion, in new spheres of production possible (Spring phase). 

Marx cites Barton's comments, in relation to the demand for labour, in response to a rise in profits, or a rise in wages. This also indicates the underlying material factors that influence the duration of the long wave. For example, I have previously described the fact that after demand for primary products rises sharply, as a new Spring phase commences, it takes around 12 years before any new mines etc. reach optimum output. Similarly, the relative surplus population that exists at the start of the Spring phase, along with any additional natural population growth, means that this surplus population does not get fully employed until many years into a new expansion. In the post-war boom, for example, despite a rapid increase in growth, the relative surplus population that existed in 1949, was supplemented by immigration, the influx of married women into the workforce, an increase in overtime working, and so on. The natural growth of population, increased by the post-war baby boom, brought additional labour-power into the workforce too, by the early 1960's, but from that point on, it became more difficult to increase the size of the social working-day further. There is only so much overtime that can be worked, only so many married women to bring into the workforce, and the bulge in new workers from the baby boom, subsided. As the gains of productivity from the labour-saving technologies developed in the mid 1930's, also began to wane, the increase in output, thereby drove demand for labour-power, as the unemployment rate fell to around 2%, wages rose, squeezing profits, and creating the conditions for a search for new labour saving technologies that began to be introduced in the 1970's. 

Tuesday, 30 October 2018

The Social Working Day - Part 1

The Social Working Day


  1. The working-day, is the hours actually worked by individual workers, in a day. The social working-day is the total amount of hours provided in a day by the working-class as a whole.
  2. The working-day, consists of the normal working-day, plus any overtime worked by the individual worker, whether paid or unpaid. The working day can only be increased, by increasing the amount of time the individual worker works (or what is the same thing, increasing the intensity of the working-day, though as Marx describes this is limited, and tends to move in the opposite direction to the extension of the working-day). The social working-day, however, can be increased simply by employing more workers. If the working-day is 10 hours, and 1 million workers are employed, the social working-day is 10 million hours, but if 2 million workers are employed, the social working-day rises to 20 million hours.
  3. The working-day is divided into necessary labour and surplus labour. The necessary labour, is the amount of labour that the worker must undertake to produce an amount of new value, sufficient to buy the commodities (wage goods) required to reproduce their labour-power. The surplus labour is the amount of labour undertaken in addition to that, which thereby creates surplus value. The social working-day similarly comprises an amount of necessary labour, and surplus labour. For the social working-day, the necessary labour also divides into a necessary product, equal to the products produced by the total amount of necessary labour, and a surplus product, equal to the products produced by the surplus labour. If, the rate of surplus value is 25%, and the working-day divides into 8 hours necessary labour, and 2 hours of surplus labour, then if 1 million workers are employed the social working day divides into 8 million hours of necessary labour, and 2 million hours of surplus labour. The 8 million hours of necessary labour, produces a necessary product (wage goods) required for the reproduction of the workers, whilst the 2 million hours of surplus labour produces a surplus product, which provides a revenue consumed by non-workers. That is it goes as profit of enterprise, rent, interest and taxes, which are spent to buy consumption goods comprising part of the surplus product, as well as to provide the revenue that is converted into new capital, as a result of accumulation. The necessary product comprises the use values that make up the variable-capital, which are bought with the money wages paid to workers, the surplus product comprises the use values that are bought from surplus value, i.e. the necessaries bought by non-workers, the luxuries bought by non-workers, and the means of production accumulated as additional capital.
  4. As social productivity rises, the amount of necessary labour declines, which means that the amount of surplus labour rises. For example, if 1 million people comprise the workforce, and they are employed in agriculture, working a 10 hour day, divided into 8 hours necessary labour, and 2 hours surplus labour, the social working-day divides into 8 million hours of necessary labour, and 2 million hours of surplus labour, with the total social product being divided into a necessary product and surplus product, in the same proportion. Another way of viewing this is that 0.8 million workers are employed producing nothing other than wage goods, whilst 0.2 million workers are employed producing the goods consumed by non-workers. If social productivity rises, so that only 6 hours of necessary labour is required, this is equivalent to 0.2 million workers employed in necessary production being released for other production. They may produce additional luxury goods consumed by non-workers, or they may be employed in some totally new type of production. When productivity in agriculture rose, it meant that not everyone needed be employed totally in providing food, required to feed the total population. It released labour, which could then be employed in other types of production, such as producing clothing, or tools etc.
  5. If social productivity rises, alongside a rise in population, it is similarly possible for the same number of workers to be employed in necessary labour (0.8 million), but for them to produce a larger surplus product. If the total working population rises from 1 million to 2 million, but it's now possible to provide the necessaries required by these 2 million, using only the labour of the same 0.8 million, then surplus labour rises from 0.2 million, to 1.2 million hours.
  6. If social productivity remains constant, so that the rate of surplus value remains constant, the mass of surplus value, and the size of the surplus product rises, in proportion with the rise in the social working-day. In other words, if 1 million workers work a 10 day, the social working-day is 10 million hours. If the rate of surplus value is 25%, the surplus product/value is equal to 2 million hours. If 2 million workers are employed, it rises to 4 million hours.
  7. In the industrial revolution, the male heads of households initially provided the majority of paid labour. Their wages had to provide for the needs of the whole family. As the industrial revolution proceeded, and the demand for labour-power rose sharply, capital responded by lengthening the working-day. It rose to extreme and unsustainable lengths. There are physical limits to the lengthening of the individual working-day. But, capital responded, by increasing the length of the social working-day. It brought the workers' family into the labour process. The necessary working-day (required to reproduce the worker and his family) did not change, but now the actual social working-day rose, because his wife and children also provided labour. If the necessary labour, remained, as above 8 million hours, but, as above, by bringing in the labour of women and children, the workforce goes from 1 million to 2 million workers, so that the social working-day rises from 10 million to 20 million hours, the surplus labour/product/value rises to 1.2 million hours.
  8. When capital accumulates at a more rapid pace, its first response is always to look for additional labour by this increase in the individual and social working-day. Firstly, individual workers are encouraged to work longer hours, either with the inducement of overtime pay, or where possible without. Alternatively, the same effect is achieved by increasing the intensity of labour, via piece-work schemes, speed-up and so on. This type of surplus value is called absolute surplus value, it results from an absolute increase in the length of the individual or social working-day. Other means of increasing absolute surplus value are, as above, to bring additional workers into the workforce. That can be women and children, or peasants and self-employed labourers, or it can come from immigrants, or simply population growth.  Marx describes this in Capital III, Chapter 15,

    "Given the necessary means of production, i.e. , a sufficient accumulation of capital, the creation of surplus-value is only limited by the labouring population if the rate of surplus-value, i.e. , the intensity of exploitation, is given; and no other limit but the intensity of exploitation if the labouring population is given. And the capitalist process of production consists essentially of the production of surplus-value, represented in the surplus-product or that aliquot portion of the produced commodities materialising unpaid labour."
  9. When the social-working day cannot be expanded further, the potential to create additional new value, and thereby additional new absolute surplus value is exhausted. Any additional capital accumulation, represents over-accumulation, because it cannot produce any additional surplus value. The additional capital does not act as capital. i.e. self-expanding value. The mass of capital employed increases, but the mass of surplus value, can no longer be increased, so the rate of surplus value, and the rate of profit fall, as profits are squeezed.
  10. When the social-working day can no longer be expanded, so that no new absolute surplus value can be produced, but capital continues to accumulate, this additional demand for labour-power causes wages to rise. This causes a further squeeze on the rate of surplus value, and rate of profit. This is what Marx defines as a crisis of overproduction. This squeeze on profits arising from the inability to increase the rate of surplus value, and the rise in wages, is the opposite of the conditions that Marx defines as characterising his Law of the Tendency for the Rate of Profit to Fall, where, by contrast, the rate and mass of surplus value rises, due to rising social productivity, and a relative decline in the proportion of employed labour. The conditions which lead to a crisis of overproduction, due to the inability to expand the social-working day, and social surplus product, and the squeeze on profits, this and the rise in wages cause, are described by Marx in Capital III, Chapter 15.
    There would be absolute over-production of capital as soon as additional capital for purposes of capitalist production = 0. The purpose of capitalist production, however, is self-expansion of capital, i.e., appropriation of surplus-labour, production of surplus-value, of profit. As soon as capital would, therefore, have grown in such a ratio to the labouring population that neither the absolute working-time supplied by this population, nor the relative surplus working-time, could be expanded any further (this last would not be feasible at any rate in the case when the demand for labour were so strong that there were a tendency for wages to rise); at a point, therefore, when the increased capital produced just as much, or even less, surplus-value than it did before its increase, there would be absolute over-production of capital; i.e., the increased capital C + ΔC would produce no more, or even less, profit than capital C before its expansion by ΔC. In both cases there would be a steep and sudden fall in the general rate of profit, but this time due to a change in the composition of capital not caused by the development of the productive forces, but rather by a rise in the money-value of the variable capital (because of increased wages) and the corresponding reduction in the proportion of surplus-labour to necessary labour.”
  11. As Marx says, in the above quote, the crisis of overproduction can only be avoided, where the potential to expand the social-working day, and absolute surplus value is exhausted, where the amount of relative surplus value can be increased, i.e. by raising social productivity, so as to reduce the size of the necessary working-day. Crises of overproduction, are a feature of periods of boom, and the period of exuberance that follows them, when capital has expanded mostly on the basis of extensive accumulation, and during which the benefits of previous labour-saving technologies have also been exhausted, as a means of raising productivity. It drives a new round of innovations to produce the new labour-saving technologies required to reduce the length of the necessary working-day, and thereby raise relative surplus value. It is that which leads to the conditions, whereby the rate of surplus value rises, the mass of surplus value rises, but the amount of labour employed relatively declines, which creates the conditions for Marx's law of the tendency for the rate of profit to fall, as the means by which crises of overproduction are resolved.

Theories of Surplus Value, Part II, Chapter 18 - Part 33

It is this fact that capital employs labour that means that the demand for labour rises, when the suitable conditions for capital accumulation exist, and falls when they do not. And that means not only that a high or sufficient rate of profit is currently being enjoyed by capital, but that it should believe that even more profit can be made by employing additional labour. The two things do not necessarily go together, as Marx describes in Capital III, which is why, at times, the rate of profit may be high, but the rate of accumulation is low, resulting in an increase in the supply of loanable money-capital, and fall in interest rates, which then can result in speculation in search of capital gains

Again, this gives the lie to the subjectivist arguments of the reformists and syndicalists about the ability of workers to raise their wages on the basis of “more militancy” or redistributive tax and benefits policies. The ability of workers to raise wages, including the social wage, is always dependent upon the demand for labour-power, but the demand for labour-power depends on the rate of capital accumulation, and the rate of capital accumulation depends on the judgement of capital on the potential additional profit that might result from such accumulation. It also depends upon the mass of profit, and rate of profit of enterprise, that makes available the resources for any such expansion, but as Marx points out, when capital has developed beyond a certain point its ability to expand output becomes very elastic, so that this constraint becomes less rigid. 

“The workmen, if they were dominant, if they were allowed to produce for themselves, would very soon, and without great exertion, bring the capital (to use a phrase of the vulgar economists) up to the standard of their needs. The very great difference is whether the available means of production confront the workers as capital and can therefore be employed by them only in so far as it is necessary for the increased production of surplus-value and surplus-produce for their employers, in other words whether the means of production employ the workers, or whether the workers, as subjects, employ the means of production—in the accusative case—in order to produce wealth for themselves. It is of course assumed here that capitalist production has already developed the productive forces of labour in general to a sufficiently high level for this revolution to take place.” (p 580) 

Marx cites the situation existing at the very time he was writing (Autumn 1862). There were large profits being made on the production that was being undertaken, but an economic recession existed. In part, the recession was due to the US Civil War, but, in a wider context, it marked the beginning of the end of the long wave boom that had commenced in 1843, with a period of crisis running from around 1862-75 (that includes the Paris Commune), and which gave way then to the period of stagnation (the so called First Great Depression) between 1875-90. 

Large profits are often made during periods, of crisis, because capital accumulation has proceeded over the previous 25 years of economic expansion, with employment of labour reaching a maximum.  But, this large mass of profit also goes together with low profit margins, because the full employment of labour, means that the working-day has already been extended, including via the payment of overtime rates, and the social working-day has already been extended by the employment of women, children, migrants etc., so that it has become impossible to increase absolute surplus value further.  Because, production has developed largely on the basis of existing technologies, during this period, the rapid increases in productivity, typical of the earlier phases of the long wave cycle, no longer apply, so that it also becomes impossible to increase relative surplus value.  The mass of profit rises, as economic growth proceeds, but it rises at a declining rate, as rising wages, and the inability to raise the rate of surplus value, cause a squeeze on profits.  Its in order to respond to that, that capital introduces new labour-saving technologies.

In the stagnation phase, this introduction of labour-saving technologies, begun in the crisis phase, leads to labour being made redundant.  The profits squeeze is ended because wages fall below the value of labour-power, as unemployment rises. As the wage share falls, then, as Marx indicated earlier, profits rise, and this is reflected in a greater proportion of production going to the production of luxuries consumed by capitalists and landlords, and less on necessaries. In addition, in such periods, large amounts of fixed capital suffers a fall in value, and is picked up on the cheap, raising the rate of profit. But, during such periods, there is no incentive to invest these large masses of profit in additional capacity, whilst economic activity and aggregate demand remains subdued. So, these profits get consumed unproductively, as increased luxury consumption, but also flow into money markets, depressing interest rates, inflating asset prices, and encouraging speculation. 

“The plight ‘of the Lancashire unemployed labourers; on the other hand, “the difficulty of finding employment for money” on the London money market, this has almost made necessary the formation of fraudulent companies, since it [is] difficult to obtain two per cent for money. According to Ricardo’s theory “some new field of employment ought to have been opened up,” for on the one hand there is capital in London, and on the other, unemployed workers in Manchester.” (p 580-1) 

Monday, 29 October 2018

Theories of Surplus Value, Part II, Chapter 18 - Part 32

Ramsey improves on Barton's position, and essentially arrives at a recognition of constant and variable-capital, even though he continues to refer to them as fixed and circulating. That Ramsey arrives at these definitions, Marx says, shows the intrinsic necessity of progress towards them, in order to analyse the productive process and relations. It is the productive process itself which is the material basis for the categories of constant and variable capital, and the technical relations between them. And, on this basis, the question of the production of consumption goods, or the commodity-capital, is irrelevant, in terms of the demand for labour-power

“The way, however, of realising the gross revenue in different commodities is not, as Ricardo has it, and Barton intimates it, the cause, but the effect of the immanent laws of capitalistic production, leading to a diminishing proportion, compared with the total amount of produce, of that part of it which forms the fund for the reproduction of the labouring class. If a large part of the capital consists of machinery, raw materials, auxiliary materials etc., then a smaller portion of the working class as a whole will be employed in the reproduction of the means of subsistence which enter into the consumption of the workers. This relative diminution in the reproduction of variable capital, however, is not the reason for the relative decrease in the demand for labour, but on the contrary, its effect.” (p 579-80) 

In other words, in an economy where technology is more advanced, there will be a larger number of machines. These machines will act to raise productivity. The higher productivity, by definition, means that less labour is required to process a given amount of material, and produce a given amount of output. A greater proportion of total output will go to reproduce the processed material, and less to reproduce labour-power. 

“Similarly: A larger section of the workers employed in the production of articles of consumption which enter into revenue in general, will produce articles of consumption that are consumed by— are exchanged against the revenue of—capitalists, landlords and their retainers (state, church etc.), [and a smaller) section [will produce] articles destined for the revenue of the workers. But this again is effect, not cause. A change in the social relation of workers and capitalists, a revolution in the conditions governing capitalist production, would change this at once. The revenue would be “realised in different commodities”, to use an expression of Ricardo’s.” (p 580) 

As productivity rises, the rate of surplus value rises, and the mass of surplus value rises along with it. A greater proportion of revenue thereby goes to profits, interest and rent, relative to wages. This not only facilitates luxury consumption, by these exploiting classes, but also facilitates them using a larger portion of these revenues for the purpose of accumulation. It is nothing in the physical nature or requirements of production per se, that necessitates these processes, and distribution or revenues. They are purely historically determined, i.e. they flow from the social relations that exist under capitalism, as a specific and historically limited mode of production. They result from the fact that the means of production confront the workers as capital. As a result, it is the capital, irrespective of its ownership, i.e. whether it is owned by a private capitalist, state capitalist, or is socialised capital, such as a joint stock company or co-operative, which employs wage labour, not labour which employs capital, simply as means to facilitate its production. 

Sunday, 28 October 2018

Theories of Surplus Value, Part II, Chapter 18 - Part 31

As Marx analysed in Capital II, fixed and circulating capital only has meaning in the context of production, but the difference between them is manifest in the realm of circulation, in other words, in their rate of turnover. The fixed capital not only turns over more slowly than the circulating capital, but it only has to be replaced when it is completely worn out. The circulating capital has to be continually replaced in its entirety. The faster this capital turns over, the less capital must be advanced, and so the higher the annual rate of profit. But, this then has further implications for prices of production, and the distribution of the surplus value

“The direct relation of the different component parts of capital to living labour is not connected with the phenomena of the circulation process. It does not arise from the latter, but from the immediate process of production, and its [expression] is the relation of constant to variable capital, whose difference is based only on their relationship to living labour.” (p 578-9) 

In other words, the relation of constant capital to variable capital is not affected by the rate of turnover of capital, but by the technical composition of capital. This is why, in Capital II and III, in discussing the rate of turnover, the rate of turnover of the circulating constant capital and variable capital are taken as coincident. If 100 kilos of cotton is processed by 10 workers, it does not matter whether the capital turns over once or ten times during the year. In the latter case, it would simply mean that if the 100 kilos of cotton has a value of £1,000 and the wages of the 10 workers is £100, then in a year, the constant capital laid out would amount to £10,000 and the variable capital laid out would be £1,000. The ratio between the two would still be 10:1. 

“Thus Barton says for example: The demand for labour does not depend on fixed capital, but only on circulating capital. But a part of circulating capital, raw material and auxiliary materials, is not exchanged against living labour, any more than is machinery. In all branches of industry in which raw material enters as an element into the process of the creation of value— in so far as we consider only that portion of the fixed capital which enters into the commodity—it forms the most important part of that portion of capital which is not laid out in wages.” (p 579) 

In Capital II, Marx sets out his definition of fixed and circulating capital as being necessarily component parts of the productive-capital. He makes this distinction that thereby also illustrates that the commodity-capital and money-capital can neither be classified as being fixed or circulating capital. Rather he classifies them as capital in circulation. This analysis by Marx distinguishes him from other economists who confused these categories. Marx says, describing Barton's argument, 

“Another part of the circulating capital, namely of the commodity capital, consists of articles of consumption which enter into the revenue of the non-productive class (i.e., [not of] the working class). The growth of these two parts of circulating capital therefore does not influence the demand for labour any more than does that of fixed capital. Furthermore, the part of the circulating capital which resolves into raw materials and auxiliary materials increases in the same or even greater proportion as that part of capital which is fixed in machinery etc.” (p 579) 

Firstly, on the basis of Marx's analysis in Capital II, the commodity-capital is capital in circulation not circulating capital. Secondly, as Marx sets out in Capital III, Chapter 6, as described in the quote given earlier, the circulating capital, i.e. materials, necessarily increases to a greater extent than the fixed capital, rather than only in the same proportion. 

Saturday, 27 October 2018

Theories of Surplus Value, Part II, Chapter 18 - Part 30

Marx cites two further propositions from Barton

““Fixed capital […] when once formed, ceases to affect the demand for labour,” (incorrect, since it necessitates reproduction, even if only at intervals and gradually) “but during its formation it gives employment to just as many hands as an equal amount would employ, either of circulating capital, or of revenue” (l.c., p. 56).” (p 577) 

““The demand for labour […] depends absolutely on the joint amount of revenue and circulating capital” (l.c., pp. 34–35).” (p 577) 

Marx comments that “Indisputably, Barton has very great merit.” (p 577) 

Marx cites Smith's view that the demand for labour grows in direct proportion to capital accumulation. In contrast to Smith, Malthus puts forward the idea that the surplus population arises due to capital not accumulating as fast as population growth. 

“Barton was the first to point out that the different organic component parts of capital do not grow evenly with accumulation and development of the productive forces, that on the contrary in the process of this growth, that part of capital which resolves into wages decreases in proportion to that part (he calls it fixed capital) which in relation to its size, alters the demand for labour only to a very small degree. He is therefore the first to put forward the important proposition “that the number of labourers employed is” not “in proportion to the wealth of the state”, that relatively more workers are employed in an industrially undeveloped country than in one which is industrially developed.” (p 577) 

This relative difference, however, is reversed when it comes to the absolute number of employed workers. The developed economy, because it has higher levels of productivity, and a greater existing fixed capital stock, is able to produce a larger net product, and to grow at a faster pace. This also gives the lie to the Keynesian and neo-Keynesian view that capital is able to grow faster as a result of, or even requires, periodic physical destruction of capital. In Chapter 17, Marx demonstrated that it is the destruction of capital value, not the physical destruction of capital that facilitates the resolution of crises, and renewed periods of accumulation. 

In the third edition of his “Principles”, Ricardo adopts Barton's position, but, 

“he not only says that the demand for labour does not grow proportionally with the development of machinery, but that the machines themselves “render the population redundant” [l.c., p. 469], i.e., create surplus population. But he wrongly limits this effect to the case in which the net produce is increased at the cost of the gross produce.” (p 578) 

As Marx has already shown, both the gross revenue and the net revenue can rise, whilst the number of workers employed falls relatively. It simply requires that the wage share of total output falls relative to the profit share

“Essentially’ however, the whole of the absurd theory of population was thus overthrown, in particular also the claptrap of the vulgar economists, that the workers must strive to keep their multiplication below the standard of the accumulation of capital. The opposite follows from Barton’s and Ricardo’s presentation, namely that to keep down the labouring population, thus diminishing the supply of labour, and, consequently, raising its price, would only accelerate the application of machinery, the conversion of circulating into fixed capital, and, hence, make the population artificially “redundant”; redundancy exists, generally, not in regard to the quantity of the means of subsistence, but the means of employment, the actual demand for labour.” (p 578) 

Here is given the lie to the idea that by restricting immigration, the labour supply can be reduced, so as to raise wages.  It simply means that in addition to the possibility that capital would simply move overseas to where it could find available labour supplies, it will simply be encouraged to replace labour with machines, thereby increasing unemployment, and pushing down on all wages.  This also contradicts those subjectivist theories of the reformists and syndicalists that the wage share, or wages generally, can be increased simply as a result of “more militancy” by workers. Workers in periods of high employment, may thereby find it easier to win pay rises, and better conditions, which raise their confidence and facilitates their organisation, so that they appear to derive these higher wages from this “more militancy”, but the higher wages of workers, during such periods of high demand for labour, simply encourages capital to develop and introduce new forms of labour-saving technology, which replaces labour, creates a relative surplus population, so that this unemployed population presses down on wages, even sending them below the value of labour-power

“Barton’s error or deficiency lies in his conceiving the organic differentiation or composition of capital only in the form in which it appears in the circulation process—as fixed and circulating capital—a difference which the Physiocrats had already discovered, which Adam Smith had developed further and which became a prepossession among the economists who succeeded him; a prepossession in so far as they see only this difference—which was handed ‘down to them—in the organic composition of capital. This difference, which arises out of the process of circulation, has a considerable effect on the reproduction of wealth in general, and therefore also on that part of it which forms the wages fund. But that is not decisive here. The difference between fixed capital such as machinery, buildings, breeding cattle etc. and circulating capital, does not directly lie in their relation to wages, but in their mode of circulation and reproduction.” (p 578) 

Northern Soul Classics - Dancin' Everywhere - Bob & Earl

Friday, 26 October 2018

Friday Night Disco - I Feel Love - Donna Summer

Theories of Surplus Value, Part II, Chapter 18 - Part 29

[2. Barton’s Views]

Marx begins by setting out the basic theoretical propositions in Barton's Observations on the Circumstances which Influence the Condition of the Labouring Classes of Society, London, 1817, and where appropriate, Ricardo's responses to them. Barton says, 

““The demand for labour depends on the increasing of circulating, and not of fixed capital. Were it true that the proportion between these two sorts of capital is the same at all times, and in all countries, then, indeed, it follows that the number of labourers employed is in proportion to the wealth of the State. But such a position has not the semblance of probability. As arts are cultivated, and civilization is extended, fixed capital bears a larger and larger proportion to circulating capital. The amount of fixed capital employed in the production of a piece of British muslin is at least a hundred, probably a thousand times greater than that employed in the production of a similar piece of Indian muslin. And the proportion of circulating capital employed is a hundred or a thousand times less. It is easy to conceive that, under certain circumstances, the whole of the annual savings of an industrious people might be added to fixed capital, in which case they would have no effect in increasing the demand for labour” (l.c., pp. 16–17).” (p 576-7) 

Its important to note here that by "circulating capital", here, Barton is actually referring to variable-capital, and in referring to fixed capital, he is referring to both machinery and materials, i.e. a rise in the technical and thereby organic composition of capital.  As Marx has shown, although the absolute mass of fixed capital (machinery) tends to rise, as with labour, its relative mass falls relative to output, and relative to the mass of material processed, and the unit value of the machinery falls at an even greater pace, because of technological development, and moral depreciation.

Marx then notes Ricardo's comment, in relation to this passage. 

“It is not easy, I think, to conceive that under any circumstances, an increase of capital should not be followed by an increased demand for labour; the most that can be said is, that the demand will be in a diminishing ratio. Mr. Barton, in the above publication, has, I think, taken a correct view of some of the effects of an increasing amount of fixed capital on the condition of the labouring classes. His Essay contains much valuable information.” (p 577) 

Its important to remember that it is only Marx who developed the concepts of constant and variable capital, as opposed to the categories of fixed and circulating capital, developed by the Physiocrats, which were taken over by Smith and his followers. A concept of an organic composition of capital, derived from the relation between fixed and circulating capital, is not, therefore, the same as the organic composition derived from the relation between constant and variable capital, whose underlying basis is the technical composition of capital, which is technologically driven. In other words, as technology improves, the productivity of labour rises so that a given mass of labour processes increasing masses of material. The real basis of the rising organic composition of capital is not then the increasing proportion of fixed capital to circulating capital, but the increasing proportion of circulating constant capital (materials) to variable capital. 

In fact, this same technologically driven rise in productivity, whilst increasing the absolute mass of fixed capital, because it brings about the rise in productivity, also brings about a fall in the value of fixed capital, as a proportion of the total output value. This indeed is the basis of moral depreciation of the fixed capital stock. As Marx says, in Capital III, Chapter 6

“Further, the quantity and value of the employed machinery grows with the development of labour productivity but not in the same proportion as this productivity, i. e., not in the proportion in which this machinery increases its output. In those branches of industry, therefore, which do consume raw materials, i. e., in which the subject of labour is itself a product of previous labour, the growing productivity of labour is expressed precisely in the proportion in which a larger quantity of raw material absorbs a definite quantity of labour, hence in the increasing amount of raw material converted in, say, one hour into products, or processed into commodities. The value of raw material, therefore, forms an ever-growing component of the value of the commodity-product in proportion to the development of the productivity of labour, not only because it passes wholly into this latter value, but also because in every aliquot part of the aggregate product the portion representing depreciation of machinery and the portion formed by the newly added labour — both continually decrease. Owing to this falling tendency, the other portion of the value representing raw material increases proportionally, unless this increase is counterbalanced by a proportionate decrease in the value of the raw material arising from the growing productivity of the labour employed in its own production.” 

Thursday, 25 October 2018

Corbyn Should Not Become Today's McDonald

As I wrote the other day, Brexit and the Tories are dead.  We have the best chance possible to finish them off, via a General Election, to stop Brexit, and elect a Corbyn led Labour government, committed to working with progressive social-democrats across Europe, to reverse the policies of austerity that been inflicted on workers for the last decade, to put in place, an EU wide programme of fiscal expansion, and investment in infrastructure, providing decent permanent jobs, on good wages, extending workers rights, including free movement, and levelling up pensions, and benefits across the continent.   But, their are reports that there is pressure inside the Labour leadership to throw all that away, and instead to come to the rescue of Theresa May, by voting for any stitched up deal, she might cobble together with the EU.  That would be a class betrayal on the scale of that of Ramsay McDonald in 1931, who lined up with the Tory government to push through cuts in Unemployment Benefit.  As then, it would spell the end of Labour for a generation, just at the point, where it has the opportunity to become the natural party of government.

The EU would be fools to cobble together a deal with May, which would be yet more fudged agreement that sought to kick the can down the road, on the withdrawal agreement, in the hope that they could deal with the real issues, in the next stage of negotiations, during a much extended transition period.  But, these are bourgeois politicians and bureaucrats, for whom such foolish deals are commonplace, as they stitch things up in back rooms.  It's that kind of politics that leads to concerns about a democratic deficit, in the first place.  Not that such bureaucratic politics is somehow peculiar to the EU.  It is the case, everywhere, including, and particularly in Britain.  For example, remember the back room deal done between Cameron and Clegg in 2010, that created the disastrous Liberal Tory coalition government, that pushed through the incompetent, and unnecessary measures of austerity, that killed off the economic recovery of the time, sent the economy into recession and stagnation, and also created the conditions for the disastrous EU referendum?

The trouble for May is that any deal she might be able to cobble together with the EU, would be such as to cause a large-scale revolt from the Tory Right.  Nor would it meet Labour's Six Tests, which not even a Labour government could achieve in any deal it might negotiate with the EU either.  Labour conference committed the party to opposing any deal that May might stitch together that does not meet the six tests, meaning it must keep Britain inside the Customs Union and Single Market, permanently.  With Labour, and around 60-80 Tories voting against any such shabby deal, May would be unable to get it passed in parliament.  She has been trying to push the vote down the road as much as possible, in order to try to bounce parliament into voting for such an abortion, simply as a lesser-evil than a No Deal Brexit, which she is trying to portray as the only alternative.  Despite promising faithfully that there would be a "meaningful vote" in parliament, its clear from what May and Dominic Raab are saying, that no such vote is their intention.  They have come up with the ridiculous idea that any amendments to the vote should be discussed, and voted on, after the vote on the substantive motion itself has been voted on, a procedure that is not adopted anywhere, other than perhaps in some Bonapartist masquerade for democracy.

A meaningful vote means that parliament must have the option to reject May's cobbled together deal, and reject No Deal, and to demand the negotiations continue, including suspending Article 50, for that purpose.  It should include the possibility of rejecting Brexit altogether.   If parliament is not offered the opportunity for such a meaningful vote, it would be better to vote against May's deal, even if she presents that as meaning No Deal.  The reality is that already government papers are showing that No Deal would be a catastrophe for Britain, with all of the things such as planes being grounded, medicines running out, ports being blocked and so on, would in fact be the least that can be expected.

Illustrating that point, David Davies, has been reduced to making ridiculous threats such as that Britain would prevent EU planes landing in Britain, and so on.  The government has already been led to hire ships so as to be able to bring in emergency supplies of food and medicines, in the event of a NO Deal catastrophe.  Whatever Davis' bluster, the EU is a $14 trillion economy, as against the UK's $2 trillion economy.  It has 450 million, as against the UK's 70 million.  If the Uk is cut adrift, by the Brextremists policies of economic autarky, as proposed by Davis, it would certainly be an inconvenience, for EU firms who export to Britain, but with such a huge economy compared to that of Britain, and with trade deals with much of the rest of the globe, the EU would quickly, be able to replace exports to the UK, with increased internal trade, or additional exports to China, Asia and elsewhere.  By contrast, the effect on the UK would be catastrophic reducing it to the kinds of conditions that existed, during the War of the Atlantic, during World War II, when, Britain was on the verge of collapse.   Why would anyone voluntarily impose that on themselves?  The reality no one, would, which is why the No Deal threat, has always been an empty threat that the Tories would never implement!

If they did, it would be an act of madness and political suicide, that would see them quickly swept out of office, which is why the police have been planning for the outbreak of civil unrest were a No Deal Brexit to occur.  It would mean the UK would quickly have to beg the EU for readmission, which would occur, on much less beneficial terms than it currently enjoys.

The only way that May could get her shabby deal through parliament would be for Labour to support her.  That would essentially mean that a supposedly radical Corbyn Labour government would be called upon to prop up a reactionary, right-wing Tory government, when that government had lost the support of its own MP's, solely to push through a piece of reactionary nationalist legislation, designed to promote the interests of the most reactionary, backward, anti-working-class sections of British capitalism, and which would lead to the most vicious assault on workers living standards, conditions and rights seen in over a century.  Yet, according to reports, there is significant pressure amongst some within Labour's leading inner circles to adopt such a blatant, class betrayal, so as to push through Brexit.

It would mean Labour essentially, forming a National Government with May, just as Ramsay MacDonald did in 1931.  But, it would be much worse.  No sooner, were Labour to perform the function of useful idiots, in pushing through such a policy, May herself would be kicked out of office by the rest of the Tory Party.  The Tory Party rank and file would quickly replace her with a a Bojo or Rees-Mogg.  Labour would have disgraced itself, and lost most of its younger, more progressive elements.  The Tory party would also split, with the social-democratic wing, hiving off to join up with the Liberals, and a large section of Blair-rights, possibly drawing in some Greens towards a progressive Alliance that would provide the basis of a new centre party, that could also work together with other anti-Brexit forces, such as Plaid and the SNP.  In fact, it would create the same kind of momentum towards the rehabilitation of the centre, as was seen with Macron in France.  The Lexiters in the Labour Party, who have essentially lined up behind the agenda of the Mogg's and Bojos, and worse (as they did with No2EU previously) will simply have promoted the interests of the extreme right, whilst simultaneously rehabilitating Blairism.

Once again the Left would have thrown away its opportunity on the altar of promoting a reactionary nationalist agenda.  Labour may say they have not been doing that, but the fact is that over the last two years, Labour has failed to promote a radical, internationalist, alternative to the reactionary nationalist agenda of Brexit.  At every stage, it has tailed the Tories in the progress of the brexit legislation through parliament, rather than giving out a clear oppositional message.  As far as workers are concerned, when the full horrors of Brexit materialise, Labour will be held as much responsible for it, as the Tories, unless it comes out more decisively to oppose it.

In 2000, and in 2008, there were plenty of voices that had been warning that a collapse of stock and property markets were inevitable, due to the massive bubbles that had blown up.  Most people failed to take heed of those warnings, as they thought the illusory increase in their wealth would go on forever.  When the stock markets and property markets crashed, the same people said, "Why didn't anyone warn us this might happen!"  People are fickle, they always want to look for a scapegoat for their own failings, and for any mishaps that might befall them.

In those instances, all of us who had warned of the impending calamity, could at least, say, "Well actually, we did tell you this was what would happen."  But, today Labour can hardly even say that.  Yes, Labour has said that Brexit will be bad for British workers, but it has hardly matched that by its campaigning against it.  If labour were to help May get some botched up, Brexit deal through parliament it certainly could not say that.

The argument for supporting May and pushing through some bastardised Brexit deal is being made on false premises.  The argument that Labour has to support Brexit, because the 2016 referendum was marginally in favour of Leave is totally false.  Only 37% of the rigged electorate actually voted for Leave.  As I set out in the post linked to above, around 1.5 million of the Leave voters have since died, whilst about the same number of Remain voters, amongst the 16-18 year olds, deprived of a vote in 2016, are now eligible.  Its likely that a vote today would be significantly in support of Remain, if Labour campaigned for it, whatever, opinion polls might currently say.

But, in terms of Labour, it is largely besides the point.  The fact is that the large majority of Labour supporters back Remain and oppose Leave.  That is true in all of those safe Labour seats in the Midlands and the North, that the apologists for Brexit, claim is the basis for Labour supporting Brexit, opposing free movement and so on.  As John Curtice showed, even in those safe Labour seats in the North and Midlands, around 60% of Labour voters backed Remain, only marginally less than Labour voters elsewhere in the country.  The support for Brexit in those areas came not from Labour voters, but from a solid phalanx of Tory voters, together with UKIP/BNP voters, and the mobilisation on this one issue, of a large number of usually atomised, apathetic, backward individuals, who are unlikely to vote, in a General Election, and probably would not be natural Labour voters even if they did.

Moreover, in terms of the 2017 General Election, the proportion of Labour voters backing Remain is even larger, because in 2017, a large number of younger voters turned out to vote Labour, and they overwhelmingly (about 80:20) back Remain.  Labour also in 2017, picked up a large number of former Liberal, Green, and even some Tory voters (e.g. Kensington, Canterbury) who wanted to oppose a hard Tory Brexit, and for whom the Liberals and Greens could offer no such prospect, and who also hoped that Labour was marching inexorably to adopting an anti-Brexit stance, as the only logical position for it to hold.

The idea that Labour would lose votes in safe Labour seats in the North and Midlands, by decisively backing Remain, and opposing Brexit now, is totally wrong.  Even amongst the actual Labour leave voters, it is not a decisive issue.  Those voters, overwhelmingly are more concerned about jobs, the NHS, Housing, education, social services and so on.  By offering a radical programme on those issues, there is no way that Labour voters, would be voting with the Tories to back Brexit.

That is particularly the case given that the effect of Brexit - let alone the disaster that would result from a No Deal Brexit - would be to sink the UK economy, and thereby scupper any prospect of a radical programme to deal with those issues.  It would mean that the Pound would sink, pushing inflation sharply higher, and a consequent drop in living standards.  The trade deficit would rise,  causing interest rates to rise, so that any government borrowing to finance expansion would be curtailed.  The only beneficial effect would be that sharply higher interest rates would cause property prices to collapse.

The truth is that Labour is being led towards at best acquiescence in, and at worst, tacit, and possibly if the reports are true, overt support for a reactionary nationalist agenda of Brexit.  The excuses being given for that, about the need to carry out a bourgeois democratic decision, or the number of Labour Leave voters in safe Labour seats are mere apologia.  They are not based upon any socialist principle, and they are not even based upon factual data.  They are merely a cover for the pushing through of a reactionary national socialist (Stalinist) agenda, of Socialism In One Country, that does not even amount to that.  At best it amounts to a palid attempt at Social Democracy in One Country.  Corbyn should be aware of what happened when that was attempted in Chile in the 1970's.  It led to Allende's government being overthrown, thousands of workers, being murdered, and tortured, and the imposition of the Pinochet dictatorship, for decades.

In Britain, it is unlikely even to get as far as Allende, because if Labour backs May's deal, its consequence will be a Mogg/Bojo right-wing government, not a Corbyn government.

Theories of Surplus Value, Part II, Chapter 18 - Part 28

Marx quotes Ricardo's statement, 

““The consequence of a rise of food will be a rise of wages, and every rise of wages will have a tendency to determine the saved capital in a greater proportion than before to the employment of machinery. Machinery and labour are in constant competition, and the former can frequently not be employed until labour rises” (l.c., p. 479).” (p 574) 

And adds, 

“The machine is thus a means to prevent a rise of labour.” (p 574) 

It's not the displaced workers who are found employment by the accumulation of capital that the rise in surplus value, and release of capital, brings about, Marx says, but their children, the next generation of workers who come into the workforce. They would previously have replaced the displaced workers, but now find employment in a range of new industries that spring up as a result of this newly accumulated capital. As I've set out before, this can be seen in every long wave cycle. For example, in the 1930's, a new generation of workers found employment in the Midlands and South-East in the new motor vehicle, and consumer electronics industries that arose at that time, even as older generations in mining, steel, and shipbuilding areas remained unemployed. 

Ricardo says, 

““In America and many other countries, where the food of man is easily provided, there is not nearly such great temptation to employ machinery” [nowhere is it used on such a massive scale and also, so to speak, for domestic needs as in America] “as in England, where food is high, and costs much labour for its production” [l.c., p. 479].” (p 574) 

But, this is wrong, as Marx describes, because, in America, far more machinery was used than in Britain. In part, this was because workers were able to save wages and buy plots of land, to turn themselves back into peasant farmers. That meant labour-power was in relative short supply, so wages were high, providing an incentive to introduce labour-saving technology. In support of this, Marx gives an extensive quote from The Standard, of September 19, 1862. It sets out that Americans seek to do nothing by hand that cannot be done by machine, 

“From rocking a cradle to making a coffin, from milking a cow to clearing a forest, from sewing on a button to voting for President, almost, he had a machine for everything. He has invented a machine for saving the trouble of masticating food… The exceeding scarcity of labour and its consequent high value” [despite the low value of food], “as well as a certain innate ‘cuteness’ have stimulated this inventive spirit.” (p 575) 

The article, which is about the World Exhibition, describes a number of new US technologies of the time that were on display. 

Ricardo says, 

““The same cause that raises labour, does not raise the value of machines, and, therefore, with every augmentation of capital, a greater proportion of it is employed on machinery. The demand for labour will continue to increase with an increase of capital, but not in proportion to its increase; the ratio will necessarily be a diminishing ratio” ([David Ricardo, On the Principles of Political Economy, and Taxation, third edition, London, 1821,] p. 479).” (p 576) 

Although this is one-sided, Marx says this expresses the correct law of capital accumulation. Ricardo is following John Barton, to whom Marx turns next. But, finally, Marx cites Ricardo's comment, 

““In both cases the net revenue would he the same, and so would be the gross revenue, but the former would be realised in different commodities” (l.c., p. 476).” (p 576) 

But, Marx points out the gross produce may be the same in value and yet consist of different commodities. It may consist of more value in machines and materials (constant capital) and less in wage goods (variable capital). 

Wednesday, 24 October 2018

Theories of Surplus Value, Part II, Chapter 18 - Part 27

The expansion of the net revenue means that more can be spent on menial servants, but also on others who live off the revenue of the capitalists and landlords, and these elements thereby also come to associate their interests with those from whom they derive their own income. Along with this comes a refinement of the luxury commodities consumed by the capitalists and landlords. As the price of necessaries falls, the greater the proportion of profit and rent that can be used for the consumption of luxuries, and gradually the price of these luxuries also falls, whilst what were once luxuries become necessaries. It is not just that luxury consumption increases quantitatively but that it also increases qualitatively. We can think of the consumption of private jets, yachts and so on. Even as workers themselves increase their consumption of what were once luxuries, so the distance between the quantity and quality of the range of commodities they can consume grows wider. 

Capital is faced with two contradictory requirements. On the one hand, it seeks to minimise the labour required for production, i.e. to maximise productivity, because this maximises the rate of surplus value. On the other hand, it seeks to maximise the amount of labour employed, for any given rate of surplus value, because in that way it maximises the mass of surplus value

“The one tendency throws the labourers on to the streets and makes a part of the population redundant, the other absorbs them again and extends wage-slavery absolutely, so that the lot of the worker is always fluctuating but he never escapes from it. The worker, therefore, justifiably regards the development of the productive power of his own labour as hostile to himself; the capitalist, on the other hand, always treats him as an element to be eliminated from production.” (p 573) 

Ricardo seeks to grapple with these contradictory tendencies, and in the process fails to take account of the constantly growing number in the middle classes who live off the revenues of the capitalists and landlords, and who, thereby, act as an important buffer, and prop for those exploiting classes. 

“The middle classes maintain themselves to an ever increasing extent directly out of revenue, they are a burden weighing heavily on the working base and increase the social security and power of the upper ten thousand.” (p 573) 

The rise in productivity, caused by the improvement in technology, first reduces the gross revenue, whilst increasing the net revenue, and then, out of this increased net revenue comes increased accumulation, and thereby an increase in employment and gross revenue. As I've described it elsewhere, in relation to the long wave cycle, new technologies are developed, in the Autumn/Crisis phase of the cycle, to deal with labour shortages, and the consequent squeeze on profits. They are employed and displace labour throughout the Winter/Stagnation phase of the cycle, thereby causing the net revenue to rise, whilst the gross revenue declines (or usually the former grows more rapidly than the latter), and this sets in place the conditions for employment to rise, and gross revenue to increase in the Spring/Prosperity phase of the cycle. 

Tuesday, 23 October 2018

Theories of Surplus Value, Part II, Chapter 18 - Part 26

The question becomes does capital accumulate at a rate fast enough that the absolute increase in employment exceeds the relative decrease in employment. In other words, if a capital of £1,000 employs 10 workers, whilst a capital of £2,000 employs 18 workers, this second capital employs 10% fewer workers relatively, but still employs 80% more workers absolutely. Ricardo says, 

““If these views be correct, it follows, 

1st. That the discovery, and useful application of machinery, always leads to the increase of the net produce of the country, although it may not, and will not, after an inconsiderable interval, increase the value of that net produce” (l.c., p. 474).” (p 570) 

But, Marx says, it will always increase the value of the net produce, i.e. the surplus value, where that machinery reduces the value of labour-power. In other words, it will increase the rate of surplus value. The reason is simple. The new value that labour produces in 10 hours is always equal to 10 hours, no matter how productive it is, i.e. no matter what quantity of use values this 10 hours represents. The lower the value of labour-power, the smaller the proportion of this 10 hours of new value is required to reproduce that labour-power, and so the greater the proportion of surplus value. However, Marx seems to miss a point here. Suppose the machine reduces the value of labour-power from 5 hours to 4 hours, in a ten hour working day. For each employed worker, the value of the net produce, i.e. the surplus value rises from 5 hours to 6 hours. So, if 100 workers are employed, the gross product is 1,000 hours, the necessary product is 400 hours, and the net product/surplus value is 600 hours. However, if the consequence is also that, say, only 80 workers are employed, because these now produce as much as did previously 100 workers, then the gross output value is 800 hours, the necessary product 320 hours, and the surplus product 480 hours. In that case, the value of the net product has fallen from 500 hours to 480 hours. 

Ricardo continues, 

2dly. That an increase of the net produce of a country is compatible with a diminution of the gross produce, and that the motives for employing machinery are always sufficient to insure its employment, if it will increase the net produce, although it may, and frequently must, diminish both the quantity of the gross produce, and its value.” (p 570) 

As Marx says in Capital III, firms never introduce machines or techniques that are less profitable than those they already use. A requirement for that is that a machine must require less labour for its own production than the paid labour its application replaces. The necessary immediate consequence of that is that the machine results in labour becoming redundant. As Ricardo puts it, 

3dly, That the opinion entertained by the labouring class, that the employment of machinery is frequently detrimental to their interests, is not founded on prejudice and error, but is conformable to the correct principles of political economy.” (p 570) 

But, that the immediate consequence is that labour is made redundant is not at all the same thing as saying that labour in the medium or longer-term is made redundant. For the reasons described, that such machinery also cheapens labour-power (and elements of constant capital) as well as raising the rate of surplus value, and rate of profit, and facilitates greater accumulation, the result is that more labour is employed absolutely, even as less labour is employed relatively

4thly. That if the improved means of production, in consequence of the use of machinery, should increase the net produce of a country in a degree so great as not to diminish the gross produce, (I mean always quantity of commodities and not value,) then the situation of all classes will be improved. The landlord and capitalist will benefit, not by an increase of rent and profit, but by the advantages resulting from the expenditure of the same rent, and profit, on commodities, very considerably reduced in value” (p 570)

However, Marx points out that, 

“this sentence contradicts the whole of Ricardo’s doctrine, according to which the lowering in the price of necessaries, and therefore of wages, raises profits, whereas machinery, which permits more to be extracted from the same land with less labour, must lower rent”. (p 570) 

And, even where the consequence of machinery is to create more favourable conditions for workers, Marx says, it does so in a way that only once again emphasises the nature of the proletariat as a slave class. For example, to the extent that a greater surplus product is produced, alongside a surplus population, the capitalists and landlords utilise some of their increased revenue to employ some of these surplus workers as menial servants. And, even in so far as the revenue is turned into capital, that employs productive-labour, it only emphasises once more that this labour is employed as wage labour, and thereby becomes even more enslaved to capital. The bourgeois apology for machinery does not deny that it causes, here and there, redundancy of labour, which acts to depress wages, 

“not because the population grows more rapidly than the means of subsistence, but because the rapid growth in the means of subsistence, due to machinery, enables more machinery to be introduced and therefore reduces the immediate demand for labour. This comes about not because the social fund diminishes, but because of the growth of this fund, the part of it which is spent in wages falls relatively.” (p 571)