The pamphlet was written as a protest against the “Difficulties” of the times and the explanation of them by the economists. The pamphlet attempts to make a protest on behalf of, and in the interests of, the working-class. From that perspective, it represents an advance on the Ricardian ideas, and yet, in terms of the economic theory and categories it uses, as the basis of its protest, it remains confined within the Ricardian framework.
Neither Smith nor Ricardo distinguish surplus value from its specific component parts of rent, interest and profit of enterprise. The author of the pamphlet does do so, but they give to it the name of one of these components, i.e. interest, rather than calling it surplus value.
““…interest paid to the capitalists, whether in the nature” (it should be shape, form) “of rents, interests of money, or profits of trade” ([The Source and Remedy of the National Difficulties, London, 1821,] p. 23).” (p 254)
As a result, Marx says, he relapses into “economic slang”. (p 254) Carey had argued that wages rise in proportion to the rise in productivity. Marx dealt with this argument in Capital I, in examining the role of machinery in raising productivity, and its effect on the international comparison of wages. In Capital I, Marx demonstrates that a firm that introduces a machine obtains an advantage over its competitors. The individual value of its output is reduced, as a result of the higher productivity which the machine brings about. But, the firm continues to sell its output at the higher market value, thereby obtaining surplus profits. It is then as though each hour of labour performed by its workers is the equivalent of several hours of labour performed by workers in the firm's competitors. It is as though the labour of its workers was complex labour. But, if the workers in the firm continue to be paid the same wages, as other workers, the rate of surplus value in this firm will be higher than elsewhere, resulting in the surplus profits.
The same thing applies, Marx says, when the level of productivity in one country is higher than in others, due to a greater level of development of the productive forces, and use of fixed capital. This is the situation that existed in Britain in the 19th century, when it was the workshop of the world. The basis of its immense and growing wealth was not trade or unequal exchange, but the vast accumulation of capital, and of machinery that raised the productivity of its labour way beyond that of its European and North American competitors, let alone beyond the level of the village handicraft production that still dominated elsewhere in the world.
On this basis, although British wages were nearly 50% higher than European wages, British commodities were still cheaper, in global markets. The much higher levels of productivity meant that British capital could pay higher wages, but the higher wages were not the result of the higher productivity, still less did they rise proportionate to it, as Carey argued. In fact, as Smith had shown, and as Marx elaborates in relation to the Factory Acts, etc., it is usually the other way around. It is higher wages that drive higher productivity, because capital seeks to address the problem of high wages, by introducing labour-saving technologies that create a relative surplus population, which pushes down wages. But, the consequent increase in productivity also thereby reduces the value of labour-power, by cheapening wage goods, which facilitates a rise in real wages/living standards, even as money wages fall. It increases living standards, whilst simultaneously raising the level of exploitation to ever higher levels.
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