Theories of Surplus Value, Part III, Chapter 20 - Part 130

It is true, as Mill says, that, 

““…if any portion of the profits which the last producer has to make good to previous producers can be economised, the cost of production of the article is diminished” [loc. cit., p. 102].” (p 194) 

But, what Mill says, here, in respect of profits, applies equally to wages, because what Mill is really saying here is that there is a rise in productivity, which reduces the labour-time required for the production of the particular commodity. For example, if we discount the value of the constant capital, in the value of yarn, its value might be equal to 2 days labour (say for 100 kilos), and is divided into 1 day for wages and 1 day for profit. If it becomes possible to produce 100 kilos of yarn in 1 day, its value halves, and although this means that 100 kilos now only represents 0.5 days of profit, it equally contains only 0,5 days of wages, assuming there has been no change in the value of labour-power, or rate of surplus value. 

Having argued that the rate of profit is calculated not only on wages, but also on the constant capital, and recognising that the value of the constant capital itself comprises profits and wages, Mill then says, 

““It is, therefore […] true, that the rate of profits varies inversely as the cost of production of wages” [loc. cit., p. 103].” (p 195) 

Marx comments, 

“Although it is false, it is nevertheless true.” (p 195) 

The argument that Mill then presents, in defence of this position, “can serve as a classical example of the way in which economists use illustrations, and it is all the more astonishing since its author has also written a book about the science of logic.” (p 195) 

Marx gives a long quote from Mill, which sets out his argument. In the example that Mill provides, what he actually does is to assume away the problem. The problem, for Mill, in arguing that it is always changes in wages, and thereby the rate of surplus value, which affects the rate of profit, is the problem of constant capital. Mill has accepted that the rate of profit must be calculated not just on the variable capital (wages), but also on the constant capital (machinery, materials etc.). What Mill actually does, in his example, however, is to assume away the existence of this constant capital in production. 

His example is this. He assumes that 60 agricultural workers are each paid 1 quarter ( I will use kilos) of corn as wages. So, v = 60 kilos. They use a further 60 kilos of corn as constant capital, in the shape of fixed capital and seed. So, c = 60 kilos. The output of these workers is 180 kilos, which represents a surplus product/profit of 60 kilos. So, we have c 60 + v 60 + s 60 = 180 kilos. The rate of surplus value is 100%, and rate of profit 50%. On the basis of this 50% rate of profit, Mill argues that the seed, tools and so on, that comprises the constant capital, with a value of 60 kilos of corn, must have been the product of 40 labourers paid 40 kilos of corn, as wages, producing a 50% rate of profit, i.e. 20 kilos, which then gives the 60 kilos value of c. 

The problem here can immediately be seen. The 60 kilos of surplus corn represents a 50% surplus over the 120 kilos of capital in total advanced, but that 120 kilos comprises not just wages, but also constant capital. It represents a 100% surplus over what was advanced as wages. In defining the value of the 60 kilos of corn comprising constant capital (seeds, tools etc.) only as wages and profits, he fails to account for the fact that part of the its value is, in turn, attributable to seed, wood etc. 

If we follow the example that Marx gave in Theories of Surplus Value, Part I, we might here argue that, if the composition of these other capitals were the same as for the corn producer, they too would comprise an equal amount of constant and variable capital, so that we would have: 

c 20 + v 20 + s 20 = 60 kilos. 

In that case, rather than 40 workers involved in the production of c, there would be only 20, paid 20 kilos of corn. 

Mill argues that the 180 kilos, therefore, are the product of 100 workers – 60 employed in producing the 180 kilos, and 40 producing the constant capital consumed in its production. 

Mill then says, assume that the 180 kilos can be produced without constant capital, i.e. without any seeds, manure or tools.. He assumes, however, that the 100 workers (60 v + 40 v) are still required, and paid 100 kilos of corn as wages. Consequently, he says, the 180 kilos can now be produced with the advance of only 100 kilos of corn, rather than the 120 kilos previously required. Mill says, 

“The produce (180 quarters) is still the result of the same quantity of 1abour as before […], the labour of 100 men.” (p 195) 

But, of course, it isn't, because he has assumed away the value of the labour contained in the constant capital, which he says is no longer required. In other words, the value of the seeds, tools etc. was 60 kilos. Mill assumed that comprised 40 kilos for wages and 20 kilos for profit, whereas it actually comprised 20 kilos for constant capital, 20 kilos for wages, and 20 kilos for profit. If we were, in turn, to examine this 20 kilos of constant capital, it would comprise 6.66 kilos for constant capital, 6.66 kilos for wages, and 6.66 kilos of profit, and so on. 

Mill assumes that the reduction in the value of a kilo of corn is attributable to a reduction in the amount of profit, because he assumes that the amount of labour and wages remains constant. But, of course, the actual reduction in the cost of production from 120 kilos to 100 kilos is a direct result of the fact that Mill has assumed away the value of seeds and tools, and the labour required for their production. Mill equates here the revenue profit with the value of constant capital, reproduced in the value of the commodity, and replaced, in kind, out of current production. 

Mill also demonstrates his confusion, in relation to both value and use value, and in relation to labour and labour-power; i.e. in relation to the value of labour-power and the value created by labour. So, he says, 

““Assuming, therefore, that the labourer is paid in the very article he produces, it is evident that, when any saving of expense takes place in the production of that article, if the labourer still receives the same cost of production as before, he must receive an increased quantity, in the very same ratio in which the productive power of capital has been increased.”” (p 196) 

But, clearly, this is not true. The value of labour-power is determined by the quantity of use values that the worker must consume to reproduce their labour-power, and by the value of those use values. The quantity of use values the worker must consume does not vary according to the value of those use values, because it is a physiologically, culturally, and historically determined minimum. If the value of corn falls, due to a rise in productivity, that does not mean that workers must consume more corn, so as to consume the same value of corn. It means that the value of labour-power falls, so that the amount of surplus value rises. 

Mill continues, 

““But, if so, the outlay of the capitalist will bear exactly the same proportion to the return as it did before; and profits will not rise. The variations, therefore, in the rate of profits, and those in the cost of production of wages, go hand in hand, and are inseparable. Mr. Ricardo’s principle […] is strictly true, if by low wages be meant not merely wages which are the produce of a smaller quantity of labour, but wages which are produced at less cost, reckoning labour and previous profits together” (loc. cit., p.104).” (p 196) 

Back To Part 129

Forward To Part 131

Spanish Socialists Teach Corbyn A Lesson

To shouts of “Larga vida a la lucha de clases” (Long Live The Class Struggle), tens of thousands of Spanish workers came out last night to celebrate the victory of the Spanish Socialist Party, in the most important elections since the fall of the Franco regime, in the 1970's. In doing so, Pedro Sánchez, and the Spanish Socialist Party also taught Jeremy Corbyn a lesson on how to deal with right-wing nationalists. Spoiler alert – its not by adopting nationalist ideas yourself. 

For the last few years, the bourgeois media has been full of stories about the rise of right-wing populism across Europe. The worst place for such stories has been in Britain, where the historic reactionary nationalism and xenophobia of its Tory Party, and that sizeable portion of the population that backs it, has meant that there has always been a large market for papers such as the Daily Express, Daily Mail, The Sun, and so on, to pander to, as they struggle for circulation, so as to stay in business. With a 24 hour news cycle, and News Channels that have obliterated the line between news and entertainment/celebrity, the emphasis is on ratings, and so the need to turn every event into a drama, and to court those whose controversial activities, can ensure viewers. 

Some years ago, the BBC justified inviting Nick Griffin on to Question Time, on the basis that it would expose his ideas. But, it only exposed them to those who already knew that his ideas were grotesque. For all of the racists, and xenophobes who supported Griffin and the BNP, it was simply an opportunity to hear him promote them to a wider audience, just as the supporters of Tommy Robinson hope to do, or indeed as the supporters of political Islam seek to do. For the supporters of Griffin, it was just confirmation that the “liberal elite” tried to stitch him up. But, the real reason that the BBC invited Griffin on to Question Time, just as the reason they invite, repeatedly Farage, Suzanne Evans, Claire Fox, and Brendan O'Neill on to their programmes, despite the fact these people represent nothing and no one, is the fact that they know that their controversial statements will get them viewers, and responses. 

The truth is that the British media, in particular, is lazy and decadent. Anyone who is actually well-informed about politics, knows that the British media, with all of its very highly paid journalists and TV presenters, is not. Moreover, as a media that, in large part, is a Tory media that simply and lazily repeats established tropes, it is easier for it to just carry on in that way, rather than to actually engage in any serious investigation, and analysis of its own. Hence we have the “Paper Reviews” where the same old talking heads are simply recirculated, reinforcing the same old cliches. 

Talking up the rise of far-right populists across Europe has been part of that narrative. Particularly in Britain, it has been part of that narrative about the potential for the EU itself to fall apart. And, of course, across Europe, the far right has been advancing, just as it has with Trump in the US, with Bolsanaro in Brazil, with Putin in Russia, Erdogan in Turkey, and so on. But, who has it been advancing against? The truth of the advance of the far-right, as the election in Spain yesterday showed, is that it is an advance at the expense of the not so far right! In other words, the far right's advance, is simply a mirror image of an advance of the left. Both are the inevitable consequence, as I wrote several years ago, of the collapse of the political centre.  The idea that there could ever be a collapse of the political centre that only benefits the left, is naive wishful thinking.  The idea that when such sharp class divisions manifest themselves the answer can be some cuddly consensus and unity, is itself a reflection of the same old centre-ground, liberal sentimentality.  In such conditions, unity only comes when one side - progress or reaction - crushes the other.  It is a unity imposed by the victor. 

But, much to the chagrin of those reactionary nationalists, and those in the media for whom the collapse of the EU would be nothing more than a bonanza for ratings and circulation, similar to their relishing of a good war, the advance of the far right has never managed to go beyond being a fringe activity. Every time there is an election, even with the proportional representation systems, used in Europe, the far right have failed to win, other than in a few places such as Hungary. Even in Italy, where the right-wing Northern League/Five Star Movement managed to form a ruling coalition, they have had to constrain many of their policies, including removing any commitment to leaving the EU. 

A lot is made of UKIP, then under Farage, winning the most seats in the last European Parliament elections, but that is nothing more than an example of fringe parties being able to mobilise fanatical supporters in low turnouts. The fact is that UKIP were never able to get their candidates elected as MP's, other than where they simply crossed the aisle from being Tory MP's. Farage himself was never able to get elected to parliament. 

In the Spanish elections, the Socialists emphasised the importance of the election, in defeating the right-wing nationalists of Vox, who are a throw-back to Franco. The socialists made clear that the election was a struggle between progress and reaction, between the future and the past, and they won. They won by emphasising their nature as an internationalist, pro-EU party, of progressive social-democracy. In his victory speech, Pedro Sanchez made a point of emphasising that the Socialist Party victory was also a victory for the EU. 

Of course, socialists will have disagreements with the social-democratic programme that the Spanish Socialists fought the election on, as we would with any social-democratic programme, including that of Corbyn and the Labour Party. That is because we are socialists not social-democrats. A progressive social-democratic agenda is at best part of what used to be termed the “Minimum Programme”, of socialists. We would, for similar reasons, have differences in relation to our attitude to the EU itself, though it has to be said that the programme of the European Socialists group in the European Parliament offers a more progressive way forward than is currently offered by the stance of Corbyn's Labour Party, even though, technically, the Labour Party is signed up to that programme. 

The point is, however, that whereas Corbyn and the Stalinists that advise him have been appeasing and facilitating right-wing nationalists, by themselves adopting a reactionary nationalist stance over Brexit, a stance which has, in turn, seen Corbyn entering into class collaborationist talks with the Tories, to try to save their reactionary Brexit agenda; has seen Labour disgracefully adopting reactionary positions in support of ending free movement, and the imposition of immigration controls; and has appeased bigoted views on all these issues, thereby legitimising the very same arguments put forward by Farage and his Brexit Party, which then not surprisingly has rallied a large degree of support around it, from ex- Tory voters, the Spanish Socialists adopted an internationalist stance, a pro-EU stance, and a stance of militantly opposing the right-wing nationalist agenda of Vox, and won. 

Not only did the Spanish socialists win, but they increased their share of the vote, where all of the media were talking about them losing seats, and the potential for Vox to be the kingmakers, claiming seats in a Spanish centre-right government. Vox did win seats. But, they only won 24 seats, whereas the media had been talking about them winning 36 or 38 seats. The 24 seats won by Vox, did not even compensate for the 69 seats lost by the centre-right People's Party, from whom Vox took most of its votes. By contrast, the Socialists increased their share of the vote, by 6.1% points, in a poll that was itself 9.3% points larger than in 2016. The Socialists took nearly 29% of the vote, and increased their number of seats by 38. 

Listen to the Tory media in Britain, and you would almost think that Vox had won the election, rather than that it actually gained only two-thirds of the seats they had been forecast to win. In fact, Vox is only the fifth largest party in the election, with just 10.3%. It is behind the Socialists on 28.7%, the PP on 16.7% (whose vote halved), Ciudadanos on 15.9%, and Podemos on 14.3%. In reality, the far-right in the elections were smashed. Its not that this 10% of the poll is something that did not exist before, it is simply a transfer of an already existing reactionary core vote that previously voted for the PP, and has now been separated out by Vox, just as UKIP acted to do that with all of the reactionaries, racists and xenophobes that have traditionally voted Tory. 

The lines of the great battle between two great class camps are being drawn more clearly. They are being drawn on the question of internationalism v nationalism. Spain was a skirmish won for progress against reaction. It is not yet victory in the war itself, but it shows the way forward.

Theories of Surplus Value, Part III, Chapter 20 - Part 129

Marx summarises Mill's argument. 

““Though […] tools, materials, and buildings […] are themselves the produce of labour […] yet the whole of their value is not resolvable into the wages of the labourers by whom they were produced.” [He says above that the replacement of capital is the replacement of wages.] The profits which the capitalists make on these wages, need to be added. The last capitalist has to replace from his product “not only the wages paid both by himself and by the tool-maker, but also the profit of the tool-maker, advanced by him himself out of his own capital” (op. cit., p. 98). Hence “… profits do not compose merely the surplus after replacing the outlay; they also enter into the outlay itself. Capital is expended partly in paying or reimbursing wages, and partly in paying the profits of other capitalists, whose concurrence was necessary in order to bring together the means of production” (loc. cit., pp. 98-99). “An article, therefore, may be the produce of the same quantity of labour as before, and yet, if any portion of the profits which the last producer has to make good to previous producers can be economised, the cost of production of the article is diminished… It is, therefore, strictly true, that the rate of profit varies inversely as the cost of production of wages” (op. cit., pp. 102-03).” (p 192) 

The fallacy in Mill's argument comes down to this; in arriving at the value of the commodity, he fails to take into account, when determining the value of all of the commodities that form components of it, the value of c contained in them. So, although he correctly argues that the rate of profit must be calculated as s/(c+v), in determining the value of c, he fails to take into account the value of c in its own value. So, for example, let us say that Mill is calculating the rate of profit on woven cloth; he recognises that this profit must be calculated on the value of the yarn used in its production, as well as the value of the labour-power used to weave the yarn. However, he fails to take into account the value of the cotton used in the production of the yarn, when determining its value. But the value of profit, in the value of the yarn, bought by the weaver, also forms part of the value of his constant capital. Its value can rise and fall, as well as wages. 

“Mr. Mill needed only to put on one side that part of the whole product which is resolvable into profit (irrespective of whether it is paid to the last or to the previous capitalists, the co-functionaries in the production of the commodity) and then put that part which resolves into wages on the other, and the amount of profit would still be equal to the surplus over the total amount of wages, and it could be asserted that the Ricardian “inverse ratio” applied directly to the rate of profit.” (p 193-4) 

But, of course, the value of the yarn, as with the value of the total social product, does not resolve solely into wages and profits (or the division of profit into interest, rent and taxes), i.e. into v + s, but also into c, i.e. the value of cotton in the value of the yarn, and so on. This is the same error made today by those who think that by including the value of intermediate production in GDP, they are including the value of constant capital. They are not, for the reasons Marx sets out. GDP is only a measure of value added, i.e. it is only a measure of he new value created by labour, (v + s), including in the value of all those commodities that comprise intermediate production. It only represents the equivalent of Department I (v +s), whilst all of the value of Department I (c), of the capital reproduced out of current production, in kind, is thereby omitted. 

Setting aside the value of the constant capital, Mill's argument is that the rate of profit, calculated on final output, is the profit not only over the total of wages, but also over the total of profit, which, for Mill, is equal to the capital advanced. 

“Hence this rate can obviously be altered not only as a result of a rise or fall in wages, but also as a result of a rise or fall in profit. And if we disregarded the changes in the rate of profit arising from the rise or fall in wages, that is, if we assumed—as is done innumerable times in practice—that the value of the wages, in other words, the costs of their production, the labour-time embodied in them, remained the same, remained unchanged, then, following the path outlined by Mr. Mill, we would arrive at the pretty law that the rise or fall in the rate of profit depends on the rise or fall of profit.” (p 194) 

Back To Part 128

Forward To Part 130

Corbyn is Facilitating Farage

Corbyn's Labour Party is facilitating Farage and his ridiculous Brexit Party. But, as with the self-publicising Farage himself, although it is ridiculous, the Brexit Party does have one advantage. It knows which side of this struggle between two great class camps it is on. Farage typifies the individualist, mentality, of all of those 12-15 million small private capitalists for whom Brexit is the flagship of their attempts to turn the clock backwards, to reverse the gains made by the social-democratic state over the last century, to try – it is bound to fail, but the consequence for the working-class will be disastrous, as those reactionary elements attempt to achieve their goals – to return to a world in which, there is unrestricted, free market competition, where workers' rights are ditched, and workers are suppressed by a strong Bonapartist state, and where all of this is to be conducted within the confines of a nation state whose usefulness ended more than half a century ago. 

Farage has a simple message to the BP's supporters, and those that might be persuaded to fall in behind; it is force through Brexit at whatever cost. The BP has no qualms about ignoring any concept of democracy. It is not concerned that a majority of people, today, oppose Brexit, or that about 1 million people in the electorate, today, who mostly oppose Brexit, by around a 4:1 ratio, did not even get a vote in 2016, or that a similar number of old people, who were the ones who voted overwhelmingly for Brexit, have since left the electorate. For Farage, and the BP, all that counts is that, on one day, in 2016, they managed, by hook and by crook, to scrape a small proportional majority in favour of Brexit, for which they have been campaigning for the last 40 odd years. 

By contrast, although more than 90% of Labour members oppose Brexit, and around 75% of Labour voters, nationally, oppose Brexit, including clear majorities of Labour voters, in those constituencies that voted for Leave, Labour, who you would have thought could have seen the need, and also the opportunity to push an equally clear anti-Brexit position, is seen as a Brexit also ran party, behind, Farage's BP, and the Tories. Ronnie Campbell, speaking on Friday's Newsnight, never spoke a truer word, when he said “We are just like the Tories”. Of course, he didn't mean it in that way. He meant that the Tories are split over Europe, and so is Labour. That is true. However, 80% of Tory voters back a No Deal Brexit, and May continues to argue for Brexit. She can still hold out the prospect of again making a sharp right turn towards a No Deal, which is likely as the BP, eats into their vote share, which will be seen in the local elections, and, if nothing changes, in the European Parliament elections. If not, the Tories will ditch her, and put in place someone like Bojo, Raab or Gove, who will make that shift, and see all the BP votes come flooding back to them, sending Farage into his sixth retirement, leaving him free to return to his lavish lifestyle, and his flirtation with the various less salubrious elements of the global elite such as Trump, Bannon, Putin et al. There is no sign yet, however, that Corbyn will change course, to be a convincing opponent of Brexit. 

As I suggested would be the case last year. The vast majority of Labour activists continue to argue against Brexit, but despite the supposed new broom that Corbyn was supposed to bring in, whereby Labour would be a member-led party, it is the close cabal of Stalinists around Corbyn himself that keep control over the party's policies and public statements. No one can have been that surprised that, for all of its pronouncements about party democracy, we have again seen the party leadership simply impose candidates for the European Parliament elections on members. It means that the candidates selected are either the old Blair-right, sitting MEP's, or else Stalinist hacks appointed by the party leadership. None of them are going to give out a clear progressive, internationalist and socialist message around which the party can mobilise confidently, and win support. 

Indeed, the fiasco of the party leaflet that was leaked and then withdrawn, because it made no reference whatsoever to the party's policy of demanding a second referendum on any proposed Brexit deal, illustrates the point, and shows why Corbyn's worst nightmare has been the possibility of having to fight the European elections, or a General Election prior to Brexit, because it means he would have to come off the fence, and say whether his Labour Party is a pro or an anti-Brexit party. We all know the truth. The Labour Party, if it is defined as its members, is a massively anti-Brexit Party, even if defined by its fudged policy, as determined by the 2018 conference, it is a decidedly anti-Brexit Party, committed to another referendum, with Remain on that ballot. But, Corbyn, and his Stalinist allies are avowedly pro-Brexit. 

Its only necessary to look at the mouthpiece of those Stalinists – The Morning Star – which has come out to argue against voting Labour, if Labour commits to another referendum, as Andrew Coates has described. 

This same rotten, reactionary Red-Brown alliance between Stalinists and ultra nationalists is nothing new. It was seen in the, at first, informal alliance between the Stalinists in the USSR, and Hitler's Nazis, and then by the formal alliance in the Hitler-Stalin Pact; it was seen in the Spanish Civil War, when the Stalinists cooperated with the Francoists to murder their political opponents on the left. It was seen in the 1970's, when the CP, and its fellow travellers, linked up with ultra right-wing nationalists like Enoch Powell, and the National Front to oppose EEC membership. It was seen more recently when the CP and its fellow travellers created No2EU, and stood on a nationalist platform of opposing the EU, putting themselves on the same side as the BNP. 

So, its no surprise that today, we not only see the Morning Star, for which Corbyn was once a regular contributor, coming out to argue against voting Labour. They have not dared go the logical next step of calling on their supporters to vote for Farage's Party, but only for tactical reasons of internal party management of their own. But, of course, that has not stopped others in that same tradition of making that further logical step. It is no surprise that the other renowned British self-publicist, “gorgeous” George Galloway, has come out to argue for a vote for Farage's reactionary nationalist Brexit Party. Nor is it any wonder that those of the strange sect that was once the Revolutionary Communist Party (that many at the time suspected was actually created by the secret services as an agent provocateur group inside the far left milieu), and which, as  Bob From Brockley points out has morphed through being Living Marxism, to Spiked Online (backed by the Koch Brothers), and the Institute of Ideas, have also joined forces with Farage. Their main achievement seems to be their ability, despite representing absolutely nothing and nobody, other than themselves, to be able to get a decadent, and pathetic British Tory media to repeatedly invite them on to TV and radio to spout their ridiculous ideas. But, that is true of the Tory media's prolonged feting of Farage, and other other UKIP 'notables', like Suzanne Evans et al, over the years, who the BBC, for example, have always been happy to provide a platform for on Question Time, The Daily Politics and so on. 

We are at a crucial juncture. In Europe, we see groups like Vox, in Spain, that are essentially looking for a return of Francoism. Yet, across Europe, support for the EU has reached new heights. So, all of the right-wing nationalist groups, which once talked about leaving the EU, or at least, as a first step, leaving the Eurozone, have ditched that line. Vox does not talk about leaving the EU. Its nationalist rhetoric is focussed on opposing Catalan separatism, but it has also raised the traditional rallying cries of such reactionary forces that appeal to bigotry. It's policies are highly misogynist, opposing abortion, and laws against violence against women, and looking to push women back into the home. 

In Britain, fascistic groups like the NF, the BNP etc., never had much success in trying to rally bigots around those kinds of issues. Indeed, UKIP itself never managed to get its candidates elected as MP's. But, the fascists and ultra nationalists have learned a trick or two. They have learned to pick a populist issue around which it is possible to mobilise a sizeable number of bigots, and to push it for all its worth. Then, you can also mobilise all of those bigots around the other elements of your programme, for which you previously could not get sufficient support. For Vox, the issue is Catalan independence, which they speak about almost to the exclusion of all else. They recognise that it has provoked a nationalist backlash in the rest of Spain, where reactionary nationalists see it as a threat to the unity of the state. In Britain, it has been Brexit, which has mobilised all of the reactionaries and bigots, who see it not as a threat to the integrity of the state – on the contrary, as an almost exclusively English nationalist movement, the Brexiteers seem willing to see the UK break-up, as a consequence of it – but as an affront to their continued nostalgia for the days of Empire, when Britain ruled the waves, and Johnny Foreigner knew his place. 

In Spain, Vox have opposed the work that is being done to uncover the mass graves of those killed by Franco and his regime. Vox are clearly Falangists that dare not speak its name. So, far, like UKIP when it began, they represent only a small minority, yet they are likely to take votes away from Spain's conservative party – The People's Party – and, as with UKIP, that has caused the PP to move right. A similar thing was seen in Sweden. But, all this simply illustrates what I forecast some time ago, which is that the collapse of the political centre means that politics must become more polarised. The idea put forward by some Labour spokespeople that it is necessary to try to unify, to bring the country together is a naïve, and ridiculous fantasy. It is time to choose sides – progress or reaction -  and progress cannot come by trying to appease reactionaries, or by trying to promote the fantasy that some progressive solution can come out of promoting, or appeasing, a reactionary nationalist agenda. 

Currently, the only party setting out a clear progressive agenda, in opposition to the clear reactionary agenda of the BP, is the Liberals. They have said this week, “Stop Brexit”. That is what Labour should be saying. It is what more than 90% of Labour members believe we should be saying, and what more than 75% of Labour voters, nationally, think we should be saying. The only vagueness in the Liberals message is that they still talk about holding another referendum. The Greens, still talk primarily about a People's Vote, rather than coming out with a clear message to “Stop Brexit”, though its clear that is what they want to happen as a result of such a vote. As for the Small Change UK party, they are a busted flush even before they have got started, after their performance last week. They are internally incoherent, even before they might try to hold discussions with other parties, where those inconsistencies would become heightened. Their main concern, at the moment, as witnessed by their commitment not even to vote against the government in a No Confidence vote, is to do whatever is in their power to avoid having to fight elections in their seats, so as to hold on to their current cushy positions. 

But, at least, all of these parties are standing on a platform of opposing Brexit, whether it is stated explicitly, as with the Liberals or not. The same is true with the SNP, and Plaid. Labour with its continued support for Brexit is likely to get hammered, everywhere that a credible anti-Brexit alternative is available, particularly in Scotland, and Wales. The Newport West By-Election showed that is the case. It would have suffered worse if the anti-Brexit parties had formed a joint slate, and there is still a possibility that they could come to alternative arrangements for vote switching, before the elections. Even if they don't, its inevitable that Remain voters will simply look at which Remain candidates, have the clearest anti-Brexit position, and best chance of winning in their constituency, and will throw their votes behind them. By contrast, in other areas, if the Tories make another sharp right turn, Labour will, on the one hand lose votes to anti-Brexit parties, whilst the Tories hoover up the Brexit vote, because, if you are a Leaver, why vote for Labour's confused pro-Brexit stance, rather than Farage's clear Brexit at all costs position, or the Tories, if they make another sharp right turn. Either way, Corbyn's stance is, like the Morning Star, in practice, doing everything required to get Labour voters to vote for some other party! 

By failing to put Labour firmly in the vanguard of the anti-Brexit forces, Corbyn has not only allowed the Liberals, Greens, and the Blair-rights to rise from the grave, but he is facilitating Farage, because he is allowing the political locus to shift decisively to the right. Neither the Liberals nor the Greens nor Blair-rights can provide a progressive, internationalist alternative to the reactionary nationalism being peddled by Farage and the Tory Right. Only international socialists and progressive social-democrats can do that. The nature of the European elections, based on lists, and a form of PR, means that the Remain supporting parties at least will not be as hampered as they would be in a General Election, and its first past the post system. In Scotland and Wales, the nationalist parties that back Remain, are likely to make big gains at Labour's expense. But, in England, without them coming to some kind of joint slate, they will still be under-represented, unless each party gets well into double digit percentage figures. In England that looks like meaning that if you want to back Remain, which every progressive social-democrat, and socialist should, you will have the choice of backing either a Liberal or a Green candidate, unless rank and file Labour members take hold of the situation, and take control away from Corbyn, and the Stalinist cabal. 

The truth is that were Corbyn not leader of the Labour Party, he would probably be echoing a line similar to that being put forward by the Morning Star, even if not following the example of Galloway in calling for a vote for Farage, which would get him expelled. But, by failing to come out against Brexit, by engaging in the class collaborationist talks with May, to try to come up with some kind of deal to get the Withdrawal Deal through parliament, which both require to save their skins, Corbyn is acting to facilitate Farage. For as long as the talks with May go on, continuing the illusion that there is some possibility of her deal getting through parliament, May will cling to office, and Farage will continue to suck away Tory support on his narrative of betrayal. If Corbyn broke off the talks, and came out with a clear message that Labour will oppose Brexit, May's days would be numbered. Either she would have to swing right, or she would be ousted, and someone will replace her who will, and then Farage would be dead in the water. Labour would be able to retrieve all of the votes that are  currently flooding away to the Greens, Liberals, Plaid and SNP. It would put itself at the head of that dynamic movement opposing Brexit, so as to kill off the prospects of the reactionary nationalists. It would put itself in a position to win the next General Election. 

But, time is draining away. At this late stage, its unlikely that Corbyn is going to convincingly change position. The response of those like Ronnie Campbell who find themselves now lining up with Labour right wingers, such as John Mann, Gareth Snell, Ruth Smeeth, Caroline Flint and so on, is indication of that problem. It is a problem that has been accentuated by the failure to push through the democratic reforms for mandatory reselection that would have seen many of these dinosaurs cleared away. Yet again, we see that Corbyn has further postponed the reforms on trigger ballots, in order to appease those right wing elements. 

Its obvious that Corbyn's real hope is that Brexit will go through without Labour having to actually vote for it, so that he can say his hands were clean on the matter. But, that will not be the end of the matter. If Farage's Brexit Party does well in the European Elections, which it could do, if Labour continues its pro-Brexit stance, and if the anti-Brexit parties remain divided, then its clear that May's days are numbered. One way or another, the Tories will swing even more decisively in favour of a hard Brexit. They will be in the position of trying to implement such a reactionary nationalist policy in the interests of that class fraction of around 12-15 million small private capitalists. But, that group in themselves are an heterogeneous bunch, ranging from the bloke with a window cleaning business, to the owner of a back street garage, or sweatshop, to the market trader, or small shop owner, through to the owners of small engineering works, and so on up to those who still own private businesses that have grown in size to be medium sized enterprises, but who have not left behind those old mindsets ingrained in them over decades. 

Such a disparate force, much like the peasantry in the past, has difficulty in arranging itself behind a set of ideas of what it is for, rather than the simpler matter of what it is against. Hence the mantra of “Just Get On With It”, though outside the idea that Brexit means Brexit, they have no real idea of what “it” is. At the lower layers of this class fraction, there is an overlap with those other social layers that back Brexit. The local drug dealer, and petty criminal are merely individualists and entrepreneurs that take their individualism across the line of what is legal, rather than what is simply unethical. A reading of Marx’s “The Eighteenth Brumaire of Louis Bonaparte” indicates where such situations lead. 

The Stalinists behind Corbyn argued in Germany in the 1930's that after Hitler it would be their turn. In reality, those that did not jump ship and join the Nazis, found themselves amongst the first put into the concentration camps. The disparate nature of the class fraction, and the other supporters of Brexit, will mean that order will have to imposed from above, by a strong leader. That was the message that the Tories tried to convey in 2017, but May was not the person to implement such a strategy. The attempt to turn the clock back is as futile as the attempt to hold back the tide. Yet, those that set their face to achieving such a task, if they are given the chance will not simply abandon it, at the first obstacle. They will double down on their attempts to push through their agenda, using whatever authoritarian measures are required to do so. 

We can see the outline of that future history. As Brexit inevitably leads to an economic slowdown, the blame will again be thrown on to foreigners. The Tories, who blamed Labour for the global financial crash that was actually caused by the banks and financial institutions, who engaged in reckless gambling and speculation, made possible by the changes brought in by Thatcher and Reagan in the 1980's, have seen how easy it is to do that. This time it will be the fault of the EU that did not “play fair”, by not giving in to the unreasonable demands of the Tories. Trump does the same thing in the US, blaming China for unfair practices, currency manipulation and so on. As economic, political and strategic influence ebbs away from Britain to the much larger, and powerful EU, British antagonism towards it will be ramped up further. In part, that will be because, having told everyone that the EU itself was about to fall apart, the Brextremists will have to cover their tracks, when the opposite turns out to be the case. 

As demands for independence in Scotland increase, the Brextremists will mobilise English nationalists against the Scots. As a majority for a United Ireland becomes ever more likely, in Northern Ireland, the majority against that, which still exists, though it is declining, in the Unionist community, will be ramped up to fever pitch, to oppose Catholic nationalism and popery. In Wales, where the economy is already being hit by the withdrawal of foreign firms, as a result of Brexit, which has caused a reversal of the 2016 position, and a majority now for Remain, there will be a push to counter any drive by the nationalists, by withdrawing devolved powers, and more closely incorporating Wales into rule by Westminster. The same English nationalism is already seeing leading Tories saying they will not allow another Scottish referendum. The Tories and BP can be blasé about the break-up of the UK, now, as a price worth paying for Brexit, but when it comes to rallying bigots around a flag, when things go pear-shaped, they will rush to emphasise their Unionism, just as with Vox in Spain today. The Scots, Welsh, and Irish nationalists will simply be turned into a convenient other, to scapegoat for the problems that Brexit has itself imposed. 

But, of course, they will not be the only ones “othered” in this process. The 30% of the population that are bigots, and who made up the bulk of the Brexit vote, already see “immigrants” as their main concern. Its already the case that 25% of the British public self-identify as holding some “racist” views. Research into those who voted for Brexit shows a high degree of correlation with holding bigoted views on a wide range of other issues from homophobia, misogyny, global warming and so on. As all of the problems mount, its obvious who the Brextremists, then running the government, will throw the blame on to. The NHS collapsing, as funding drains away, and all the foreign staff disappear – blame all the foreigners taking up bed spaces; lack of affordable houses, because rent racketeers are allowed to ride roughshod over tenants, and landowners hold on to land to drive the price up, whilst building costs rise, as foreign building workers go home – blame foreigners for occupying the houses; energy bills high and rising, as the Pound collapses, pushing up the cost of imported oil, gas and electric – blame environmentalists and their wacky policies of wanting to help stop global warming. 

And, as with the situation in Spain, with Vox, as was the case with the Nazis in the 1930's, as unemployment rises, not only will this be blamed on the EU for stealing “our” jobs, and foreigners coming here and taking those jobs, whilst the Daily Mail and Express run stories about them simultaneously living off the dole, but it will be the fault of women, who should know their place, and stay at home to look after the kids and the elderly, as the state no longer can fulfil those functions anyway; it will be blamed on trades unions demanding that wages not be cut, as the economy tanks, and thereby being unpatriotic, in the same way that during the Falkland War, similar talk about an “Enemy Within” was unleashed by the Thatcher government.   When a rail strike occurred, as warships returned from the Falklands, the troops hung banners saying “Call off the rail strike, or we’ll call an air strike!”, and a subsequent rallying of nationalist sentiment was used when the 1984 Miners Strike began.

Corbyn, by failing to take a clear stand against Brexit, is making all of that more likely, because his silence acts to facilitate Farage, and all of the reactionary forces he represents. Those forces can never actually succeed in turning the clock back. But, the chaos they would unleash in trying to do so would impose a severe setback on workers in Britain, and for the cause of socialism. In the end, all of that nostalgia for 18th and early 19th century free market capitalism that motivates the Libertarians like Rees-Mogg will fail, because the global economy, the EU economy, and the British economy is necessarily dominated by large-scale, socialised, industrial capital. It will prevail. In the end, to save the economy, and save the state, the Libertarian elements would have to suffer their own “Night of the Long Knives”, as more ruthless, strong state, Bonapartists took control, to restore order, as happened with Louis Bonaparte in France. But, that large-scale, socialised industrial capital itself cannot operate effectively within the confines of the small British nation state. It would ultimately have to find its way back to the EU, but would then do so, on much less favourable terms than Britain currently enjoys. 

Any hope that Corbyn and his Stalinist advisors have of Brexit opening up the possibility of building socialism, or even social-democracy in one country, are forlorn, and themselves reactionary. But, the more likely result is that Britain would be plunged into a period of reaction, and chaos, which far from bringing about “unity” would simply create even more bitter divisions, and social conflict. But, it is in any case a reactionary delusion that would inevitably end in failure, having gone through all of this turmoil. It would, in the end, turn out to have been just a temporary, backwater, in the course of the tide of history.

Theories of Surplus Value, Part III, Chapter 20 - Part 128

The mass of surplus value may rise because the rate of surplus value rises, and yet the rate of profit may fall, because the constant capital rises, so that the total of c + v rises relative to s. In economies based on manufacturing, this is inevitable, because the largest part of c consists of the consumed material. If productivity rises, it is tautologically true that a given amount of labour (v + s) processes a greater quantity of material (c), so that c rises relative to (v + s). The rate of profit would fall unless s rises sufficiently relative to v, as a result of the rise in social productivity, to offset the rise in c. In other words, if we first have 100 units of labour processing 100 units of material, with a rate of surplus value of 100%, we might have in money terms: 

c 100 + v 50 + s 50, s` = 100%, r` = 33.3%. 

If social productivity rises, by 50%, so that the 100 units of labour now processes 150 units of material, but the value of wage goods falls by 50%, so that the rate of surplus value rises to 300%, we would have: 

c 150 + v 25 + s 75, s` = 300%, r` = 42.86% 

If the value of wage goods falls by a smaller amount, so that the rate of surplus value, does not rise so significantly, we might have, say 

c 150 + v 40 + s 60, s` = 150%, r` = 31.58%. 

However, as Marx sets out, in the next few chapters, this is also not the end of the matter, because, in the same way that the rise in social productivity cheapens wage goods, and so raises the rate of surplus, so too, it cheapens constant capital, and thereby acts to counteract the rise in the mass of it consumed, which raises the rate of profit. For example, if the price of the material falls by 20%, equal to the fall in the price of wage goods, the price of the 150 units consumed falls to 120, so we then have 

c 120 + v 40 + s 60, s` = 150%, r` = 37.50%. 

“Since the rate of profit is the ratio of surplus-value to the total amount of capital advanced, it is naturally affected and determined by the fall or rise of surplus-value, and hence, by the rise or fall of wages, but in addition to this, the rate of profit includes factors which are independent of it and not directly reducible to it.” (p 191) 

Mill is placed in a predicament that Ricardo himself did not face. Ricardo's antagonists drew out the contradiction, in his theory, in relation to the rate of profit. Conscious of those criticisms, Mill was led, as just seen, to define the rate of profit correctly, in terms of the ratio to both constant and variable capital, and not, as Ricardo had done, only to the variable capital. But, having done so, this makes it impossible for Mill to rationally explain why it is only variations in the rate of surplus value which determine movements in the rate of profit, i.e. a fall in wages results in a rise in the rate of profit, and vice versa. 

This, of course, may be the case, as Marx describes in Capital III, Chapter 6, and 15, where there is a profits squeeze, when wages raise and the rate of surplus value falls, and vice versa, but it is by no means the only reason for the rate of profit rising or falling. Indeed, the rate of surplus value may rise, as wages fall, and yet the rate of profit fall, and vice versa. This is the essence of Marx's critique of those previous theories of the falling rate of profit, and the foundation of his own explanation of that tendency. 

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Theories of Surplus Value, Part III, Chapter 20 - Part 127

Ricardo equated exchange-value with price of production, in which case surplus value must equal profit. But, as Marx has demonstrated, this is impossible, if there is to be an average rate of profit, because capitals with a lower organic composition of capital, or a higher rate of turnover, will produce more surplus value than capitals, of an equal size, where the opposite conditions apply. An average rate of profit necessitates that competition would lead to capital flowing away from the latter and towards the former, until the rate of profit was equalised. But, that would mean that the resultant price of production would diverge from the exchange value in each sphere, and correspondingly, the profit, in each sphere, would differ from the surplus value in each sphere. 

Ricardo further erred, in equating the rate of profit, measured correctly, as Mill says, against the cost of production, with the rate of surplus value, measured only against the variable-capital. 

“Mr. Mill himself is not quite clear about the question which he seeks to answer. We will therefore formulate his question briefly before we hear his answer. The rate of profit is the ratio of surplus-value to the total amount of the capital advanced (constant and variable capital taken together) while surplus-value itself is the excess of the quantity of labour performed by the labourer over the quantity of labour which is advanced him as wages; that is, surplus-value is considered only in relation to the variable capital, or to the capital which is laid out in wages, not in relation to the whole capital. Thus the rate of surplus-value and the rate of profit are two different rates, although profit is only surplus-value considered from a particular point of view.” (p 191) 

Although this latter point is only true from the perspective of the total social capital, for the reasons described above. For any particular capital, there need be no relation between profit and surplus value, whatsoever. A capital that employed no labour would produce no surplus value, but, as capital, would still demand the average rate of profit. Moreover, as Marx and Engels describe, in Capital III, the rate of profit is only equal to the surplus value as a ratio of the total advanced capital, where that capital turns over once a year – which is rarely the case. Otherwise, the surplus value, as a proportion of the total advanced capital is equal to the annual rate of profit, and whether this annual rate is greater than or less than the rate of profit will depend upon the relation of fixed capital to circulating capital, and on the rate of turnover of the circulating capital. 

“It is correct to say with regard to the rate of surplus-value that it exclusively depends “upon wages; rising as wages fall, and falling as wages rise”. (But it would be wrong with regard to the total amount of surplus-value, for this depends not only on the rate at which the surplus labour of the individual worker is appropriated but likewise on the number of workers exploited at the same time.)” (p 191) 

This is the same point that Marx makes at the beginning of Capital III, Chapter 15. 

“Given the necessary means of production, i.e. , a sufficient accumulation of capital, the creation of surplus-value is only limited by the labouring population if the rate of surplus-value, i.e. , the intensity of exploitation, is given; and no other limit but the intensity of exploitation if the labouring population is given.” 

So, the rate of surplus value may rise, but the mass of surplus value fall, if the rise in social productivity, implied by this higher rate of surplus value, results in less labour, in total, being employed. Similarly, the rate of surplus value may fall, and yet the mass of surplus value rise, if more labour is employed. If the rate of surplus value rises, whilst more labour is employed, the mass of surplus value will rise for both reasons. But, whether the mass of surplus value rises or falls for any of these reasons, no conclusion for the rate of profit can be drawn from it, because the rate of profit is measured against both the constant and variable capital. 

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Theories of Surplus Value, Part III, Chapter 20 - Part 126

7. John Stuart Mill [Unsuccessful Attempts to Deduce the Ricardian Theory of the Inverse Proportionality Between the Rate of Profit and the Level of Wages Directly from the Law of Value] 

[a) Confusion of the Rate of Surplus-value with the Rate of Profit. Elements of the Conception of “Profit upon Alienation”. Confused Conception of the “Profits Advanced” by the Capitalist] 

Marx says that John Stuart Mill's, “Essays on some Unsettled Questions of Political Economy”, (1844) contains all that is original in his writing. It contrasts with his much more extensive “Principles of Political Economy with some of their Applications to Social Philosophy” (1848). 

In Essay IV , in the former, titled, “On Profits and Interest”, Mill writes, 

““Tools and materials, like other things, have originally cost nothing but labour… The labour employed in making the tools and materials being added to the labour afterwards employed in working up the materials by the aid of tools, the sum total gives the whole of the labour employed in the production of the completed commodity… To replace capital, is to replace nothing but the wages of the labour employed” ([John Stuart Mill, Essays on some Unsettled Questions of Political Economy, London, 1844,] p. 94).” (p 190) 

“This itself is quite wrong,” Marx responds, for the reasons described previously, in relation to the error of Smith's “absurd dogma” that the value of commodities resolves entirely into revenues. But, Mill's argument, here, is wrong, also, because the employed labour is not at all equal only to the wages, but to the wages and profit. 

“To replace capital means to replace the labour for which the capitalist pays (wages) and the labour for which he does not pay but which he nevertheless sells (profit). Mr. Mill is here confusing “employed labour” and that portion of the employed labour which is paid for by the capitalist who employs it. This confusion is itself no recommendation for his understanding of the Ricardian theory, which he claims to teach.” (p 190-1) 

And, as previously described, in dealing with Smith's “absurd dogma” inherited by Ricardo, and subsequent economists, that the value of commodities resolves entirely into revenues, whilst the value of the constant capital that is also consumed can be attributable to labour, at some point, it cannot all be attributable to current living labour, and this distinction is significant, because, 

“... though each part of it can be reduced to previous labour and therefore one can imagine that at some time it represented profit or wages or both, but once it exists as constant capital, one part of it—for example, seeds, etc.—can no longer be transformed into profit or wages.” (p 191) 

That is for the reason previously set out that once revenue has been congealed into constant capital, that constant capital must itself be continually reproduced out of current production, if social production is to continue on the same scale. This is also why, for Marx, the rate of profit has to be calculated on this current reproduction cost, and not on the basis of historic prices.  That portion of social production now required to reproduce that constant capital can only then serve in that function, thereby precluding its allocation to any form of revenue.  In fact, as Marx shows in subsequent chapters, and also in Capital III, Chapter 6, this is, actually only true in relation to the physical capital that must be reproduced on a "like for like basis", and so in value terms only applies where social productivity remains constant.  Marx also describes this situation in Capital III, Chapter 49.

Where social productivity rises, so that the value of those use values that must be reproduced falls, it results in a release of capital, which does then take the form of an appearance of additional profit, although this is merely an illusion, as Marx shows in relation to this confusion by Ramsay.  The opposite occurs where rather than this physical capital being depreciated, a fall in productivity results in an appreciation of the physical capital, so that what would previously have been appropriated as revenue (profit) must now be tied up as capital to replace the consumed capital on a like for like basis.  This phenomena also results in capital gains (where the stock of capital is appreciated), and capital losses (where the stock of capital is depreciated) - the same phenomena results in capital losses/gains for the holders of money-capital - which Ramsay, and the proponents of historic pricing are led to confuse with profits and losses, and leads them to arrive at false conclusions in relation to the calculation of the rate of profit.

Marx says, 

“Mill does not distinguish surplus-value from profit. He therefore declares that the rate of profit (and this is correct for the surplus-value which has already been transformed into profit) is equal to the ratio of the price of the product to the price of its means of production (labour included). (See pp. 92-93.) At the same time he seeks to deduce the laws governing the rate of profit directly from the Ricardian law, in which Ricardo confuses surplus-value and profit, [and to prove] that “profits depend upon wages; rising as wages fall, and falling as wages rise”[p.94].” (p 191) 

The comment by Marx, 

“ and this is correct for the surplus-value which has already been transformed into profit”, 

is not quite right, for the reasons Marx himself sets out in the following paragraphs. The rate of profit is not equal to the price of the product in proportion to the cost of production, but to the profit as a proportion of the cost of production. Marx's comment, that it is correct for the surplus value that has been transformed into profit, is intended to make the distinction between surplus value as an element of the exchange-value of a commodity, and profit as a component of the price of production of a commodity. The two things are different and distinct, and the failure to make that distinction, by Ricardo, and his followers, is what led them into error, and the ultimate dissolution of the Ricardian School. 

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Theories of Surplus Value, Part III, Chapter 20 - Part 125

6. Stirling [Vulgarised Explanation of Profit by the Interrelation of Supply and Demand] 

Marx quotes Stirling. 

“... the quantity of every commodity […] must be so regulated that the supply of each commodity shall bear a less proportion to the demand for it than the supply of labour bears to the demand for labour. The difference between the price or value of the commodity, and the price or value of the labour worked up in it […] constitutes the […]profits” (op. cit., pp. 72-73).” (p 188), 

and, 

“When the values of commodities are exchanged with one another according to their production costs, “the value of these commodities may be said to be at par” (p. 18).” (p 189) 

This has elements of Smith's cost of production theory of value, but its underlying explanation of profit is the pre-Smithian, Mercantilist concept of profit on alienation. Smith recognised that surplus value is created in production. He recognised that the value created during a working-day is greater than the value required to reproduce the labour-power of the worker itself. But, because he fails to make this vital step of recognising the difference between labour-power and labour, he ends up in a series of contradictions and dead-ends. Having identified the source of surplus value, all Smith needed to do, to explain profit, was to demonstrate that what the wage worker sells is not labour, but labour-power, and is paid the value of that commodity by the capitalist. The capitalist, thereby, appropriates the surplus value as profit. 

Instead, Smith gets caught up in trying to explain how it is that the capitalist can appropriate this surplus value, and can only do so by arguing that, because labour is plentiful and capital scarce, the price of labour is paid below its value, and the price of capital above its value. But, the fact is that even if this relation did not exist, the division of the working-day into necessary labour and surplus labour would still exist. A labourer who owned their means of production would still only have to work for part of the day to reproduce their labour-power, leaving them free to work the rest of the day engaged in surplus labour. 

The value of their labour-power would still be less than the value of the product of their labour. The relative abundance of labour, and relative scarcity of capital does not explain the existence of surplus value, it simply explains why the capitalist, rather than the worker, is able to appropriate that surplus value, as profit. It is not that the worker receives a price for labour below its value, but that what the worker sells to the capitalist is not labour, but their labour-power. They are paid the value of that labour-power. 

Following on from Smith, therefore, Stirling's argument is that, if the demand and supply for labour was equal, labour would be sold at its value. But, if that were the case, so that the worker was paid not for their labour-power, but for all of the labour they provide, there could be no profit – there would still be surplus value, but it would now end up in the pocket of the worker, not the capitalist. But, then, there would be no reason for the capitalist to employ the worker. Hence, Stirling's argument that the supply of labour must exceed the demand for it. 

But, what then determines the demand for the labour; it is the demand for the product of that labour. So, Stirling ends up with a Mercantilist theory of profit on alienation. The profit arises because the demand for the commodity is greater than the supply, so that its price is higher than its value. The profit might then arise because either a) the demand and supply for the commodity is in balance, so that it sells at its value, but at this level of production, the demand for labour is less than its supply, so that the labour is sold below its value; or b) the demand and supply of labour is in balance, so that labour is sold at its value, but at this level of output, demand for the commodity is greater than supply, so that it sells at a price above its value; or c) a combination of both, so that at this level of output the demand for the commodity exceeds the supply, so that it sells above its value, but, at those levels of output the supply of labour exceeds the demand for it, so that its price is below its value; or conceivably, even if the demand for labour exceeds the supply, so that its price is above its value, the demand for the commodity exceeds its supply by a larger amount, so that the price rises above its value, by an amount that covers not just the higher price of labour, but produces a profit over and above it. 

“Or the demand for labour is greater than the supply and the price [of labour] is higher than its value. In these circumstances, the capitalist has paid the worker more than the value of the commodity, and the buyer must then pay the capitalist a twofold surplus—first to replace the amount he [the capitalist] has already paid to the worker and then his profit.” (p 189) 

Stirling frames this in terms of the capitalist so arranging things that the supply is lower than the demand, but this then leads to the point made previously, in relation to Walras. If such profit exists, then why would other capitals not engage in production to obtain it? That would increase the supply, lowering the profit, and would simultaneously raise the demand for labour, increasing its price. Competition would then eradicate the profit. 

Stirling's argument implies that capitalist production is somehow planned at a social level, so that production matches consumption requirements, whilst providing for the profit. But, that is totally at odds with the true nature of capitalist production, based upon competition, even when we get to the stage of monopolistic competition between huge socialised capitals. These oligopolies do plan their production for long periods ahead, and do not plough ahead with additional investment, to increase output, when their market research tells them that the market will not support such an increase in output. As Andrew Kliman says, 

“Companies' decisions about how much output to produce are based on projections of demand for the output. Since technical progress does not affect demand – buyers care about the characteristics of products, not the processes used to produce them – it will not cause companies to increase their levels of output, all else being equal.” 

(The Failure of Capitalist Production, Note 4, p 16) 

However, that does not mean that these capitals stop competing against each other. Rather than additional investment to increase output, they look to more technological solutions of intensive accumulation, so as to produce their existing level of output at lower cost. As each does so, whilst the quantity of supply may not rise, the market value/price of production of this output falls, bringing about lower market prices, and, where supply, or the rate of turnover does rise, lower profit margins. Or, they may compete in other ways, where such intensive accumulation is not possible, for example, by improving quality, increasing the range, or even just via advertising and marketing. 

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Theories of Surplus Value, Part III, Chapter 20 - Part 124

5. Wakefield [Some Objections to Ricardo’s Theory Regarding the “Value of Labour” and Rent] 

Wakefield describes the problem of Smith's confusion of labour with labour-power. If “labour” is exchanged for an equal value of wage goods, then profit is impossible. Marx also quotes a passage from Wakefield in which he illustrates why the terms used in common vocabulary for economic categories do not correspond with their actual economic content. 

““Surplus produce […] always constitutes rent: still rent may be paid, which does not consist of surplus produce” (p. 216). 

“If” (as in Ireland) “the bulk of a people be brought to live upon potatoes, and in hovels and rags, and to pay, for permission so to live, all that they can produce beyond hovels, rags, and potatoes, then, in proportion as they put up with less, the owner of the land on which they live, obtains more, even though the return to capital or labour should remain unaltered. What the miserable tenants give up, the landlord gathers. […] A fall in the standard of living amongst the cultivators of the earth is another cause of surplus produce… When wages fall, the effect upon surplus produce is the same as a fall in the standard of living: the whole produce remaining the same, the surplus part is greater; the producers have less, and the landlord more” (pp.220-21).” (p 188) 

In other words, here, what economically is actually profit, is called rent. The landlord collects, as “rent”, an amount of value, which actually constitutes profit, just as sometimes capital obtains, as profit, what economically constitutes wages, or the value of labour-power. Sometimes the two go together; the landlord encroaches on profit, in the rent they demand from the farmer, whilst the farmer seeks to compensate by encroaching on wages, by paying below the value of labour-power. 

“In this case, profit is called rent, just as it is called interest when, for example, as in India, the worker (although nominally independent) works with advances he receives from the capitalist and has to hand over all the surplus produce to the capitalist.” (p 188) 

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Theories of Surplus Value, Part III, Chapter 20 - Part 123

Marx seizes on McCulloch's use of the term “accumulated labour” to attack him on a more personal level. Not only had McCulloch gained financially, by selling his writing that had been largely plagiarised from the labour of other writers, such as Ricardo, Mill and Say, but McCulloch had also sold his own writings on multiple occasions to different journals. Marx refers specifically to an 1826 work by Mordecai Mullion, Some illustrations of Mr. McCulloch’s Principles of Political Economy, Edinburgh, 1826. 

“It traces how our chevalier d’industrie made a name for himself. Nine-tenths of his work is copied from Adam Smith, Ricardo and others, the remaining tenth being culled repeatedly from his own accumulated labour which he repeats most shamelessly and contemptibly. Mullion shows, for example, not only that McCulloch sold the same articles to The Edinburgh Review and The Scotsman and the Encyclopaedia Britannica as his own “dissertations” and as new works, but also that he published the same articles word for word and with only a few transpositions and under new titles in different issues of The Edinburgh Review over the years. 

In this respect Mullion says the following about “this most incredible cobbler”, “this most Economical of all Economists”: 

“Mr. McCulloch’s articles are as unlike as may be to the heavenly bodies […] but, in one respect, they resemble such luminaries—they have stated times of return” ([Mordecai Mullion,] (op. cit., p. 21). “ (p 185-6) 

McCulloch also issued forth on the question of the law of falling profits, giving “vent to a veritable jeremiad” on the question, similar to the warnings of current day catastrophists, who prophesy crises of capitalism always impending as a result of that same law. 

“(This claptrap is called “Considerations on the Accumulation of Capital”.) 

“The author … expresses the fears in him by the decline in profit as follows:” 

‘…the condition of’ (England) ‘however prosperous in appearance, is bad and unsound at bottom; […] the plague of poverty is secretly creeping on the mass of her citizens; […] the foundations of her power and greatness have been shaken…’ 

‘… where […] the rate of interest is low, as in [Holland and] England, […] the profits of stock are also low […], those are countries […] that […] are approaching the termination of their career.’ 

“These observations must surprise everybody acquainted with England’s splendid situation” ([McCulloch, Discours sur l’économie, traduit par] Prévost, p. 197” (p 186) 

However, McCulloch did manage to stumble on one correct proposition. As Marx puts it, even a blind sow sometimes finds an acorn. 

“But even this, as he presents it, is only an inconsistency, since he does not distinguish surplus-value from profit. Secondly, it is again one of his thoughtless, eclectic acts of plagiarism.” (p 186) 

For subjectivists, like Bailey, there is no difference between surplus value and profit. Profit is simply derivative from capital, and proportionate to it. That is also the case with Torrens. In other words, for them, surplus value does not exist as a concept; there is only profit. They do not try to explain its source, and their theory prevents them from doing so. All their theory does is to recognise its existence and to describe it. 

Ricardo does acknowledge surplus value and profit, but considers them to be identical, and he has to do so, because he equates the natural price of commodities with their exchange value rather than their price of production. 

“The passages in Mac’s work, who is (1) a Ricardian and (2) plagiarises Ricardo’s opponents—without attempting to reconcile [the conflicting ideas]—read: 

Ricardo’s law [that a rise in profits can be brought about in no other way than by a fall in wages, and a fall in profits only by a rise in wages] is only true “in those cases in which the productiveness of industry […] remains constant” (J. R. McCulloch, The Principles of Political Economy, London, 1825, p. 373), that is, the productiveness of the industry which produces constant capital. 

“… profits depend on the proportion which they bear to the capital by which they are produced, and not on the proportion […] to wages” (loc.cit., pp. 373-74). If the productivity of industry in general is doubled and the additional product thus obtained is divided between capitalists and workers, then the proportion of the share of the capitalists to that of the workers remains unchanged, although the rate of profit calculated on the capital advanced has risen.” (p 187) 

In other words, here, McCulloch correctly makes the distinction, by contrast with Ricardo, between surplus value, which is produced by, and measured against, variable-capital, and profit, which is the product of and measured against the total capital, constant and variable. So, as McCulloch correctly states, if productivity rises, the value of the constant capital may fall, so that even if the mass of surplus value remains constant, the rate of profit will rise. 

It could be said that wages have fallen proportionately to the total product, but Marx says, this is an incorrect way of measuring wages, “and, as we saw previously, Mr. John Stuart Mill seeks to generalise the Ricardian law in this sophistical manner.” (p 187) 

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