Thursday, 6 December 2018

Theories of Surplus Value, Part III, Chapter 19 - Part 32

The requirement is for the price of necessaries to rise so as to create a larger surplus product. But, if the capitalists simply use their revenue to buy luxuries they hand part of this surplus product to others, to the producers of luxury goods that are sold to them above their value. If the class A capitalists, however, use the surplus product for accumulation, then the supply of necessaries rises, and competition will push down the prices of necessaries, thereby shrinking the surplus product. 

“This incongruity would be remedied if, in addition to exchange by one class of capitalists with its workers and the mutual exchange between the capitalists of the different classes, there also existed a third class of purchasers—a deus ex machina—a class which paid the nominal value of commodities without itself selling any commodities, without itself playing the same trick in return; that is a class which transacted one phase only: M—C, but not M—C—M; [a class] which bought not in order to get its capital back plus a profit, but in order to consume the commodities: a class which bought without selling.” (p 50) 

Enter the landed aristocracy, and the state, and the other unproductive layers that Malthus represented. 

“Since these pay 110 for 100 without selling 100 for 110 in their turn, a profit of 10 per cent would be made in actual fact and not simply nominally. The profit would be made in dual fashion by selling as little as possible of the total product back to the workers and as much as possible to the third class, who pay ready money, who, without themselves selling, buy in order to consume.” (p 50) 

What Malthus does not address, however, is where these buyers who are not sellers obtain the revenue required in order to buy. Buyers who are not sellers are also consumers who are not producers. According to Malthus, the passion for consumption by the landed aristocracy matches the passion for accumulation by the capitalists. The consumption of the former ensures that the capitalists can always sell their output at prices that replace their capital plus profit, thereby providing the incentive for accumulation, but, because the landlords consume a large part of the surplus product, without themselves throwing any production into circulation, they limit the potential for over-accumulation and overproduction. A modern version of the Malthusian theory is the Permanent Arms Economy thesis

The landed aristocracy also employ unproductive labourers as menial servants etc., who also buy necessaries and thereby help to keep their prices up. 

“But these landed proprietors do not suffice to create “an adequate demand”. Artificial means must be resorted to. These consist of heavy taxation, of a mass of sinecurists in State and Church, of large armies, pensions, tithes for the priests, an impressive national debt, and from time to time, expensive wars. These are the “remedies” (Principles of Political Economy, [second ed.,] p. 408 et seq.).” (p 51) 

In effect, they obtain a portion of the surplus product without paying for it, because they pay for their consumption out of rents and taxes, which they receive as revenues for which they have supplied no commodities in return. It amounts to the productive class simply handing money to these unproductive sections solely in order for them to buy part of the surplus product, and thereby have the money flow back to them. 

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