Monday, 10 June 2019

Theories of Surplus Value, Part III, Chapter 21 - Part 18

As Marx sets out in Chapter 22, the component of the value of total output equal to A (c), or in his schemas of reproduction Department I (c), can only form revenue if the hypothetical and irrational assumption is made that, at the end of the production process, all production ceases. On that basis, the reproduction cycle of capital is reduced to a syllogism, where each circuit of capital is a discrete event, and instead of capitalism being analysed as a continuous process, it is viewed as being a series of such discrete events, like viewing it as a series of still photographs rather than as a motion picture. It means that each discrete event takes the form M – C … P... C` - M`, so that at the start of each circuit there is sum of money laid out (the historic price), which buys commodities (means of production and labour-power) which then take part in production, resulting in the production of a surplus value, embedded within the new commodities produced, which are then converted into money. On that basis, every capitalist would sell everything, at the end of the circuit, liquidating the whole of their capital, only to then buy back the required capital to commence a new discrete circuit. 

But, as Marx sets out in Capital II, this situation is one which only applies in relation to newly invested money capital, or to where the capital is indeed being liquidated, i.e. where the firm is closing down. Where the firm is closing down, the firm does indeed liquidate all of its capital, including any constant capital in the form of materials, and fixed capital it has not consumed, because it no longer needs to reproduce it. It would be like a farmer who normally takes 20% of their grain output to replant as seed, but who decides to retire to the Bahamas, and so not only sells that 80% of their output equal to their surplus value and variable-capital, but also literally sells the seed corn of the business, i.e. the 20% of their output that would have replaced their constant capital. 

As Marx puts it, such a situation would give the illusion to the farmer that they had obtained an additional amount of profit out of thin air that is not the product of the creation of surplus value, but is equal to the value of the seed corn they no longer need to replace. This delusion of Ramsay is the same delusion that arises from the use of historic prices as a means of calculating the rate of profit. As I have written, elsewhere, it fundamentally undermines Marx's theory of value, by creating this delusion that profit can be created from some other source than the production of surplus value by labour. 

As we will see, in the next chapter, this applies also where capital is released, as a result of a fall in the value of the constant or variable-capital. The ideas that Marx set out there are a restatement of the ideas on appreciation and depreciation, and the release and tie-up of capital as set out in Capital III, Chapter 6. 

No comments: