Wednesday, 14 November 2018

Theories of Surplus Value, Part III, Chapter 19 - Part 10

“Now Mr. Malthus, who transformed the utilisation of commodities as capital into the value of commodities, quite consistently transforms all buyers into wage-workers, in other words he makes them all exchange with the capitalist not commodities, but immediate labour, and makes them all give back to the capitalist more labour than the commodities contain, while conversely, the capitalist’s profit results from selling all the labour contained in the commodities when he has paid for only a portion of the labour contained in them. Therefore, whereas the difficulty with Ricardo [arises from] the fact that the law of commodity exchange does not directly explain the exchange between capital and wage-labour, but rather seems to contradict it, Malthus solves the difficulty by transforming the purchase (exchange) of commodities into an exchange between capital and wage-labour.” (p 19-20) 

In other words, wage workers always overpay for the commodities they buy, because they always buy the money used to buy these commodities with more labour than the money itself represents. Malthus wants to put all buyers in this position of overpaying for the commodities they buy, and, thereby, reverts to the position of the Mercantilists of explaining profit on the basis of selling commodities above their value. 

“What Malthus does not understand is the difference between the total sum of labour contained in a particular commodity and the sum of paid labour which is contained in it. It is precisely this difference which constitutes the source of profit. Further, Malthus inevitably arrives at the point of deriving profit from the fact that the seller sells his commodity not only above the amount it costs him (and the capitalist does this), but above what it costs; he thus reverts to the vulgarised conception of profit upon expropriation and derives surplus-value from the fact that the seller sells the commodity above its value (i.e., for more labour-time than is contained in it). What he thus gains as a seller of a commodity, he loses as a buyer of another and it is absolutely impossible to discover what profit is to be made in reality from such a general nominal price increase. It is in particular difficult to understand how society as a whole can enrich itself in this way, how a real surplus-value or surplus product can thus arise. An absurd, stupid idea.” (p 20) 

The real basis of Malthus' error is the failure to distinguish what the commodity actually costs, in terms of how much labour it contains, and how much it costs the capitalist to produce. As described earlier, Malthus, in his Principles, was concerned to re-establish his “front rank” position, in the field of political economy, following Ricardo's assumption of that position. Malthus used his recognition of the unsolved contradiction in Smith's work, to put forward a new theory in opposition to Ricardo. 

A commodity, where it acts as capital, for example grain used as variable-capital, to employ wage labour, commands more labour than it contains. So, ten kilos of grain used as variable-capital, with a value equal to ten hours, buys twelve hours of labour, provided by the worker. It is this which produces the profit, here equal to two hours, or two kilos of grain. But, if we turn this around, and make this ability to command more labour not a function of the commodity as capital, but itself an aspect of the value of the commodity itself, we place all buyers of commodities in the same position as wage workers, who buy commodities with a greater quantity of their own labour. The value of a commodity becomes not just the labour it contains, but also an amount of profit on top of that, and it is this price, or the equivalent amount of labour that the buyer must pay for it. 

Buyers of commodities, other than workers, do not buy them directly with their labour, but with money. Therefore, it has to be assumed that this money itself contains more labour than the commodity it is buying. 

“In fact, it comes to this: the value of a commodity consists of the value paid for it by the purchaser, and this value is equal to the equivalent (the value) of the commodity plus a surplus over and above this value, surplus-value. Thus we have the vulgarised view that profit consists in a commodity being sold more dearly than it was bought. The purchaser buys it for more labour or for more materialised labour than it costs the seller.” (p 21) 

And, its from here that Malthus makes his case for his paymasters, the landed aristocracy, and other unproductive sections of society. If commodities are all sold above their value, then, as seen earlier, as far as the capitalists themselves are concerned, they cannot produce a profit by mutually exchanging these overpriced commodities amongst themselves. If the average rate of profit is 10%, so that each capitalist routinely overcharges the buyers of their commodities by this amount, then what any capitalist gains by such overcharging, they equally lose as a buyer of commodities. 

It is only workers who are not in that position, because whilst they must buy these overpriced commodities, they are not themselves sellers of them. But, Malthus argues, a further problem then arises, because if these commodities are overpriced, the workers, collectively, cannot buy them all with their wages. If a worker expends 10 hours of labour creating a commodity, but is only paid the equivalent of 8 hours labour as wages, they can only buy 80% of the commodity. The capitalist needs to sell the other 20%, which represents the surplus product, if they are to realise their profit. But, basing himself on the previous argument, Malthus argues that the capitalists cannot realise this profit by selling the remaining 20% to each other. Hence arises the theory of under-consumption

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