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

[2. Barton’s Views]

[a) Barton’s Thesis that Accumulation of Capital Causes a Relative Decrease in the Demand for Labour. Barton’s and Ricardo’s Lack of Understanding of the Inner Connection Between This Phenomenon and the Domination of Capital over Labour]

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.” 

Back To Part 28

Forward To Part 30