It is undoubtedly true that the real variable-capital, i.e. the commodities that comprise the means of subsistence, and which are the physical equivalent of the money wage, remain in the market. Even if they have not been physically saved up, then as Hodgskin points out, they are being continuously and simultaneously produced, and thrown on the market each day by coexistent labour. But, these products do not confront the worker as variable-capital. They only confront the worker as commodities, and to buy them, the worker requires wages. They require that the money form of this variable-capital be paid to them by some employer prepared to buy their labour-power. As Marx says, if the displaced workers have no wages, they cannot buy these commodities. Assuming these commodities could not be exported, the fall in demand for them would reduce their market price. The fall in market price would lead to a rise in demand, but this rise in demand does not mean that the displaced workers are thereby enabled to consume. It means other workers, capitalists, landlords and rentiers are able to increase their consumption. But, not even that may happen. Some of these means of consumption will be imported, so that the fall in demand simply results in fewer imports. Alternatively, the excess may be exported.
“Ricardo imagines quixotically that the entire bourgeois social mechanism is arranged so nicely that if, for instance, ten men are discharged from their work, the means of subsistence of these workers—now set free—must definitely be consumed in one way or another by the identical ten men and that otherwise they could not be sold; as if a mass of semi-employed or completely unemployed were not for ever crawling around at the bottom of this society—and as if the capital existing in the form of means of subsistence were a fixed amount.” (p 560)
Illustrating this point, Marx refers to the situation, in Britain, between 1838-41. The hand-loom weavers were unable to compete with the power looms being introduced into factories. Marx describes this, also, in Capital I. The hand-loom weavers worked from their own homes, using their own looms. For years, they tried to compete with the power-loom production. To do so they had to accept lower and lower prices for their output. The only way they could continue was because their starvation was ameliorated by the payment of Poor Relief. This is very similar to the situation in Britain today, where millions of people subsist in jobs on zero hours contracts, casual employment, and very low wages that only persist because the workers enduring these conditions receive welfare benefits, which thereby subsidise the employers, and facilitate the continuation of very low levels of productivity.
Marx makes the point, in Capital I, that all the Poor Relief did was to keep the hand-loom weavers lingering on in this state of misery, whilst the Poor Relief itself was paid out of the pockets of other workers in the parish, thereby also reducing their living standards. And, as Marx sets out, in Capital I, the other effect was that, in those areas where this Parish Relief became more burdensome, it gave an incentive for people to move out of that parish, and into one where deductions from their wages were less. That applies today with the problems faced with raising revenues in boroughs with higher levels of deprivation and need. It indicates the limits of policies of income redistribution via taxes and benefits, particularly where applied within restricted geographical boundaries. It also shows the lunacy of the Tories claim that it is always better for people to be in employment. These forms of low wage, low value, low productivity forms of employment that can only persist by inflicting misery on the workers employed in them, and by supplementing their incomes with various benefits and welfare payments, benefit the particular, inefficient capitalists who are thereby enabled to continue to make profits, but no one else. It involves perpetuating conditions of low productivity, and lack of modernising investment, whilst draining revenue and potential capital from other, more productive, higher value areas of the economy, and thereby reducing potential growth, and sustainable employment on better wages.
During this period, the output of cloth and other manufactures expanded considerably, and this output lay on the market unsold, depressing its price, but, even at this depressed price, those who had been thrown out of work could not buy it. The consequence is that both a surplus of production and a relative surplus population, unable to consume that production, exist side by side.
“It is true that in the long run the labour that has been released together with the portion of revenue or capital that has been released, will find an opening in a new sphere of production or in the expansion of the old one, but this is of more benefit to those who succeed the displaced men than to the displaced men themselves. New ramifications of more or less unproductive branches of labour are continually being formed and in these revenue is directly expended. Then there is the formation of fixed capital (railways etc.) and the labour connected with superintendence which this opens up; the manufacture of luxuries etc., foreign trade, which increasingly diversifies the articles on which revenue is spent.” (p 560)
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