Theories of Surplus Value, Part III, Chapter 21 - Part 38

Hodgskin seeks to prove that capital is not productive. 

“Ricardo does not assert that capital is productive of value. It only adds its own value to the product, and its own value depends on the labour-time required for its reproduction. It only has value as accumulated labour (or rather, materialised labour) and it only adds this—its value—to the product in which it is embodied. It is true that he is inconsistent when discussing the general rate of profit. But this is precisely the contradiction which his opponents attacked.” (p 263-4) 

And, here is shown the importance of making the distinction between the value of commodities (as elements of constant and variable-capital) and the value of capital. The former values are fixed (assuming no change in social productivity), but the latter is not, because it fluctuates, as the rate of profit rises or falls. Ricardo fails to make this distinction between the commodities that comprise the elements of capital, and capital itself. That is partly because he views capitalist categories as natural and eternal, so that means of production are treated as capital, whatever the mode of production. 

As far as Ricardo is concerned, the means of production, which for Marx are termed constant capital, only have the value of any other commodity, as determined by the labour-time required for their production. This value is preserved by concrete labour, in the production process, and, thereby, transferred to the value of the final output. But, the commodities that comprise the variable-capital never enter into the production process. Those commodities, the wage goods consumed by the workers, simply go into the workers' consumption, and, thereby, effect their reproduction. As the use value of these commodities never enters the production process, nor can it be a part of the final product, and nor can its value be transferred to the final product. 

The use value, and the value of the commodities that comprise the variable-capital is destroyed as soon as they are consumed by the workers. Nor do these commodities that comprise the variable-capital, have any more magical power than those that comprise the constant capital to produce additional value. It is not in the exchange of these commodities for the commodity labour-power that the source of the expansion of value resides. This exchange of commodities – wage goods for labour-power – is an exchange of equal values, as much as the exchange of any other commodities. And, if equal values exchange, its clear that no additional value, surplus value, can arise from this exchange. 

What is different, in relation to the variable-capital, as opposed to the constant capital, is this fact that its value is destroyed at the point of its consumption (more correctly it is metamorphosed into the value of the labour-power of the worker), rather than being transferred to the value of the end product. Nor is the value of the labour-power obtained in exchange for these wage goods transferred. If, for example, the workers paid these wages in exchange for their labour-power, are unable to work – for example, because the firm is unable to get raw materials – they create no new value. The new value the workers create by their labour has no relation whatsoever to the value of their labour-power, or the wages paid to them. It is not their labour-power, which creates new value, but their labour, i.e. their activity in the labour process.  Indeed, its precisely because of that fact that they can produce surplus value. The value of the variable-capital/wages/labour-power is not somehow transferred to the value of the end product, with a surplus value produced on top of it. The value created by labour, in the labour process, is entirely new value, unrelated to the value of labour-power. The value of constant capital is automatically transferred to, and thereby reproduced in, the value of the end product, but the value of the variable-capital is only reproduced, in the value of the end product, if the new value created by labour is enough to do so. It is entirely dependent, therefore, on the degree of social productivity, which must be such that labour can produce more new value, in a day, than is required to reproduce the value of the labour-power that undertakes it. 

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Theories of Surplus Value, Part III, Chapter 21 - Part 37

As Marx noted earlier, in this chapter, 

"Labour-time, even if exchange-value is eliminated, always remains the creative substance of wealth and the measure of the cost of its production. But free time, disposable time, is wealth itself, partly for the enjoyment of the product, partly for free activity which—unlike labour—is not dominated by the pressure of an extraneous purpose which must be fulfilled, and the fulfilment of which is regarded as a natural necessity or a social duty, according to one’s inclination. 

It is self-evident that if labour-time is reduced to a normal length and, furthermore, labour is no longer performed for someone else, but for myself, and, at the same time, the social contradictions between master and men, etc., being abolished, it acquires a quite different, a free character, it becomes real social labour, and finally the basis of disposable time—the labour of a man who has also disposable time, must be of a much higher quality than that of the beast of burden.” 

It is this social relation between wage labour and capital that establishes the value of capital, as the average rate of profit, on the basis of the cost of putting that labour to work (c + v), as against the value that labour creates (v + s), so that the extent of the value of capital is equal to its self-expansion s/(c + v), or the rate of profit. 

For the  industrial capitalist (which includes both productive and commercial capitalists), this relation also exists in relation to the money-lending capitalist, and the owner of landed property. Just as the labourer is only allowed to access the means of production if they provide unpaid labour, so the industrial capitalist, who does not own money-capital of their own, (or who needs to borrow more of it) is only allowed to access it, by the money-lending capitalist, if they, in turn, provide unpaid labour (surplus value) to them. The same is true of the industrial capitalist who needs to use land in the hands of the owners of landed property. If the money-lender lends €100 to the industrial capitalist, who buys a machine with it, on which they make €10 profit, that latter repays the €100 loan, plus an amount of interest. The interest, say €5, represents an amount of unpaid labour, surplus value. 

The money-lender got back, in the €100 the exact same amount of value they had handed to the industrial capitalist, but they have also obtained an additional €5, whilst exchanging nothing for it, in return. It is the equivalent of €5 of unpaid labour. The same is true of rent, where the owner of landed property, obtains a rent, equal to the surplus profit of the capitalist farmer, whilst giving no equal value in exchange for it. In examining the productiveness of capital, therefore, it is important to keep in mind this distinction between the commodities that comprise the elements of capital, as opposed to capital itself, as self-expanding value, as the social relation with wage-labour. 

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Northern Soul Classics - Help Me Get Myself Back Together Again - The Spellbinders

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Theories of Surplus Value, Part III, Chapter 21 - Part 36

In the same way that capital does not buy a specific type of labour-power, say the labour-power of a lathe operator, for its specific use-value, of turning metal, but for its use value, as abstract labour, of creating new value, and thereby surplus value, so the capitalist does not buy a lathe, for its use value as a lathe to assist the lathe operator in turning metal, but for its capacity, as capital to produce the average rate of profit. It is the demand and supply for this use value, which determines its market price – the rate of interest. In the same way, land, which has no value, because it also is not the product of labour, has a price for the use value it provides, which is determined by the demand and supply for that use value. Where land enables a capitalist farmer to produce a surplus profit, the demand for land rises, enabling landowners to charge a rent for the land, equal to this surplus profit. 

The value of the machine, as a machine, however, is simply €100. If I sell the machine as a machine, i.e. as a commodity, I can only obtain this value, equal to the labour-time required for its reproduction – assuming prices equal exchange values. The commodities that comprise the elements of constant and variable-capital have no magical property to expand in value, and, those same commodities, in previous modes of production, acted only as means of production, not capital. It is nothing about these commodities, as means of production, as constant and variable-capital that enables them to produce a profit, but only the social relation that is created between them, and their use as capital, and wage labour. In the same way, it is nothing about wage-labour, as wage labour, that enables it to produce new value, and thereby to also produce a surplus value. That is a property of labour itself, irrespective of whether it is wage-labour, the labour of members of a communist society, of the primitive commune, or the labour of members of a peasant household. All that changes in these different societies, is the form in which this value, and of the surplus value manifests itself. 

As Marx puts it, 

“In so far as it has the specifically social character of wage-labour, it is not value-creating.”,

He continues, 

“... and the specific social conditions, under which this labour-power is sold, have nothing to do with labour as a general agent in production... And, in general, when we establish labour as value-creating, we do not consider it in its concrete form as a condition of production, but in its social delimitation which differs from that of wage-labour.” 

(Marx – Capital III, Chapter 48) 

It is that social relation that ensures that the labourer, who can only work if they are allowed access to the means of production, in the possession of the capitalist, is only allowed that access if they provide free labour to the capitalist in addition to the paid labour. Similarly, the worker can only live if they have access to the means of consumption (wage goods), which are also in the possession of the capitalists, as they appropriate them, as soon as they are produced by the worker. So, again, the worker only has access if they supply labour-power to the capitalist as a commodity, at its value, and which the capitalist will only buy if the worker also then provides additional unpaid labour to the capitalist. This relation does not create surplus value, other than in the sense that it ensures that the labourers must perform surplus labour, whereas previously it was up to them to choose to do so or not. The fact that a labourer performs surplus labour, in excess of that required to reproduce their labour-power, is what produces surplus value, whether that labourer is an independent producer, or a wage labourer. The specific social relation merely determines who has control over this surplus labour, and the form it assumes. The independent peasant producer, produces a surplus value, and it is appropriated from them as feudal rent by the landlord, as Labour Rent, Rent in Kind, or Money Rent, though some of these producers may be able to retain some of the surplus value they produce, which is used for their accumulation. The wage worker produces new value, and a surplus value, and this surplus value is appropriated by the capitalist as profit, whilst further parts are appropriated as rent, interest and taxes. The surplus value produced by labourers in a primitive commune or a communist society takes the form of a surplus product, immediately under the control of the commune itself, and available to enable either accumulation of means of production, an increase in consumption, or an increase in leisure-time. 

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Theories of Surplus Value, Part III, Chapter 21 - Part 35

3. Hodgskin 

Marx examines the work of Hodgskin, contained in four lectures at the London Mechanics Institute, along with an anonymous pamphlet that was also produced by Hodgskin - Labour Defended against the Claims of Capital; or, the Unproductiveness of Capital Proved, By a Labourer, London, 1825. (With reference to the Present Combinations amongst Journeymen.) 

“Thomas Hodgskin, Popular Political Economy. Four Lectures delivered at the London Mechanics’ Institution, London, 1827. 

The anonymous first work is also by Hodgskin. Whereas the pamphlets mentioned previously and a series of similar ones have disappeared without trace, these writings, especially the first one, made a considerable stir and are still regarded as belonging to the most important works of English political economy (see John Lalor, Money and Morals, London, 1852).” (p 263) 

[a) The Thesis of the Unproductiveness of Capital as a Necessary Conclusion from Ricardo’s Theory] 

It is necessary to distinguish between “capital” and the commodities that comprise the elements of capital. A building, a machine, a quantity of raw material are all commodities that can comprise elements of constant capital. But, in themselves, they are not capital. They are only commodities. When we speak of the value of constant capital, what we are actually referring to is not the value of this constant capital as capital – because capital itself is a social relation, not a thing, and has no value, because it is not the product of labour – but as commodities. The same applies to those commodities – wage goods – that comprise the variable-capital.  As Marx sets out, in Capital II, when we talk about "buying constant capital" this is just a shorthand for saying buying the commodities that comprise the elements of constant capital.  It does not mean buying them as capital.

Capital, as capital, as a social relation, has value only in the sense that, via this social relation with wage labour, it is able to produce profit. This ability to produce profit, i.e. to produce the average rate of profit, as commodities sell at prices of production, is the use value of capital. It is this use value of capital that is sold as a commodity, whose price is the rate of interest. The value of capital, as capital, i.e. the use value of it as capital, is not the value of the commodities that comprise it, but the average rate of profit. If the average rate of profit is 10%, then the value of a €100 machine, as capital, rather than as a commodity, is €10, i.e. the amount of profit that this machine, used as capital can produce. The use value of the machine, as capital, as opposed to its use value as a machine/commodity, is its capacity to produce €10 of profit, and it is this latter use value that is paid for, when capital is bought and sold as a commodity. 

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Deselect The Reactionary 26

Last week, as Jeremy Corbyn continued his glacial slide towards accepting the reality that, in order to survive, Labour must become a clear anti-Brexit party, 26 Labour MP's sent him a letter arguing for him to do the opposite. Those 26 MP's are:

Sir Kevin Barron Sarah Champion Julie Cooper Rosie Cooper Jon Cruddas Gloria De Piero Jim Fitzpatrick Rt.Hon. Caroline Flint Yvonne Fovargue Mary Glindon Mike Hill Dan Jarvis Stephen Kinnock

Justin Madders John Mann Jim McMahon Grahame Morris Lisa Nandy Melanie Onn Stephanie Peacock Jo Platt Dennis Skinner Laura Smith Gareth Snell Ruth Smeeth Emma Lewell Buck

Many on this list, like John Mann, are well known right-wingers. Others like Stephen Kinnock, and Caroline Flint are Blair-rights. Others like Dennis Skinner are part of what composed the Bennite Left, that was always compromised by its adherence to reactionary nationalist ideas that has its roots in the reactionary Stalinist concept of “Socialism In One Country”, developed by Stalin in the 1920's. For some, therefore, like Skinner, who have an ideological commitment to such ideas, at least there is some element of principle in their actions, even if that principle is formulated on the basis of a fundamentally flawed, and reactionary ideology. 

But, a look at the list shows that many of these MP's are motivated by a far less noble idea. It is the idea that they should hold on to their seats at all costs, whether that cost be an abandonment of any kind of advocacy of progressive principles, and a capitulation to bigotry, or abandonment of the prospects for other Labour MP's to win their seats, or for Labour to win a parliamentary majority. In either case, the reality is that these 26 MP's, on the most important class battle of our generation, over Brexit, and a life and death struggle between progressive internationalism and reactionary nationalism, have come down on the wrong side of the barricades. Their action on this decisive issue of the day is reactionary, and Labour members in their constituencies, the vast majority of whom oppose Brexit should act accordingly, and begin to deselect them as soon as possible. 

In their letter, they write saying that they are responding to the results of the local and EU elections, and the Peterborough by-election, but everything in their letter shows they have totally failed to learn the lessons of those elections. They say that, in 2017, Labour MP's were elected in both strongly Leave, and strongly Remain voting seats. That is true, but all of the analysis done since then shows that whether in strongly Remain or in strongly Leave voting constituencies, the same pattern is observed, that Labour voters voted by a clear majority for Remain. Why would any sane Labour MP, in a Leave voting constituency, base their decisions on what Tory, BNP, UKIP or other right-wing voters did in their constituency, rather than on what a majority of Labour voters in those constituencies did? Even in strongly Leave voting constituencies, more than 60% of Labour voters, voted to Remain, with only 40% voting Leave. Again, why would any sane Labour MP, in such a constituency act to piss off the 60% of Labour voters in their constituency that voted Remain, in order to appease the 40% that voted Leave, let alone to appease all of the Tory and UKIP voters? Such a strategy is total madness. It seems to be based on the idea that the Remain supporting Labour voters will be forced to still vote Labour, even if Labour pursues a reactionary Brexit policy, because they will have nowhere else to go. But, the local and Euro-elections, and, in part, the Peterborough by-election showed that is not true. 

In the local elections, and in the Euro-elections, 60% of Labour members, let alone Labour voters, abandoned the party in order to vote, Liberal, Green, SNP or Plaid. In Peterborough, with the Liberals and Greens starting from an impossible position, Labour managed to win, but still suffered a massive drain of its votes to the Liberals. Labour managed to win only because the hard Brexit vote was divided between Farage's Brexit Company and the Tories. With Boris Johnson ensconced as Prime Minister, and pursuing a hard No Deal Brexit, that situation will cease to exist. After Johnson becomes Prime Minister, another Peterborough would see the Tories win by a clear margin. 

The reactionary 26, in their letter say that the 2017 position of “respecting” the Referendum result, and renegotiating the withdrawal agreement is the only way of representing the national interest. But that is a fantasy that everything since 2016 has exposed. Firstly, Labour did not gain support in 2017 because of its stance of “respecting” the referendum result. It won support because on the one hand, a large number of younger voters saw Corbynism as a radical new movement in contrast to the dominance of Blairism in the previous period. But, part of that new radicalism was itself based upon a rejection of the referendum result, and of the reactionary nationalism it represented. Nearly all of those new young radicalised elements recognised that Labour's position of “constructive ambiguity” over Brexit was intended to be a fudge, and saw it as the best means of rallying the greatest number of anti-Tory votes against a hard Brexit. 

All of those young Labour voters were actually more mature than Labour MP's, who, in the following period, have turned that fudge into a hard pro-Brexit principle, and thereby increasingly separated themselves from 90% of Labour Party members, and around 80% of Labour voters. The local and EU elections showed that just as they came to Labour in 2017, so they are now being repulsed by Labour's continued adherence to Brexit, and they are flocking away to the Liberals, Greens, SNP, Plaid etc. It threatens to destroy the Labour Party. All of the evidence shows that for every Leave supporting voter, the pro-Brexit stance retains, three Remain supporting Labour voters are lost to these other parties. 

They refer to the losses by Labour in the local elections, and Leave voting constituencies, but they fail to look at the reason why Labour suffered those losses, seeing only a superficial relation between Labour losses, and Brexit Party gains. In fact, of course, in the local elections, the Brexit party did not stand, and UKIP was effectively wiped off the map. Nor did the absence of the Brexit Party and demise of UKIP benefit the Tories, who lost 1300 seats. The clear beneficiaries of the local elections were the Remain supporting parties such as the Liberals, Greens, SNP and Plaid. Labour did not lose seats in the local elections because it was too committed to Remain, but because it was too committed to Leave! Even in seats where Remain supporting parties did not actually win the seat, the fact is that the reason Labour lost them, was that Remain supporting parties were able to pick up sufficient votes to prevent Labour winning. That is why we saw, Labour actually lose some seats to the Tories in those elections. 

Overall, in the local elections, and in the EU parliamentary elections the vote for Brexit supporting parties fell notably, and the vote for Remain supporting parties rose sharply, now showing a clear majority of voters backing Remain rather than Leave. 

They refer to Peterborough and say that it shows what would happen in similar Labour-Tory marginals, many of which are Leave supporting seats. They point to the 17% point drop (the actual % rather than points drop is even more dramatic) in Labour's vote share. But, again they fail to identify that this 17% point drop was not a switch from Labour to the Brexit Party (which merely picked up the former UKIP vote plus a chunk of the Tory vote), but was a direct switch from Labour to the Liberals and Greens! Labour lost this massive share of its vote, precisely because of its pro-Brexit stance, even in a seat where the Liberals had no chance of winning. As stated earlier, Labour only narrowly won, because the hard Brexit vote was split between the Tories and Brexit party. As soon as Johnson swings the Tories behind a hard Brexit position, he will recover all of those hard Brexit votes, in which case, in Peterborough, it would mean that Labour would be trounced by the Tories. Indeed, with the Liberals rapidly rising in the polls, if Peterborough were to be re-run, the sensible option for all Remain voters in the constituency would now probably be to vote Liberal, and on the basis of the last poll, and on the basis of the swing towards Remain and away from Leave nationally, as seen in the local elections and EU elections, that would probably result in a Liberal win in Peterborough, as the Labour vote collapses. 

Certainly, in many other marginals, where the Liberals position is more hopeful than it was in Peterborough that will be the case. Moreover, if Johnson continues to pursue his No Deal Brexit stance, and with many Remain supporting Tory MP's already being threatened with deselection, there is every possibility, in the next few months, that around 100-150 Tory MP's could defect to the Liberals, as the best way of retaining their seats. Once that happens, a similar number of Blair-right Labour MP's will be likely to join them. A Liberal Party with around 300 MP's, plus the support of the SNP and Plaid, in parliament, would have a majority, and be able to put forward its own Leader as Prime Minister, thereby being able to stop Brexit in its tracks. But, more than that. 

A similar thing occurred in the 1930's with the National Government. Once formed it was able to utilise the advantages of the first past the post system to win crushing electoral majorities. As soon as such a National Liberal government is formed, the first past the post system will again provide it with such advantages. Where now the Liberals face the problem of winning individual seats because of being seen as no-hopers, it would instead be, certainly as far as Remain supporting voters are concerned, the rump Labour and Tory parties that would be in that position. The Tory Right would have succeeded in selecting Johnson as Prime Minister so as to push through a hard Brexit, only to see the Tories decimated as an electoral force, reduced to a right-wing rump, whilst the reactionary pro-Brexit wing of the Labour Party would have achieved a similar result. With the vast majority of Labour voters backing Remain, Labour could be reduced, in any future General Election, under those conditions, to the same kind of 6-10 seats that the Liberals won in 2015. It would put Labour back to the kind of position it was in in 1906 when it was formed. 

The whole of the letter from the reactionary 26 is premised on the idea that the interests of Leavers should be privileged over the interests of Remainers, even though there is every indication that the latter now form a clear majority of the electorate, and even though we know that they form a clear majority of Labour voters. That is short sighted even in terms of electoral strategy, but it is unprincipled politically, because it subordinates political principle to electoral expediency. Socialists cannot limit their opposition to reactionary policies simply because to do so, might result in the far right whipping up further fear and loathing. That is political cowardice of the first order, but it is also idiotic politics, because appeasing the fears and bigotry upon which the far right base themselves only legitimises the arguments of the far right itself, it legitimises the very bigotry that it is the job of socialists, and even consistent democrats, to oppose, and thereby only encourages a growth of that bigotry, and encourages the far right to press further forward. 

In Germany in the 1930's, when the German socialists and communists attempted to combat the nationalism of the Nazis by themselves becoming more ardent nationalists, it acted merely to legitimise the nationalist ideas that the Nazis were promoting. But, the voters then, having had those ideas legitimised, by the very forces that should have been confronting them, did the rational thing, when it come to voting, they voted for the authentic voice of that reactionary nationalism, not its pale substitute. They voted for the Nazis, and no small number of the former German Communist party members, followed the logical trajectory too, and donned the brown shirt. Today, already we see supposed figures of the Left joining the red-brown coalition that is the Brexit Party. 

The letter put forward by the reactionary 26 is full of such nationalistic nonsense, talking about the national interest, and a Brexit for the many not the few, as though any such fanciful deal was possible. Suggesting that Labour could push through any such Workers Brexit, after Britain has left the EU is even more fanciful. Britain outside the EU will be a much worse place for workers, particularly workers in Britain. Even if such a situation were to result in a Labour government, rather than the far more likely result of a further lurch to the right, and a right-wing authoritarian government under Johnson, that government would be constrained in its bunker from day one. It would have to deal with a growing economic crisis resulting from Brexit, and the increasing attacks on workers pay, conditions and rights that would go with it. It would be faced with simply trying to firefight against the falls in workers pay and conditions, rather than any ambition to create better conditions than currently exist. And, constrained within the boundaries of a relatively small, and declining UK economy, it would necessarily fail in that task. It would again undermine the concept of socialism in the eyes of workers, setting the movement back decades, once again. 

If we want to win the votes of Labour Leave voters the answer is not to appease their nationalistic ideas, but to build upon the progressive beliefs they hold. The truth is that these voters did not acquire their reactionary views overnight, with the EU referendum in 2016. This cohort of Labour voters have always had reactionary and bigoted views on a whole range of subjects from nationalism and immigration, to feminism, homophobia, through to climate change. Those reactionary and bigoted views did not stop them voting Labour in the past, and nor will they in the future, provided Labour provides them with radical and progressive policies in relation to jobs, wages, the NHS, social care, education and industrial democracy. But none of those radical policies are feasible on the basis of Brexit and of national solutions. They are only credible as solutions implemented on an EU wide basis, struggled for alongside our fellow EU workers, trades unions, and socialist parties. 

Theories of Surplus Value, Part III, Chapter 21 - Part 34

Ravenstone's asceticism is reflected in his statement, 

““If each man’s labour were but enough to procure his own food, there could be no property, and no part of a people’s industry could be turned away to work for the wants of the imagination” (loc. cit., pp. 14-15).” (p 262) 

This is also consistent with the view put forward by Thomas Hobbes that each man should only own sufficient property that they could themselves cultivate, and whose product they could consume. And, Ravenstone continues in the same vein, 

““In every [subsequent] stage of society, as increased numbers and better contrivances add to each man’s power of production, the number of those who labour is gradually diminished… Property grows from the improvement of the means of production; its sole business is the encouragement of idleness. When each man’s labour is barely sufficient for his own subsistence, as there can be no property, there will be no idle man. When one man’s labour can maintain five, there will be four idle men for one employed in production: in no other way can the produce be consumed… the object of society is to magnify the idle at the expense of the industrious, to create power out of plenty” (loc. cit., p. 11).” (p 262) 

Whilst Ravenstone is forced to acknowledge the progressive historical role that capital plays in utilising this surplus product to create fixed capital, develop science, and establish global trade, he does not connect this to its compulsion to do these things as a result of competition. Rather, it comes down to utilising the surplus product for these purposes because otherwise it would mean an increased supply of necessaries having to be handed back to workers. The concept remains within the confines of a view of capital as being driven by the subjective desires of the capitalist, for consumption, rather than the objective requirement for accumulation. 

Ravenstone explains rent in a similar way that, as productivity rises, the proportion of surplus product rises, which means that rent rises. As Marx says, this is a correct explanation for the increase in surplus value, in general, but it is not a sufficient explanation of rent, because it does not explain why this larger surplus product lands in the pocket of the landlord, as rent, rather than the capitalist farmer as profit. 

Marx notes of Ravenstone's book, 

“An original piece of work. Its real subject is the modern system of national debt, as its title indicates.” (p 262) 

In respect of that subject, Marx quotes the following section from it, which might (with the appropriate recognition of the times, in respect to the use of words) equally be applied to the last thirty years of dominance of conservative ideas that promoted financial and property speculation above the interests of industry and production, and attempted to rescue those that benefited from that process, when it inevitably resulted in a financial and property market crash, by using the state and central banks to use money printing to artificially reflate asset prices, thereby creating the inevitability of an even greater busting of those asset price bubbles, as I have described in my book, Marx and Engels' Theories of Crisis: Understanding the Coming Storm. 

““…the history of the last thirty years […] has achieved no higher adventure than the turning of a few Jews into gentlemen, and a few blockheads into political economists” (op. cit., pp. 66-67). 

The funding system has one beneficial consequence although “the ancient gentry of the land” are robbed “of a large portion of their property” in order “to transfer it to these new fangled hidalgos as a reward for their skill in the arts of fraud and peculation… If it encourage fraud and meanness; if it clothe quackery and pretension in the garb of wisdom; if it turn a whole people into a nation of jobbers … if it break down all the prejudices of rank and birth to render money the only distinction among men … it destroys the perpetuity of property…” (op. cit., pp. 51-52).” (p 263) 

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Brexit, Trade and Tariffs

Boris Johnson is renowned for being too lazy to bother getting to grips with details. For a populist politician, like Johnson or Trump, details are just an inconvenience that get in the way of their promotion of alternative facts, of easy solutions that they can promote to a gullible electorate, and, when reality then does come along to confront the fallacy of their easy solutions and alternative facts, they simply find some scapegoat for their own failures, they deny the reality for as long as possible, and proclaim that the messengers of that reality are merely purveyors of fake news. Eventually, as appears to be happening to another right-wing populist, currently, Erdogan in Turkey, the reality becomes too undeniable, but, in the meantime, such populists can create considerable chaos and disorder. 

Johnson, has understandably avoided undertaking any rigorous interrogation of his ideas, precisely because of his inability to analyse details, or to incorporate them into his development of policy. His policies are not, in fact, policies at all, but nothing more than a fanciful wish list, like a child drawing up a list of gifts they want from Santa. That indeed, was the nature of the wish list that the Brexiters drew up in relation to the EU Referendum. So, we were told that getting a Withdrawal Deal with the EU would be the easiest thing in the world, and the EU would be so desperate to do a deal with the UK that this easily achieved deal would give Britain benefits from the EU, whilst being outside it that even EU members did not have. Of course, this “have cake and eat it” fantasy collapsed on first contact with reality. Yet, it has not stopped the Brexiters from continuing to push it forward, explaining that reality did not conform to their demands only because Theresa May was not a strong enough leader to implement it. Unfortunately, that line has been facilitated by Labour's leadership too, because they have pursued their own version of the “have cake and eat it” fantasy, ridiculously claiming that Jeremy Corbyn could negotiate such a Unicorn deal, where the Tories cannot. 

Illustrating Johnson's lack of grasp on details, he has repeatedly talked about Britain negotiating solutions to the Irish Backstop dilemma during the implementation period. However, he did not even seem to understand that the backstop is part of the Withdrawal Agreement, and that if he scraps the Withdrawal Agreement, and goes for a No Deal Brexit, there is no implementation period. It would mean that Britain would leave with No Deal, and from the start that would mean that it would go on to WTO terms with the EU. Johnson, and other Brexiteers have also suggested that under Article 24 of GATT, Britain could avoid that, by negotiating to have no tariffs between the EU and UK, as currently exists with Britain's membership of the EU. But, Article 24 only applies, where a trade deal has already been put in place. The whole point about a No Deal Brexit, is that no such deal would be in place! Even arch Brexiteer Liam Fox, has pointed this out to Johnson and co. 

The response of Johnson and his camp is that the EU would want to negotiate such a deal, because it is in their interests to do so. That is just a continuation of the line that the EU would be desperate to do a deal with the UK that they have pushed for the last three years, and which reality has repeatedly shown to be a fantasy. Speaking on “Newsnight”, for example, Bernard Jenkin, when confronted with this reality argued two diametrically opposed positions simultaneously. He began by arguing that in a No Deal situation, the EU would not want to impose tariffs, because if it did, the UK would impose corresponding tariffs on EU exports to Britain. Because the EU sells much more stuff to Britain than Britain sells to the EU, Jenkin argued, it would hit the EU harder if such tariffs were introduced. 

When it was pointed out that, for example, the UK car industry would be badly hit, in that case, he then argued that far from Britain imposing these tariffs, it could scrap tariffs altogether, or reduce them substantially, so as to cheapen imports. But, which is it to be, tariffs on imports to retaliate against the EU imposing tariffs on UK exports, or no tariffs so as to have cheaper imports? It can't be both at the same time, because under WTO terms, unless you have specific trade deals in place, you have to apply the same tariffs on all imports wherever they come from. The whole point about No Deal, is that no such trade deal would be in place. It is likely to take 7-10 years to negotiate any such trade deal, and if the Brexiters continue to insist that they can renege on Britain's obligation to pay the £39 billion it owes for its existing commitments to the EU, no such trade deal is ever likely to be even offered, by the EU. 

But, the argument that the EU would not want to impose tariffs on imports from the UK is again total fantasy. Without a deal, the EU would have to treat the UK as with any other country it does not have a trade deal with. So, it would have to impose WTO tariffs, which for some commodities would be devastating for the UK economy. Its why many car companies are already getting ready to shut up shop in the UK, and to move their operations to the EU. It would also be devastating for the UK farming and fishing industry. The Brexiter argument is that, because the EU sells much more to Britain than Britain sells to the EU, the EU will not want to impose tariffs, because, the UK would respond with tariffs of its own, and that would hit EU exports to Britain. This is like comparing the sales of Tesco to the local shopkeeper, with the shopkeeper's sales to Tesco. Of course, Tesco's sales to the local shopkeeper will be much bigger than vice versa, because Tesco is much bigger, and the same is true with the EU economy and UK economy. 

EU GDP is $18.5 trillion. UK GDP is $2.6 trillion. So, given that the EU economy is more than seven times the size of the UK economy, its fairly obvious that it will sell more to the UK than the UK sells to the EU. In 2017, UK exports to the EU were $274 billion, which amounts to 44% of all UK exports. By contrast, EU exports to the UK were $341 billion, accounting for 53% of all UK imports. Similarly, if we take the EU as a whole, its exports to the UK account for only 18% of its total exports, a fraction of the proportion of UK exports going to the EU. If trade between the other 27 members of the EU is included, in its total trade, then only 6% of its exports go to the UK. 

So, it is ridiculous, as the Brexiters do, to suggest that the EU is more dependent on the UK than the UK is on the EU. Even if we take the EU's two largest economies, France and Germany, the claim that the businesses in these countries would demand a trade deal does not stack up. Firstly, they have not done so yet, as the Brexiters continually insisted they would. German exports to the UK account for just 6.6% of total German exports, whilst France's exports to the UK amount to only 6.7% of its total exports. The truth is that the UK and its economy just isn't that significant any more, however, much the Brexiters go on about it being the fifth largest economy – now at least only sixth even since the Brexit farrago began, and rapidly dropping down the rankings – because the size of national economies is pretty irrelevant in a world dominated by large economic and trading blocs, like the EU, NAFTA, Mercosur, ASEAN, and so on, and where only the very largest countries like the US, and China can compete on an equal footing. 

Exports to the UK from Germany account for just 2.6% of its GDP, 1.4% for France, and 2.3% for the EU as a whole. The reality is that, if the UK imposes tariffs on EU exports, the main casualties of that will not be the EU, but will be UK businesses and consumers. That is what is being seen even in the huge US economy, as a result of Trump's tariffs on Chinese and EU imports. The effect of Trump's 25% tariff on imported steel and aluminium was not to prevent those commodities being imported into the US, it was simply to increase the price of steel and aluminium to US users of steel and aluminium by 25%. That meant that the cost of steel and aluminium for US producers of cars, aeroplanes, domestic consumer products and so on went up by 25%, which in turn raises the cost of production of all these end products. 

A rise in the price of cars, washing machines and so on affects US consumers of those products, most of whom are workers. It thereby, increases the value of labour-power, reducing the rate of surplus value, and squeezing US profits. Because steel and aluminium as raw materials for production, form part of the constant capital of producers, a rise in these costs, means that the rate of profit itself is reduced. But, the US economy has huge advantages that the UK economy does not have, in this respect. It is a $19.4 trillion economy. For many commodities, it has the potential for import substitution over a period of time. If, as a result of tariffs, imported Chinese T-shirts, or toys become more expensive than they can be produced in the US, then US producers will step in to fill that gap. It will still mean a loss to the US economy, because where US consumers previously paid $1 for a T-shirt etc., they would now pay $1.25 for a US made T-shirt, and that will impact US profits, and rate of profit as described above. Similarly, where a US consumer bought an EU produced car for $20,000, they would now pay $25,000 for an equivalent US produced car. Again, it means a hit to the US economy, compared to where there were no such tariffs. The argument that this is counterbalanced by the fact that the US would at the same time provide jobs for workers making T-shirts and cars, is also false. To employ those workers, requires capital. That capital could have been employed in other more profitable ways. For example, it might have employed them producing computer games, and those computer games could have been sold to China or the EU, and obtained a greater quantity of T-shirts and cars in exchange for them, than that amount of capital can produce in the US. 

If the US, with all of its advantages, suffers as a result of imposing tariffs, imagine how much more damage the imposition of tariffs by the UK would impose on its economy, and its consumers and workers. If the UK introduced tariffs on EU produced cars, for example, it would not stop British consumers buying BMWs, Renaults, Citroens, Fiats, Skodas etc. It would simply mean they paid more for them, due to the imposition of the tariffs. It would mean the cost of living of British workers would rise, and ultimately that would mean that UK wages would have to rise, thereby squeezing UK profits, and the rate of profit. It would mean less profit was available for investment, slowing UK growth, and causing unemployment to rise. If, as it would, the EU imposed tariffs on UK produced cars, then EU consumers would have every reason to buy the equivalent EU produced car instead, which would be cheaper by the amount of the tariff. The EU could easily take up this slack given the much larger size of its economy. It would mean that UK car makers would lose a sizeable chunk of their main market in the EU. The consequence is obvious, that UK car makers, as they are already doing, would simply move their production to the EU, so that they no longer faced such tariffs on the EU sales. With more production, thereby, moving out of the UK to the EU, the trade gap between the UK and EU would widen in favour of the EU, causing an even greater drain of capital from the UK to EU, to bridge the deficit. 

The Brexiters have simply built their desire for Brexit on a fantasy that ignores economic realities, and instead puts forward merely their desire for the world to conform to that fantasy even as at every step reality confounds it. 

Theories of Surplus Value, Part III, Chapter 21 - Part 33

Workers do not become immiserated by this process, quite the contrary, but their exploitation, in the Marxist sense, of the amount of unpaid labour they must provide, continually rises, and, for the reasons Marx sets out, this exploitation is all the greater in those developed capitalist economies where social productivity is highest. Again, this is the exact opposite to the arguments put forward by the Sismondists, Stalinists and Third Worldists, who talk about super-exploitation, in the least developed economies, and on the basis of it, justify their hostility to the very capitalist development that would be the basis of lifting the living standards of workers in these economies. 

When Marx talks about poverty, in this context, he does not mean lack of income or standard of living, i.e. affluence. The terms wealth and poverty refer to stock not flows. What Marx means by wealth is a large stock of assets, in particular of capital. Poverty is its opposite. Labourers are poor not as a result of low wages, but because of non-ownership of capital, or other assets. A worker may be very affluent, in terms of a high money wage, and the range of wage goods they can buy with it that constitutes their standard of living. But, that does not make them rich, because they do not own capital, and, in such a developed economy, they are unlikely to be able to acquire capital on a sufficient scale for it to be able to function effectively as capital. Their affluence only exists so long as they have paid employment, and their paid employment is conditional on them providing large amounts of unpaid labour to capital. 

A small peasant farmer in China may have a much lower standard of living than the above affluent worker. Where the worker might work an 8 hour day, the peasant farmer may work a 12 hour day. But, the worker may only work 30 minutes of necessary labour, providing capital with 7½ hours of surplus labour, whilst the peasant farmer might work for 11 hours of necessary labour, just to sustain their meagre standard of living, undertaking just 1 hour of surplus labour, which they use to try to expand their own production. But, the peasant farmer has wealth, where the affluent worker does not. They can increase their wealth by the slow accumulation of means of production, from their 1 hour of surplus labour, each day, whereas the 7½ hours of surplus labour of the affluent worker is directly appropriated by capital, and increasingly confronts them itself as an alien force, requiring even more unpaid labour from them, under constant threat of removing the paid employment from them. The small peasant farmer, unless confronted by some natural crisis, has no such concern, they can continue to employ themselves and provide for their own meagre needs. 

It was this concept that lay behind the ascetic ideas of Ravenstone, but which also lies behind the reactionary ideas of Sismondi, in trying to hold back capitalist development. The same ideas are criticised by Lenin, in his writings on Economic Romanticism, and they continue to be presented today in the arguments of the “anti-capitalists” and “anti-imperialists”, who, to use Marx's phrase above, “hark back to antiquated forms of the contradiction in order to be rid of it in its acute form.” 

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Theories of Surplus Value, Part III, Chapter 21 - Part 32

Ravenstone writes, 

“It is the “wants” of the poor which “constitute his” (the rich man’s) “wealth… When all were equal, none would labour for another. The necessaries of life would be overabundant whilst its comforts were entirely wanting” (op. cit., p. 10).” (p 261) 

But, of course, as Marx points out, were it not for the historically progressive role of capitalism, in continually revolutionising the economy of use of labour-time, so as to drive up surplus labour, and thereby accumulate capital, so as to drive up efficiency even further, the quantity and quality of use values produced, the wealth of society, would not have grown, and nor would the living standards of workers. It's easy to see why those writing in the early part of the 19th century would arrive at such conclusions, because the rapid growth of the factory towns, the demand for long hours of work, and low wages to meet the requirements of a rapidly mechanising production, gave the impression that the affluence of the rich could only be achieved as a consequence of an immiseration of the workers – a similar rationale is used to argue that the wealth of developed economies is achieved by the immiseration via super-exploitation and unequal exchange with less developed economies. The huge influx of labour thrown off the land, along with the sharp rise in population, added to that perception, as it appeared that the supply of cheap labour was endless. 

It results in ideas such as Lassalle's Iron Law of Wages. A similar theme can be seen in the writing of Daniel De Leon. But, as Marx demonstrates, these concepts about the immiseration of the workers are false. Capitalism, by developing the forces of production, raises, not lowers, workers' living standards. It not only creates whole new ranges of goods and services, but is led to stimulate, amongst the workers, ever new desires for them, so as to expand its markets; it must expand the workers' horizons, not just for necessaries, but for ever new types of commodity, for culture and so on. As Marx describes it, in the Grundrisse, this its Civilising Mission. 

Capital does not make workers poor, or increase their exploitation by reducing their standard of living. Quite the opposite. It increases their exploitation by raising the level of social productivity, via capital accumulation, and investment in labour-saving technology. That higher level of productivity means that wage goods become cheaper, so a smaller part of the working-day is required as necessary labour, increasing the proportion and amount of surplus labour. And, that very process, of cheapening wage goods, also leads to the range of wage goods expanding, so that even as the proportion of necessary labour to surplus labour shrinks, the amount of wage goods, represented by it, the standard of living of workers, expands. 

As Marx puts it, in opposition to the Lassallean Iron Law of Wages. 

“Since Lassalle's death, there has asserted itself in our party the scientific understanding that wages are not what they appear to be -- namely, the value, or price, of labour—but only a masked form for the value, or price, of labour power. Thereby, the whole bourgeois conception of wages hitherto, as well as all the criticism hitherto directed against this conception, was thrown overboard once and for all. It was made clear that the wage worker has permission to work for his own subsistence—that is, to live, only insofar as he works for a certain time gratis for the capitalist (and hence also for the latter's co-consumers of surplus value); that the whole capitalist system of production turns on the increase of this gratis labour by extending the working day, or by developing the productivity—that is, increasing the intensity of labour power, etc.; that, consequently, the system of wage labour is a system of slavery, and indeed of a slavery which becomes more severe in proportion as the social productive forces of labour develop, whether the worker receives better or worse payment. And after this understanding has gained more and more ground in our party, some return to Lassalle's dogma although they must have known that Lassalle did not know what wages were, but, following in the wake of the bourgeois economists, took the appearance for the essence of the matter. 

It is as if, among slaves who have at last got behind the secret of slavery and broken out in rebellion, a slave still in thrall to obsolete notions were to inscribe on the program of the rebellion: Slavery must be abolished because the feeding of slaves in the system of slavery cannot exceed a certain low maximum!” 

(Marx – Critique of the Gotha Programme) 

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Theories of Surplus Value, Part III, Chapter 21 - Part 31

Ravenstone's main focus is on the surplus product rather than surplus labour. As with many of these writers, there is a certain asceticism in his ideas. There was a strong link between these early socialists and social democrats and Methodism. It is a thread that has allowed conservatives to tar socialists with the brush of wanting to reduce everyone in society to the same low level, rather than to raise them up. 

Ravenstone sees the productive power of labour being able to create a surplus product, and this surplus product is then what constitutes capital. This surplus product is in the hands of non-workers, idlers, be they landlords, capitalists or their flunkeys. 

“For Ravenstone property is merely appropriation of the products of other people’s labour and this is only possible insofar as and in the degree that productive industry develops. By productive industry Ravenstone understands industry which produces necessaries. Unproductive industry, the industry of consumption, is a consequence of the development of capital, or property.” (p 260) 

There is also an echo of Adam Smith's writing on productive and unproductive consumption here. The production of necessaries is productive, because it is a production of those goods and services required by the workers for the reproduction of their labour-power. The production of all those things that are not necessaries is not productive, because they are not consumed by workers, not required for their reproduction, and so represent a diversion of their resources. 

“Without capital, without property, the necessaries of the workers would be produced in abundance, but there would be no luxury industry. Or it can also be said that Ravenstone, like the author of the pamphlet discussed above, understands or at least in fact admits the historical necessity of capital; since capital, according to the author of the pamphlet, produces surplus labour over and above the labour strictly necessary for the maintenance [of the worker] and at the same time leads to the creation of machinery (what he calls fixed capital) and gives rise to foreign trade, the world market, in order to utilise the surplus product filched from the workers partly to increase productive power, partly to give this surplus product the most diverse forms of use-value far removed from those required by necessity. Similarly, according to Ravenstone, no conveniences, no machinery, no luxury products would be produced without capital and property, neither would the development of the natural sciences have taken place, nor the literary and artistic productions which owe their existence to leisure, nor the urge of the wealthy to receive an equivalent for their “surplus product” from the non-workers.” (p 261) 

In this respect, Ravenstone is in advance of many of today's “anti-capitalists”, who stand on the ground of Sismondi, rather than that of Marx. Ravenstone, and the author of the previous pamphlet, do not point to the fact of the development of machinery, foreign trade, and so on, out of the creation and appropriation of a surplus product, as positive justification of the role of capital. On the contrary, they point to the fact that all those things are developed by capital for its own benefit, and against the interests of workers, whose exploitation is increased all the more by them. However, Marx points out, in doing so, they are also forced to acknowledge the historically progressive role that capital plays in doing all these things. 

“... they thus admit that this is a result of capitalist production, which is therefore a historical form of social development, even though it stands in contradiction to that part of the population which constitutes the basis of that whole development, In this respect they share the narrow-mindedness of the economists (although from a diametrically opposite position) for they confuse the contradictory form of this development with its content. The latter wish to perpetuate the contradiction on account of its results. The former are determined to sacrifice the fruits which have developed within the antagonistic form, in order to get rid of the contradiction. This distinguishes their opposition to [bourgeois] political economy from that of contemporary people like Owen; likewise from that of Sismondi, who harks back to antiquated forms of the contradiction in order to be rid of it in its acute form.” (p 261) 

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Theories of Surplus Value, Part III, Chapter 21 - Part 30

It is capital which regulates the extent of production, and the extent to which labour is employed, to meet these needs. But, of course, this only means that capital occupies this role as regulator of production, if you assume that capitalism itself is eternal. In other modes of production, capital does not perform that function. They fail to distinguish between capitalism as an historically necessary form of developing the forces of production, as opposed to it being a natural form. 

“Since in the self-same breath they proclaim on the one hand, labour as such (for them, labour is synonymous with wage-labour) and on the other, capital as such—that is the poverty of the workers and the wealth of the idlers—to be the sole source of wealth, they are perpetually involved in absolute contradictions without being in the slightest degree aware of them. (Sismondi was epoch-making in political economy because he had an inkling of this contradiction.)” (p 259) 

But, on the basis of this inkling, Sismondi's solution to the contradiction was not to push forward through it, but to seek to move in the opposite direction, to the restoration of more primitive forms. There are reflections here also of many present day concerns and ideas. The Tories continually bleat about the success of the economy, for example, as though the economy were something separate from the millions of people within it. Of course, what that really means is that the economy, on a number of metrics is doing well, which means not that the millions of workers are doing well, but that capital, as the regulator of production is doing well. It means that millions of workers are employed on low wages, in insecure jobs, each of them, thereby, producing more profits for capital. 

“Since the same real development which provided bourgeois political economy with this striking theoretical expression, unfolded the real contradictions contained in it, especially the contradiction between the growing wealth of the English “nation” and the growing misery of the workers, and since moreover these contradictions are given a theoretically compelling if unconscious expression in the Ricardian theory, etc., it was natural for those thinkers who rallied to the side of the proletariat to seize on this contradiction, for which they found the theoretical ground already prepared. Labour is the sole source of exchange-value and the only active creator of use-value. This is what you say. On the other hand, you say that capital is everything, and the worker is nothing or a mere production cost of capital. You have refuted yourselves. Capital is nothing but defrauding of the worker. Labour is everything.” (p 260) 

But, his standpoint remains within the Ricardian framework, because it continues to accept the categories capital and labour. It ultimately only provides the basis for a distributional struggle over revenues, between capital and labour, rather than a class struggle for the abolition of both of these categories themselves. It is the foundation of the ideology of social-democracy, of reformism and syndicalism, remaining within the confines of a trades unionist rather than socialist consciousness. 

“That is why the most important among them—Hodgskin, for example—accept all the economic pre-conditions of capitalist production as eternal forms and only desire to eliminate capital, which is both the basis and necessary consequence [of these preconditions].” (p 260) 

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Theories of Surplus Value, Part III, Chapter 21 - Part 29

2. Ravenstone. [The View of Capital as the Surplus Product of the Worker. Confusion of the Antagonistic Form of Capitalist Development with Its Content. This Leads to a Negative Attitude Towards the Results of the Capitalist Development of the Productive Forces] 

Marx describes this as, 

“A most remarkable work.” (p 257) 

Where the author of the previous pamphlet viewed the surplus in terms of surplus labour, and was concerned with the extent of labour-time, and specifically surplus labour-time, Ravenstone views the surplus more in terms of a surplus product, and his perspective is one in which the goal is not to drive up productivity, so as to increase relative surplus value, but, 

“... the reduction of the producers’ labour-time and the cessation of labour for the possessor of surplus produce.” (p 258) 

The Ricardian theory presents labour as “the sole element of value and the only creator of use-values, and the development of the productive forces as the only real means for increasing wealth...” (p 258) 

Labour is the essence of value, but, as Marx sets out, in numerous places, it is not the sole creator of use values. Nature also creates use values. As labour becomes more productive, so that it increases wealth, in the shape of an increased mass of use values, so it also reduces the value of each of these products, because each is representative of a diminishing amount of social labour-time. 

“This is, in fact, the foundation of capitalist production. Ricardo’s work, in particular, which demonstrates that the law of value is not invalidated either by landed property or by capitalist accumulation, etc., is, in reality, only concerned with eliminating all contradictions or phenomena which appear to run counter to this conception. But in the same measure as it is understood that labour is the sole source of exchange-value and the active source of use-value, “capital” is likewise conceived by the same economists, in particular by Ricardo (and even more by Torrens, Malthus, Bailey, and others after him), as the regulator of production, the source of wealth and the aim of production, whereas labour is regarded as wage-labour, whose representative and real instrument is inevitably a pauper (to which Malthus’s theory of population contributed), a mere production cost and instrument of production dependent on a minimum wage and forced to drop even below this minimum as soon as the existing quantity of labour is “superfluous” for capital.” (p 258-9) 

This is, indeed, the case for capitalist production. Capital is the regulator, because its demand for labour-power rises or falls with the potential for capital accumulation, which is governed by its anticipation of being able to expand the mass of profit. As Marx sets out, in Capital III, in contradiction to Ricardo, it is not the rate of profit that is determinant here, but the mass of profit. If the rate of profit rises or falls abruptly, this will undoubtedly influence the willingness of firms to advance more or less capital, but, any gradual or marginal change in the rate of profit does not have any such effect, because a marginal fall in the rate of profit will be more than offset by a rise in the mass of profit, so long as the market is expanding, and vice versa. In an expanding market, competition will drive firms to accumulate, even if the rate of profit is falling. The rate of profit determines the allocation of capital, i.e. capital migrates from low profit areas to high profit areas, which is the process which creates an average rate of profit, but is the potential to increase the mass of profit, not rate of profit, which is determinant as to whether accumulation itself increases. 

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The distinction between labour as the creator of value, and thereby of wealth, as opposed to leisure time, as real wealth, itself is also significant. It illustrates Marx's point, in Capital, concerning the fallacy about value as a saving of labour-time. 

“If everybody has to work, if the contradiction between those who have to work too much and those who are idlers disappears—and this would in any case be the result of capital ceasing to exist, of the product ceasing to provide a title to alien surplus labour—and if, in addition, the development of the productive forces brought about by capitalism is taken into account, society will produce the necessary abundance in six hours, [producing] more than it does now in twelve, and, moreover, all will have six hours of “disposable time”, that is, real wealth; time which will not be absorbed in direct productive labour, but will be available for enjoyment, for leisure, thus giving scope for free activity and development, Time is scope for the development of man’s faculties, etc.” (p 256) 

And, again, here, Marx sets out the progressive historic role of capital, by developing the productive forces, so that the product of 12 hours labour can then be achieved in six hours, which facilitates this transition to socialism, and the enjoyment of all this additional six hours of leisure-time, of real wealth. By contrast, he says, if the statement is viewed only in terms of capital ceasing to exist, because the workers work the current six hours, rather than 12, the implication is that the whole of society is reduced to the same inadequate living standards endured by the workers. 

“If capital ceases to exist, then the workers will work for six hours only and the idlers will have to work the same amount of time. The material wealth of all would thus be depressed to the level of the workers. But all would have disposable time, that is, free time for their development.” (p 256) 

The point, however, being, as Marx sets out in the Critique of the Gotha Programme, and elsewhere, if society is constrained within such a restricted level of development, the ability to undertake this individual development is also stunted. The historic case for capitalism is that it creates the conditions whereby it continually drives to produce the greatest quantity of use values, in the least amount of labour-time, and hence with the least amount of value. 

“Here also, the “disposable time” and the enjoyment of that which is produced in the labour-time of others, appear as the real wealth, but like everything in capitalist production—and consequently in its interpreters—it appears in the form of a contradiction. In Ricardo’s work the contradiction between riches and value later appears in the form that the net product should be as large as possible in relation to the gross product, which again, in this contradictory form, amounts to saying that those classes in society whose time is only partly or not at all absorbed in material production although they enjoy its fruits, should be as numerous as possible in comparison with those classes whose time is totally absorbed in material production and whose consumption is, as a consequence, a mere item in production costs, a mere condition for their existence as beasts of burden. There is always the wish that the smallest possible portion of society should be doomed to the slavery of labour, to forced labour. This is the utmost that can be accomplished from the capitalist standpoint.” (p 257) 

Though, even that ambition escapes today's Tories who prefer to wish for the greatest number to be in employment, as wage slaves, whilst imposing on them the greatest misery through low wages, poor conditions, and lack of security. 

Marx, also, here, provides the antidote to those who claim that The Law of Value only applies to capitalism, and that value, as a category, only has meaning under capitalism. He writes, 

“Labour-time, even if exchange-value is eliminated, always remains the creative substance of wealth and the measure of the cost of its production. But free time, disposable time, is wealth itself, partly for the enjoyment of the product, partly for free activity which—unlike labour—is not dominated by the pressure of an extraneous purpose which must be fulfilled, and the fulfilment of which is regarded as a natural necessity or a social duty, according to one’s inclination. 

It is self-evident that if labour-time is reduced to a normal length and, furthermore, labour is no longer performed for someone else, but for myself, and, at the same time, the social contradictions between master and men, etc., being abolished, it acquires a quite different, a free character, it becomes real social labour, and finally the basis of disposable time—the labour of a man who has also disposable time, must be of a much higher quality than that of the beast of burden.” (p 257) 

This is a restatement of The Law of Value as set out in the Letter to Kugelmann, and of Marx's comment in Capital III, Chapter 49, that in the post-capitalist society, the concept of value, though not exchange-value, and its measurement by labour-time, as opposed to the measurement of exchange value by money, becomes, if anything even more significant, as social labour seeks to maximise the production of use values (wealth) whilst minimising the expenditure of labour-time, to achieve it, which thereby maximises leisure-time – real wealth.

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