Saturday, 29 December 2018

Theories of Surplus Value, Part III, Chapter 20 - Part 8

The production process is one in which matter and energy, in one form, is transformed into matter and energy in some other form, or place. If we consider Torrens' example, we might have 20 kilos of corn used as seed, and 80 kilos of corn paid to workers as wages. The workers transform the 80 kilos of corn paid to them as wages into labour-power. They plant 20 kilos of corn as seed, and their labour-power is then utilised to transform the seed once more into corn. In the production process, the seed absorbs chemicals from the soil, as water from rainfall, and energy from sunlight. These are additional use values to that represented by the 20 kilos or corn used as seed, or the 80 kilos of corn paid as wages. These additional use values, however, have no value. They come as free gifts of nature. Although they provide the physical constituents of additional use value, contained in the final product, they contribute no additional value to it. 

If, for the sake of argument, we say that it takes 120 hours to produce 120 kilos of corn, we might then deduce that the 20 kilos of corn used as seed represent 20 hours of value, and this is transferred to the value of the end product. In addition, the 80 kilos of corn paid to the workers as wages, represents 80 hours of value. However, as variable-capital, this value is not as Torrens believes transferred to the value of the end product, in the way the value of the constant capital is. The 80 kilos of corn used as wages, takes no part whatsoever in the production process of corn, only in the production of the worker. What takes part in the production process, is the worker's labour, and that is a completely separate process from the process of producing the worker. It is something completely new, and the production of a completely new value. This new value created is not then at all determined by the value of the labour-power, or thereby the value of the corn required for the reproduction of the labour-power. Were that not the case, surplus value would not be possible. 

In other words, if productivity remains constant, the workers will perform 100 hours of immediate labour. The end product of 120 kilos will then again have a value of 120 hours (20 hours seed plus 100 hours of new labour) and 20 kilos will be reproduced to be used to replace, in kind, the 20 kilos of seed consumed. A further 80 kilos will replace in kind the 80 kilos of corn paid as wages to the workers, required to reproduce their labour-power, leaving 20 kilos as surplus product, with a value of 20 hours. 

And, this is also why the capital value has to be determined by its current reproduction costs, and not by its historic price, because, as Marx demonstrates, a change in productivity, would change these values, and the proportion of labour-time thereby required to reproduce, in kind, the various components of the capital. Referring back to the comments made earlier by Marx, it is because it is the new value created by labour, and not the value of wages that is determinant that a drastic fall in productivity may result in losses rather than profits being made. 

Suppose instead of 120 kilos being produced, only 90 kilos are produced, as a result of a crop failure. The obvious thing is that the farmer, having advanced 100 kilos, and now having only 90 kilos has suffered a loss equal to 10 kilos. If the farmer were to continue production on the same scale, they would have to make up for this loss by adding 10 kilos of corn to their capital, so that they can advance 20 kilos of seed, and 80 kilos as wages. Viewed in terms of value, the 90 kilos have required 20 hours of materialised labour in seed, and 100 hours of immediate labour, 120 hours, so that the value per kilo is 1.33 hours. So, the value of the 20 kilos of seed that has been consumed, and must now be replaced in kind, is equal to 26.66 hours, and the value of the 80 kilos consumed as wages, and which must also be replaced in kind, is 106.64 hours, giving a total value of the advanced capital that must be replaced of 133.33 hours, whereas the value of the output of 90 kilos is only 120 hours, so that, in value terms, there is a loss of 13.33 hours, which is the value of the 10 kilos of corn that the farmer must add to their capital, to continue production on the same scale. 

This is the situation that Marx describes in Capital III, Chapter 6, where he discusses the tie up of capital, resulting from such a change in productivity, which causes the value of the commodities that comprise the productive-capital, to rise. In the converse situation, where productivity rises, causing the value of these commodities to fall, Marx describes how this causes a release of capital, which creates the illusion that additional profit has been created, whereas all that has happened is that the released capital is converted into revenue, because it no longer has to be physically utilised to replace in kind the consumed capital. Marx explains this further, later in this volume, where he deals with the confusion in this regard as demonstrated by Ramsey. The same confusion experienced by Ramsey is shared by the proponents of historic pricing, in the calculation of the rate of profit

Consequently, Torrens is wrong, in relation to his argument in terms of use value. 

“Regarded merely from the standpoint of use-value, these 20 quarters are not mere profit. The inorganic components have been merely assimilated by the organic components and transformed into organic material. Without the addition of matter—and this is the physiological expenditure—the 100 qrs. would never become 120. Thus it can in fact be said even from the point of view of mere use-value, that is, regarding corn as corn—what enters into corn in inorganic form, as expenditure, appears in organic form, as the actual result, the 20 quarters, i.e., as the surplus of the corn harvested over the corn sown.” (p 78) 

And, in any case, the question of whether the quantity of use value is greater or smaller has nothing to do with the question of of value or profit. For example, in the example above, the use values fall from 120 kilos to 90 kilos, whilst the total value remained 120 hours, and so the value per kilo rose from 1 hour to 1.33 hours. 

“But these considerations, in themselves, have as little to do with the question of profit, as if one were to say that lengths of wire which, in the production process, are stretched to a thousand times the length of the metal from which they are fabricated, yield a thousandfold profit since their length has been increased a thousandfold. In the case of the wire, the length has been increased, in the case of corn, the quantity. But neither increase in length nor increase in quantity constitutes profit, which is applicable solely to exchange-value, although exchange-value manifests itself in a surplus product. 

As far as exchange-value is concerned, there is no need to explain further that the value of 90 quarters of corn can be equal to (or greater than) the value of 100 quarters, that the value of 100 quarters can be greater than that of 120 quarters, and that of 120 quarters greater than that of 500.” (p 78-9) 

If we take the example above, and productivity were to remain at its new lower level, for example, the 20 kilos of seed has a value of 26.66 hours, which would be transferred to the final product, whilst the same 100 hours of new value would be created by immediate labour. It would still result in output of only 90 kilos, but the value of this 90 kilos is now, 126.66 hours, which is 6.66 hours more than was the initial value of 120 kilos. The tie-up of capital in relation to the constant capital, has now passed through, because the higher value of the seed is accounted for. The loss suffered by the farmer, is now solely accounted for by the fact that this newer higher value of corn causes the value of labour-power to have risen, to a level greater than the new value created by that labour. The workers continue to create 100 hours of positive new value, but to do so requires a greater value to reproduce their labour-power. 

“Thus, on the basis of one example which has nothing to do with profit, with the surplus in the value of the product over the value of the capital outlay. Torrens draws conclusions about profit. And even considered physiologically, as use-value, his example is wrong since, in actual fact, the 20 quarters of corn which form the surplus product already exist in one way or another in the production process, although in a different form. 

Finally, Torrens blurts out the brilliant old conception that profit is profit upon expropriation.” (p 79) 

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