Thursday, 29 November 2018

Theories of Surplus Value, Part III, Chapter 19 - Part 25

9. Constant and Variable Capital [According to Malthus] 

Marx quotes Malthus' comments in regards to constant and variable-capital, though Malthus never uses those actual terms. 

““Accumulated labour”. (It should really be called materialised labour, objectified labour.) “The labour worked up in the raw materials and tools applied to the production of other commodities” (op. cit., p. 13). 

In speaking of the labour worked up in commodities “… the labour worked up in the capital necessary to their production were designated by the term accumulated labour, as contra-distinguished from the immediate labour employed by the last capitalist” (op. cit., pp. 28-29).” (p 36) 

Malthus, however, never goes anywhere from having made this crucial distinction. Like Ricardo, Malthus confuses surplus value and the rate of surplus value, with profit, and the rate of profit. But, where Ricardo never attempts to identify the source of surplus value, Malthus' attempt to do so takes him back to the theories of the Mercantilists, and his theory of value is also, thereby, a step backwards, compared to Ricardo's labour theory of value. So, although Malthus attempts to relate the rate of surplus value to the variable-capital, his theory of value prevents this attempt from going anywhere. 

Marx gives a long quote from Malthus, where he attempts to demonstrate this relation between the rate of profit and wages, but, in it, Malthus sets out nothing but a series of mathematical tautologies. Malthus begins by assuming that all capital is variable-capital, in which case it would be true that surplus value and profit are the same, and that the rate of profit and rate of surplus value is the same. 

He assumes a 10% rate of profit, so that, if wages are £100, the value of the product is £110, with £10 being profit. 

“In relation to the total, 10 per cent profit can be so expressed that the part of the value of the total product which is not made up of profit amounts to 10/11 of the total product; or, a product of 110 which includes 10 per cent profit consists of 10/11 outlay, on which the profit is made. This brilliant mathematical effort amuses him so much that he repeats the same calculation using a profit of 20 per cent, 30 per cent, etc. But so far we have merely a tautology. The profit is a percentage on the capital expended, the value of the total Product includes the value of the profit and the capital expended is the value of the total product minus the value of the profit. Thus 110-10=100. And 100 is 10/11 of 110.” (p 37-8) 

Malthus then proceeds to outline the case where part of the capital is constant capital, in addition to the variable capital. If surplus value is determined by wages, then this is clearly in contradiction to the idea also propounded by Malthus that the capitalist expects to receive the average rate of profit on all of their capital. Malthus sets out an example where a capital of £2,000 consists of £1500 constant capital and £500 variable capital. He assumes a 20% rate of profit, so that profit of £400 is added to the £2,000, giving a product of £2,400. 

Now Malthus argument is that it is the proportional relation to wages that is determinant of the rate of profit. So, he says, if the total capital is £2,000 and wages are a quarter of this total, a quarter of the total product of £2,400 is £600. This £600 represents the £500 spent on wages plus 20% profit. This £100 of profit is 25% of the total profit, proportional to wages as a portion of total capital. 

“And this is supposed to prove that “the profits of the capitalist will vary with the varying value of this one-fourth of the produce compared with the quantity of labour employed”. It proves nothing more than that a profit of a given percentage, e.g. of 20 per cent, on a given capital—say of £4,000— yields a profit of 20 per cent on each aliquot part of the capital, that is a tautology, But it proves absolutely nothing about a definite, special, distinguishing relationship of this profit to the part of the capital expended on wages.” (p 38) 

It could just as easily have been said that 75% of the total capital comprises constant capital and that 75% of the total product is £1800, which is £300 more than the value of the constant capital, and £300 is 75% of the total profit. 

Marx says, if you take not ¼ but 1/24 of the total product, £100, it too contains 20% profit, i.e. the capital would be £83.33 and profit £16.66. 

“If the 83⅓ were equal, for instance, to a horse which was employed in production, then it could be demonstrated according to Malthus’s recipe that the profit would vary with the varying value of the horse or the 28 4/5 part of the total product. 

Such are the wretched things Mr. Malthus comes out with when he stands on his own feet and cannot plagiarise Townsend, Anderson or anyone else. What is really remarkable and pertinent (apart from what is characteristic of the man) is the inkling that surplus-value must be calculated on the part of capital expended on wages.” (p 38-9) 

If the rate of profit is given, the mass of profit then depends on the mass of capital advanced, because the average annual rate of profit is measured against the advanced capital, not the laid out capital. But, Marx says, this is the gross profit, before rent, interest or taxes have been deducted, and before the personal consumption needs of the capitalist have been met. Only after all these deductions have been made is the amount available for accumulation determined. 

“But this part, since it is equal to the gross profit minus the revenue consumed by the capitalist, will depend not only on the value of the total profit, but on the cheapness of the commodities which the capitalist can buy with it; partly on the cheapness of the commodities which he consumes and which he pays for out of his revenue, partly on the cheapness of the commodities which enter into his constant capital. Wages here are assumed as given—since the rate of profit is likewise assumed as given.” (p 39) 

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