The author of the pamphlet describes surplus value as interest. They illustrate, here, why this continual increase in the amount of this “interest” could not keep expanding, proportionate to the capital, because it would mean that wages would disappear. But, their belief that the capitalists would attempt to do so is what leads them into the belief that wages would be progressively reduced to the bare subsistence level, with cheaper foods, such as potatoes, replacing bread and so on.
Over the last thirty years, the idea contained here can be seen to have some validity, in the policy adopted, certainly, in the US and UK, of conservative social democracy. The belief took hold that wealth, in the form of fictitious capital, of financial and property assets, could simply inflate, and this inflation would somehow magically produce additional value. But, instead, and necessarily, as asset prices inflated, yields fell, and, as attempts were made to compensate for falling yields, by raising dividends and rents, so this simply succeeded in draining even more potential money-capital away from productive investment, and, thereby, undermined the actual basis of raising the production of surplus value, from which these higher dividends and rents could be paid.
As Andy Haldane pointed out, where, in the 1970's, only about 10% of corporate profits went to dividends, today that figure is around 70%. And yet share prices have risen so much that, even on the basis of this massive rise in dividends as a share of profit, dividend yields have continued to fall. The same story applies to rental yields, and bond yields. And, in pension funds, revenues from dividend yields and bond interest eventually fell to levels whereby those funds, also under the delusion that asset price inflation represented real value creation, thought they could simply cover liabilities by selling some of these rapidly inflating assets, which, of course, had the consequence then, of undermining the capital base of the fund, and its future revenue producing capacity. Which then left those funds with multi-billion Pound black holes. As Marx points out,
“Because surplus-value and surplus labour are identical, a qualitative limit is set to the accumulation of capital, [it is determined by] the total working-day (the period in the 24 hours during which labour-power can be active), the given stage of development of the productive forces and the population, which limits the total number of working-days that can be utilised simultaneously at a given time. If, on the contrary, surplus yield is understood in the abstract form of interest, that is, as the proportion in which capital increases itself by means of a mythical “sleight of hand”, then the limit is purely quantitative and it is absolutely impossible to see why capital does not daily add to itself interest as capital every morning, thus creating interest on interest in infinite progression.” (Note * p 241)
As the author of the pamphlet puts it,
““Suppose … there is no surplus labour, consequently, nothing that can be allowed to accumulate as capital” (op. cit., p. 4).
“… the possessors of the surplus produce, or capital…” (loc. cit., p. 4).
“… the natural and necessary consequence of an increased capital, [is] its decreasing value…” (op. cit., pp. 21-22).” (p 240)
Or as, again, Marx puts it,
“If the value of capital, that is, the interest of capital, i.e., the surplus labour which it commands, which it appropriates, did not decrease when the amount of capital increases, the [accumulation of] interest from interest would follow in geometrical progression, and just as, calculated in money (see Price), this presupposes an impossible accumulation (rate of accumulation), so, reduced to its real element—labour, it would swallow up not only the surplus labour, but also the necessary labour as “being due” to capital.” (p 240)
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