Thursday, 15 August 2019

Theories of Surplus Value, Part II, Chapter 21 - Part 84

[g) Hodgskin’s Basic Propositions as Formulated in His Book—”Popular Political Economy”] 

Marx quotes from Hodgskin's “Popular Political Economy. Four Lectures delivered at the London Mechanics’ Institution”, London, 1827. 

Hodgskin sets out the way higher productivity is a consequence of past labour

““Easy labour is only transmitted skill” (p. 48).” (p 315) 

He goes on to argue that, therefore, the results of this higher productivity are attributable to labour not capital. Yet, it is capital that reaps the most reward from the greater wealth that results from this greater productivity. The labourers submit to this because the economic relation between capital and labour means that labour is plentiful and capital scarce. Its not a question of labour being in absolute oversupply, but only in relation to the needs of capital. 

““But as all the advantages derived from the division of labour naturally centre in, and […] belong to the labourers, if they are deprived of them, and in the progress of society those only are enriched by their improved skill who never labour,—this must arise from unjust appropriation; from usurpation and plunder in the party enriched, and from consenting submission in the party impoverished” (op. cit., pp. 108-09). 

“The labourers, to be sure, multiply too rapidly when that multiplication is only compared with the want of the capitalist for their services…” (op. cit., p. 120).” (p 315-6) 

Hodgskin also, more or less, grasps the idea of labour as the essence and measure of value, as against labour-power, the commodity sold by wage workers, whose value is determined by what is required for its production. He does not spell it out in these terms, but its clear that he understands this basic difference as the source of the existence of surplus value, appropriated by capital. 

““Mr. Malthus points out the effects which an increase in the number of labourers has in lessening the share which each one receives of the annual produce—the portion of that distributed amongst them being a definite and determinate quantity, not regulated in any degree by what they annually create” (op. cit., p. 126). 

“… labour […] the exclusive standard of value,” but “labour, the creator of all wealth” [is] “not a commodity” (op. cit., p. 186, note).” (p 316) 

Hodgskin recognises the point made by Marx in relation to Say's Law, in relation to money. Commodities have a definite life. Some are more durable than others. A producer of commodities, however, can always ensure the durability of their wealth by selling the commodities they produce, in exchange for money. He also recognises the point made by Marx in Capital III, Chapter 15, that the conditions for producing surplus value are not the same as, and may contradict, the conditions for realising surplus value. In production, each individual capital must produce on a minimum scale, in order to produce efficiently. The larger the scale on which each capital produces, the more efficiently they produce, because of economies of scale. 

Competition between individual capitals, in any sphere, therefore, leads each of them to produce on the largest scale their capital will allow, because that reduces the individual value of their production, relative to the market value, which enables them to obtain a surplus profit, equal to the differential value. Moreover, because each type of commodity is, to some extent, in competition with every other type of commodity, to attract demand from consumers, there is a requirement to reduce the market value of each type of commodity, by producing on the largest possible scale. 

But, demand for these commodities is governed by completely different rules. To produce commodity A at the most efficient level so that its market value is kept to a minimum, and where individual producers maximise surplus value, may require output of 1 million units. The market value of this production might be £1 per unit. However, at a price of £1 per unit, there may be only demand for 950,000 units, so that the actual selling price is only £0.95 per unit. £0.05 of the produced surplus value cannot be realised. Even if all producers of the commodity could cooperate – which competition prevents them doing – so as to reduce output to 950,000 units, this may not help. Suppose for 1 million units the cost of production is £0.90, per unit, so that produced surplus value is £0.10, and realised profit is £0.05. If the scale of production is reduced below the optimum level of 1 million units, the cost of production might rise to, say, £0.96, per unit. Even if the 950,000 units can then be sold at £1 per unit, the profit per unit falls to £0.04, from £0.05. 

Moreover, previously the mass of profit was 1 million x £0.05 = £50,000, whereas now it is 950,000 x £0.04 = £38,000. 

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