Theories of Surplus Value, Part III, Chapter 19 - Part 45

Cazenove says the following, in relation to a rise in productivity due to the division of labour. 

““… when commodities are multiplied by a more judicious distribution of labour, no greater amount of demand than before is required in order to maintain all the labour which was previously employed;”” (p 65) 

This seems to be making the same point as above, but from a different angle. In other words, it is discussing demand in relation to a change in price, of the commodity rather than in relation to a change in income. It is basically what orthodox economics would discuss under the heading price elasticity, as opposed to income elasticity of demand. 

Marx comments, 

“How so? If the distribution of labour is more judicious, more commodities will be produced by the same labour; hence the supply will grow, and does its absorption not require an increased amount of demand? Does Adam Smith not rightly say that division of labour depends upon the extent of the market?” (p 65) 

Essentially, it seems to me that what Cazenove is saying is that in the same way that someone with £60 of income can provide twice as much demand as someone with £30 of income, so too, if the value of a commodity falls from £2 to £1, as a result of a rise in labour productivity, existing levels of income can create twice the demand, in terms of quantity as before. So, if the rise in productivity is manifest in 200 units of output with an exchange-value of £1 per unit, rather than 100 units with an exchange-value of £2 per unit, then £200 of demand, in both cases, is enough to absorb the supply. But, of course, this does not follow, for the very reason that Cazenove has set out above, and that Marx describes later, in this book. Just because my income doubles, or just because the price of a commodity halves, is no reason that my demand for such a commodity will double. In the terms of orthodox economics, it depends upon the income or price elasticity of demand for that commodity. 

Marx continues, 

“In actual fact, the difference as regards demand from outside is the same except [that demand] on a larger scale [is required] when machinery is used. But “a more judicious distribution of labour” may require the same or even a greater number of labourers than before, while the introduction of machinery must under all circumstances diminish the proportion of capital laid out in immediate labour.” (p 65) 

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