The author of the pamphlet takes as a starting point the objective basis of the value of labour-power, and, thereby, the limitation placed upon surplus value.
““… whatever may be due to the capitalist” (from the viewpoint of the capitalist) “he can only receive the surplus labour of the labourer; for the labourer must live…” (The Source and Remedy of the National Difficulties, p. 23).” (p 239)
This is the point that Marx has made repeatedly throughout Capital and Theories of Surplus Value. No matter what mode of production it is, the working-day is divided into necessary labour and surplus labour. The necessary labour is required to produce those goods and services the worker needs for their own reproduction. Surplus labour is any labour undertaken above it. The only question here, which is resolved differently in each mode of production, and, thereby, characterises these different modes of production, is how this surplus labour is pumped from the labourer, and who has control over it, when it is produced.
“To be sure, these conditions of life, the minimum on which the worker can live, and consequently also the quantity of surplus labour which can be squeezed out of him, are relative magnitudes.” (p 239)
In other words, as Marx describes in Wage Labour and Capital, Value, Price and Profit, and elsewhere, these magnitudes are not absolute, fixed quota. But, at any one time, in any one place, they set limits. And, other objective factors also constrain those limits further. It's not just that workers, today, could, theoretically, survive on a mere subsistence amount of food, clothing and shelter, that determines what is an objective minimum. The reality is that today's workers require a minimum level of education, to function as productive labour. That means a minimum amount of social labour-time has to be devoted to the provision of that education, as necessary labour. To be able to obtain the benefits of that education, workers need some minimum standards of living conditions, nutrition and so on. Nor is there any point, from the standpoint of capital, in providing such education and training, if the workers die young, or are frequently too ill to work. So, a minimal standard of healthcare is required, which is why developed capitalist economies all created welfare states, in the 20th century, to provide these goods and services, and to ensure that the minimum portion of wages was devoted to their consumption, by compulsory deduction from their wages of Income Tax, National Insurance and so on.
Moreover, as capitalist production increases the level of social productivity, so that the unit value of commodities continually falls, capital faces the problem of realising, as profit, the surplus value it has pumped out of the workers in production. The way it does this is to also continually expand the range of goods and services produced by, and sold back to workers. The value of labour-power continually falls, facilitating a rise in profits, but the volume and range of goods that comprise the wage goods, consumed by the workers steadily rises. The value of wages fall, but the standard of living rises.
So, the limits within which the value of labour-power is fixed are not mechanically determined, but, nor are they arbitrary, or subjectively determined. In the end, they are objectively determined by the minimum requirements of producing the specific concrete labour-power that capital requires at that particular time and place, as well as by the objective requirements of capital to maximise the realisation of profit, by the process of diversification of production. Nor, in turn, do these requirements stand on their own. The type of labour-power required depends upon the degree of technological development, which also determines the types and ranges of goods and services to be produced. The quantity of labour-power of any particular type required, also depends upon the level of social productivity, and the accumulation of capital, and so on. So, whilst, at any time, wages may rise or fall, within these limits, set by these various constraints, that is also a function of the demand and supply of labour-power, which itself is ultimately determined by the needs of capital, and the rate of accumulation.
There is a question where the answer would allow me to reach a better understanding, and that is
ReplyDeleteunder which conditions can workers exploit a capitalist, that is they extract a surplus from the capitalist?
Also it would be interesting whether those conditions are sustainable.
Yes, there are such conditions, as explained by Marx, in Capital III, Chapter 15.
ReplyDeleteIn other words, if the demand for labour-power reaches a high level, then wages, which are the market price of labour-power can exceed the value of labour-power, i.e. the value required to reproduce the worker. That still does not mean that the worker is exploiting the capitalist. It only means they are exploited less, i.e. they provide less unpaid labour. For example, if the labour required to reproduce the worker's labour power is 4 hours per day, and the worker works for 8 hours, they provide 4 hours of surplus labour. If the demand for labour-power rises, so that the market price of labour is pushed up by the normal operation of demand and supply, to be equal to 5 hours labour, the worker is now getting paid a higher price for their labour-power than its value, but they are still providing 3 hours of unpaid labour to the capitalist, and being exploited to that amount.
This illustrates Marx's point that surplus value is not the result of unequal exchange of commodities, labour-power for wages/wage goods, but is created in production, by the performance of surplus labour.
If the demand for labour-power rises, further - and the increased wage share caused by higher wages, and more workers in employment is a fundamental driver of this, because it means a sharp increase in demand for commodities for final consumption - then wages can rise even further, to such a point that they at least wipe out all of the unpaid labour, and potentially more, though capitalists would not intentionally employ workers if they thought that this was going to be the case. It can turn out to be the case, as Marx sets out in Ch. 15, because they may not be able to actually realise as profit, the surplus value produced by the workers they employ. One reason again can be that as wages rise, the price elasticity of demand means that prices of existing wage goods have to fall, to sell more.
Glyn and Sutcliffe in Britain, and others in various countries showed how such a profits squeeze arose in the 1960's and 70's. Such a situation, as Marx sets out in Ch. 15 is what constitutes an overproduction of Capital. It means wages rise to a level, where any additional capital employed cannot act as capital, i.e. cannot produce a profit. So, the total profits may actually fall, and the rate of profit falls sharply.
Such a situation is not sustainable, because it means that a) the crisis of overproduction causes firms to go bust laying off workers, b) the squeeze on profits caused by the higher wages causes firms to search out new labour-saving technologies. IN Value, price and Profit, Marx describes how such rising wages between 1849-1859, in agriculture caused a search for new agricultural equipment to replace labour. In the 1970's, it led to a new splurge of technological innovation that that introduced the microchip, and associated technologies that replaced labour, deskilled previously skilled jobs in the print industry etc, which created a "relative surplus population", so that wages fell, and profits rose. In the process, it also massively depreciated all of the existing fixed capital stock, which thereby caused the rate of profit to rise massively.
The but of Chapter 15, where Marx describes this is here:-
ReplyDelete"Over-production of capital, not of individual commodities — although over-production of capital always includes over-production of commodities — is therefore simply over-accumulation of capital. To appreciate what this over-accumulation is (its closer analysis follows later), one need only assume it to be absolute. When would over-production of capital be absolute? Overproduction which would affect not just one or another, or a few important spheres of production, but would be absolute in its full scope, hence would extend to all fields of production?
There would be absolute over-production of capital as soon as additional capital for purposes of capitalist production = 0. The purpose of capitalist production, however, is self-expansion of capital, i.e., appropriation of surplus-labour, production of surplus-value, of profit. As soon as capital would, therefore, have grown in such a ratio to the labouring population that neither the absolute working-time supplied by this population, nor the relative surplus working-time, could be expanded any further (this last would not be feasible at any rate in the case when the demand for labour were so strong that there were a tendency for wages to rise); at a point, therefore, when the increased capital produced just as much, or even less, surplus-value than it did before its increase, there would be absolute over-production of capital; i.e., the increased capital C + ΔC would produce no more, or even less, profit than capital C before its expansion by ΔC. In both cases there would be a steep and sudden fall in the general rate of profit, but this time due to a change in the composition of capital not caused by the development of the productive forces, but rather by a rise in the money-value of the variable capital (because of increased wages) and the corresponding reduction in the proportion of surplus-labour to necessary labour."
The increase in absolute surplus value can arise in two ways. Absolute surplus value arises as a result of the lengthening of the working day. So, if the normal working-day is 8 hours, and wages are equal to 4 hours labour, there is 4 hours of surplus value. If the working-day is extended to 10 hours, then surplus value rises to 6 hours, if wages remain the same. If wages rise in proportion, surplus value still rises to 5 hours. The first squeeze on this is that, increasingly workers demand higher premium rates, for any overtime worked. That means capital can still obtain an increased mass of surplus value, as a result of the additional labour performed, but at a diminishing rate.
ReplyDeleteThe second way of increasing absolute surplus value is to increase the size of the social working day, i.e. even if the individual working day remains 8 hours, if 12 million workers are employed rather than 10 million workers, the social working-day rises from 80 million hours to 96 million hours, and surplus value rises from 40 million hours to 48 million hours. The social working-day rises as a result of population growth, employment of women and children, encouragement of immigration etc.
The individual working-day has a natural limit to its extension. The social working-day can only be extended to the extent that population grows, that there are women and children to employ, or immigrants to bring into the country, peasants to free from the countryside etc. When all of these options are exhausted, the demand for labour exceeds the supply, and wages rise, and profits are squeezed.
Then capital must resort to relative surplus value. It must introduce new technologies etc. to reduce the value of wage goods, bring in cheaper foods from other countries (as with repeal of the Corn Laws). Even then profits may get squeezed. If the value of labour-power falls to 3 hours, because wage goods are cheapened, the demand for labour may still mean actual wages are higher causing real wages to rise even faster. Only when the technology reduces the demand for labour does it cause wages to fall to or below the value of labour-power, to restore a long term stable condition.
BTW, many thanks for the answer, it is rather interesting to understanding Marx's arguments, to consider both cases.
ReplyDelete«to such a point that they at least wipe out all of the unpaid labour, and potentially more, though capitalists would not intentionally employ workers if they thought that this was going to be the case.»
I guess that can happen though if it is in the interests of capitalists to liquidate their capital, that is indeed if there is an over-accumulation of capital, or at least of some types of capital: it can happen that it is better to liquidate it gradually than by just leaving it unused.
Marx cites two such potential cases.
ReplyDelete1) Where a lot of investment in fixed capital has taken place, a capitalist cannot simply stop production without losing all the investment sunk into that fixed capital. Though in such a case they would be less likely to be employing additional labour, as opposed to additional labour-saving equipment. In the 1980's, Marxist economists did work showing that as well as barriers to entry into certain industries, there are also barriers to exit, due to precisely this fact.
2) At the start of a period of general overproduction of capital, some firms, as Marx sets out in Capital III, Chapter 15, believe that the answer for them is to produce on a larger scale so as to reduce their marginal costs of production, and so undercut their competitors, so as to grab market share. So, instead of employing less labour,even though it would appear to mean producing no more, or even less surplus value, they employ more.
Another factor to consider here is that for each individual firm, it is not the amount of surplus value they produce that is decisive, but the share of surplus value as a whole they can grab. Firms do not sell their output at its exchange value (c + v + s), but at its price of production (c + v) + p, where p is the average profit. The individual price of production of any firm can be below the price of production for that industry, if its cost of production is lower than the average cost of production. Producing on a larger scale, might, therefore, reduce its cost of production, but it would be able to sell its output at the price of production, or preferably slightly below it, so as to undercut its competitors, whilst selling all its output and grabbing additional market share.
As Marx says, in Chapter 15, this is one way that the overproduction is actually made worse at the outbreak of the crisis. Those firms that can then produce at a lower cost of production grab the market share, whilst the others are driven out of business.
On a more general note, its also important to recognise Marx's point about the formation of the average rate of profit, a a result of capital moving from low to high profit areas. Marx notes that this happens, as a result of capital accumulating faster in the latter than the former, rather than via any actual absolute reduction in the former.