Wednesday, 12 December 2018

Theories of Surplus Value, Part III, Chapter 19 - Part 38

13. Critique of Malthus’s Conception of “Unproductive Consumers” by Supporters of Ricardo 

Marx quotes from the anonymous author of “An Inquiry into those Principles, respecting the Nature of Demand and the Necessity of Consumption, lately advocated by Mr. Malthus etc.”, London, 1821, which was an attack on Malthus' theory from a Ricardian standpoint. The arguments in the book, attacking the Malthusian arguments in favour of the unproductive consumption by landlords, Marx says, can also be used by workers against capitalists. 

““Considering, that an increased employment of capital will not take place unless a rate of profits equal to the former rate, or greater than it, can be ensured, and considering, that the mere addition to capital does not of itself tend to ensure such a rate of profits, but the reverse, Mr. Malthus, and those who reason in the same manner as he does, proceed to look out for some source, independent of and extrinsic to production itself, whose progressive increase may keep pace with the progressive increase of capital, and from which continual additional supplies of the requisite rate of profits may be derived” (An Inquiry into those Principles, respecting the Nature of Demand and the Necessity of Consumption, lately advocated by Mr. Malthus etc., London, 1821, pp. 33-34). 

According to Malthus, the “unproductive consumers” are such a source (loc. cit., p. 35).” (p 60) 

This connects to the ideas set out by Marx in Capital III, Chapter 15, whereby capital accumulation has proceeded to such a degree that there is an overproduction of capital, in the sense that any additional capital, and employment of labour, fails to bring about a rise in surplus value, and may even result in a reduction in the mass of surplus value, due to higher wages, and a fall in the rate of surplus value. In other words, this is a Smithian overproduction of capital, which results in a relative shortage of labour-power, pushing wages higher and the rate of surplus value lower, thereby causing a squeeze on profits, of the kind seen in the 1960's and 70's, and at similar previous stages of the long wave cycle

As Marx puts it, 

“As soon as capital would, therefore, have grown in such a ratio to the labouring population that neither the absolute working-time supplied by this population, nor the relative surplus working-time, could be expanded any further (this last would not be feasible at any rate in the case when the demand for labour were so strong that there were a tendency for wages to rise); at a point, therefore, when the increased capital produced just as much, or even less, surplus-value than it did before its increase, there would be absolute over-production of capital; i.e., the increased capital C + ΔC would produce no more, or even less, profit than capital C before its expansion by ΔC. In both cases there would be a steep and sudden fall in the general rate of profit, but this time due to a change in the composition of capital not caused by the development of the productive forces, but rather by a rise in the money-value of the variable capital (because of increased wages) and the corresponding reduction in the proportion of surplus-labour to necessary labour.” 

(Capital III, Chapter 15) 

In other words, as Marx describes in Chapters 15-17 of Theories of Surplus Value, this is a squeeze on profits arising not from his Law of the Tendency for the Rate of Profit to Fall, which is based upon a rise in the technical and thereby organic composition of capital, but from a rise in the value composition of capital, due to a rise in the value of the elements of constant capital (higher material prices), or else from a fall in the rate of surplus value due to a higher value of labour-power, or simply from a rise in money wages, caused by a rising demand for labour-power.  Marx's law of a falling rate of profit is based upon rising social productivity, which causes the technical composition of capital to rise, and causes the rate of surplus value also to rise.  All of these conditions listed, by Marx in Chapter 15, which lead to a crisis of overproduction, are based upon the opposite, of falling productivity, which increases the value of commodities, including those that comprise elements of constant and variable-capital.  Marx's law of a falling rate of profit is based upon a rising rate of surplus value, but here in describing the causes of a crisis of overproduction, he cites the opposite as being the case, i.e. a falling rate of surplus value, due either to a rise in the value of labour-power, or simply a rise in wages, caused by the demand and supply for labour-power.

But, that is not surprising, because as seen in Chapter 17, Marx's explanation of crises of overproduction is not based upon his law of the tendency for the rate of profit to fall.  On the contrary, in Marx's analysis of crises, that Law comes into play, after such crises have occurred, and is the means by which the causes of those crises are resolved.

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