And, its on this basis that a new expansion takes place. As part of this new expansion, absolutely more labour is employed, even as relatively less labour is employed, precisely because capital and output expands by an even greater degree. Marx's criticism of capital is not that it creates poverty (as for example the Lassalleans argued). On the contrary, Marx shows that capitalism creates wealth and raises living standards, far more than any previous mode of production. The criticism is that a) it does this chaotically, and through a series of crises, in which the constraints of the system itself have prevented further expansion, and those constraints are breached via the crisis, and b) because, at the same time as raising living standards of workers, it reduces their wealth, their capacity to own and control, individually, the means of production. It illustrates how the increasing socialisation of production, and consequent development of socialised capital, as it bursts asunder the constraints of the monopoly of private capital (the expropriation of the expropriators), can only be rationally transformed into a corresponding change in the social relations that arise upon those changed productive relations, with that socialised capital itself, having to be collectively organised, and controlled by the associated producers in each company. It illustrates how the existing society creates the material conditions, and social forms required for its own transcendence.
The gross income consists of wages, profit and rent, whilst the net income consists only of surplus value (profit, rent, interest, taxes). It is quite possible then for gross income to fall, whilst net income rises. It only requires that wages fall more than the fall in gross income. Ricardo was quite wrong then to think that machinery only has a negative effect on workers where it causes the gross income to fall. A fall in wages, or the wage share, as workers are replaced by machines, may leave a surplus product on the market, but this surplus could be exported, or consumed by members of other classes, or indeed, employed workers.
“The quantity of articles entering into consumption or, to use Ricardo’s expression, the quantity of articles of which the gross revenue consists, can be increased, without a consequent increase in that portion of this quantity which is transformed into variable capital. This may even decrease. In this case more is consumed as revenue by capitalists, landlords and their retainers, the unproductive classes, the state, the middle strata (merchants) etc.” (p 561)
The error of Ricardo and Barton, following on from Smith, is that they see the accumulation of capital as synonymous with the accumulation of variable-capital. But, along with the accumulation of capital goes a rise in the organic composition of capital, at least, at the time Marx was writing, where economies were dominated by material production rather than service industry. Even in periods when there is no revolution in technology, social productivity rises, even with extensive accumulation, because of economies of scale, greater division of labour, and gains from co-operative labour. Higher productivity alone raises the organic composition of capital, because, by definition, it means more material is processed by a given quantity of labour. As a result, output rises faster than the growth of labour, and wages. Revenue, i.e. commodities destined for personal consumption, rises, along with the general growth of output, but, this rise in revenue, therefore, does not imply a rise in wages. Wages, or wage share, may or may not rise absolutely, but will fall relatively. A larger proportion will fall to other classes, so that their living standards rise relative to workers, and they will have more of this revenue available itself to be converted into capital and accumulated.
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