Theories of Surplus Value, Part III, Chapter 19 - Part 46

As Marx describes, in Capital I, capitalist production, from the start, is mass production. Its precondition is the existence of sizeable markets, so that production can be undertaken on this larger scale. Consequently, although the amount of labour may be relatively smaller, compared to output, as a result of the division of labour, compared to handicraft production, the absolute amount of labour employed is greater, because the precondition is production on a larger scale. Indeed, the division of labour, by definition, requires multiple workers to do what previously one worker alone would have done, because it involves the labour process being broken down into a series of tasks, each to be performed by a different worker. But, as Marx says, once machinery is introduced, this raises labour productivity way beyond what the division of labour could achieve. Production, on this scale, in turn, requires demand to be increased by even greater proportions. Marx quotes Cazenove again,

““whereas, when machinery is introduced, if there be not an increased amount of demand, or a fall in wages or profits, some of the labour will undoubtedly be thrown out of employment […] let the case be supposed of a commodity worth £1,200, of which £1,000 consists of the wages of 100 men, at £10 each, and £200 of profits, at the rate of 20 per cent. Now, let it be imagined that the same commodity can be produced by the labour of 50 men, and a machine which has cost the labour of 50 men, and which requires the labour of 10 men to keep it in constant repair; the producer will then be able to reduce the price of the article to £800, and still continue to obtain the same remuneration for the use of his capital […]

The wages of 50 men at £10, are		£500
[The wages] of £10 to keep [the machine] in repair		£100
Profit 20 per cent
on circulating capital		£500	} £200
[…] on fixed capital		£500
	[Total] £800”

(op. cit., pp. 114-15).” (p 65)

The labour of the ten men is the value of wear and tear of fixed capital. So, where previously the cost of production was £1,000, comprised wholly of wages, it now comprises £500 of wages, plus £100 of wear and tear, equals £600. Previously, a 20% rate of profit was levied on the capital of £1,000 giving a commodity value of £1200. Now, the 20% rate of profit is levied on the £500 of variable capital, and £500 of fixed capital, again giving a profit of £200. But, this £200 profit on the cost of production of £600, gives a commodity value of £800. In other words, £400 less than the previous commodity value, prior to the machine. 

Cazenove continues. 

““Those who used to pay £1,200 for the commodity will now have £400 to spare, which they can lay out either on something else, or in purchasing more of the same commodity. If it be laid out in the produce of immediate labour, it will give employment to no more than 33.4 men, whereas the number thrown out of employment by the introduction of the machine will have been 40, for— 

The wages of 33.4 men at £10, are £334 

Profits 20 per cent £66 

Total £400” 

(loc. cit., pp. 114-16).” (p 66) 

In other words, because the value of commodities includes not just the value of wages, but also the 20% profits (the cost of constant capital – raw materials – is excluded from these examples) commodities bought with a value of this £400 must actually be comprised of £334 wages, and £66 profits. If wages are taken to be £10 per worker, the £334 is the equivalent of 33.4 workers. Consequently, the £400 saving resulting from the machine was the equivalent of 40 workers, but the spending of this £400 on commodities is only the equivalent of the employment of an additional 33.4 workers, so that, net, 6.6 workers are made redundant. 

Marx comments, 

“Ricardo himself has shown in exactly the same way that machinery itself, when its money price is as high as the price of the immediate labour it displaces, can never be the product of so much labour.” (p 66) 

Cazenove continues the example to show that, if the £400 was used in the same or similar line of production, where the machine is employed, the number of workers then employed, falls from 33.4 to 30. 

“The wages of 25 men at £10 each, are £250 

[The wages of] 5 men [at £10 each] to keep [it] in repair £50 

Profits on £250 circulated and £250 fixed capital £100 

£400” 

(loc. cit., p. 116).” (p 67)

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