Saturday, 8 June 2019

Theories of Surplus Value, Part III, Chapter 21 - Part 16

The workers, as well as producing the goods and services that comprise the necessaries for themselves and other classes, also produce luxury goods and services consumed by the rich, and they also produce all of the means of production (materials, machines and other fixed capital) required for the production of necessaries, luxuries and means of production. The workers who produce luxury goods and services, produce goods and services that are bought from revenue that comprises surplus valueprofits, rents, interest. Of course, over time, and in different countries, the definition of what constitutes luxuries or necessaries varies. Many of the necessaries consumed by workers, everywhere, today, such as mobile phones, would previously have been considered luxuries, even by the rich in the most developed economies. Indeed, many of these commodities such as mobile phones, iPads, SatNav, and so on did not even exist 30 years ago, such has been the pace of development. 

But, at any one point, it remains the case that the luxury goods and services are bought out of surplus value. The workers who produce the luxury goods and services (in so far as they are produced capitalistically) produce surplus value as with any other worker, if we assume a common rate of surplus value, but the surplus value contained in the value of these goods and services is not just that of the workers that produce them. The variable-capital, which represents the necessaries consumed by the workers, also contains the surplus value produced by the workers that produced these necessaries, and the inputs required for the production of necessaries. The constant capital consumed in the production of luxury goods and services also includes the surplus value produced by the workers in those industries that produced that means of production. All of this surplus value, produced elsewhere, also, thereby, provides the monetary demand for the luxury goods, from all of these different recipients of revenues out of that surplus value. 

But, therefore, it's also clear why the surplus value produced by the workers in the luxury goods sector cannot be converted directly into capital. As luxury goods and services, these commodities comprise no physical component of either variable or constant capital. In order for these luxury goods to be converted into capital, they must be exchanged for either necessaries, so as to reproduce the variable-capital, or for means of production, so as to reproduce the constant capital. The process is intermediated by money. 

The producers of luxury goods and services sell them to rich consumers, who buy them with their own money revenues derived from surplus value. Some of that surplus value comes from the sale of means of production/elements of constant capital. In turn, the producers of luxury goods and services use the money they receive from their sale to buy the elements of constant capital, and they, thereby, convert their own luxury production, once more, into constant capital. Similarly, some of the money they receive from the sale of luxury goods and services comes from those who obtain their revenues from the surplus value produced in the production of necessaries. The luxury goods producers indirectly buy these necessaries that comprise their variable-capital, by first paying money wages to their own workers, who then exchange those money wages for necessaries, so that the elements of the variable-capital are reproduced. 

And, emphasising the point I made earlier, in relation to the objective drivers of socialised capital, and the dynamics of social-democracy, Marx notes, 

“If too large a part of surplus labour is embodied directly in luxuries, then clearly, accumulation and the rate of reproduction will stagnate, because too small a part is reconverted into capital. If too small a part [of surplus labour] is embodied in luxuries, then the accumulation of capital (that is, of that part of the surplus product which can in kind serve as capital again) will proceed more rapidly than increase in population, and the rate of profit will fall, unless a foreign market for necessaries exists.” (p 246) 

The unusual phenomenon witnessed in the last thirty years, though most notably in the last ten years, has been that there has been too large a part devoted to “luxuries” rather than accumulation, but it has taken the form not of an increase in the actual production of luxury goods and services, but of an increase in the proportion of revenues out of surplus value going to interest and rents, which then went into gambling in asset prices. The consequence has been that as asset prices grew much faster than capital, or the production of surplus value, interest and rental yields fell lower and lower, making a crash in asset prices an inevitability. 

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