Sunday, 11 August 2019

Theories of Surplus Value, Part III, Chapter 21 - Part 80

As Marx puts it, Chalmers confuses cause with effect. 

“Moreover, with a smaller rate [of profit] the amount of profit increases as the size of the capital laid out grows. In addition, the quantity of use-value which this smaller proportion represents, increases. At the same time, however, this leads to the centralisation of capital, since the conditions of production now demand the application of capital on a mass scale. It brings about the swallowing up of the smaller capitalists by the bigger ones and the “decapitalisation” of the former.” (p 311) 

And, as Marx has pointed out, here, as in Capital III, Chapter 15, it is the mass of profit, not the rate of profit that is decisive, in terms of capital accumulation. What the crisis achieves, here, therefore, is what a rational planning system would achieve without a crisis. It reallocates capital away from certain spheres, and eventually into other new spheres. It does so by first withdrawing capital from those particular firms that operate below the average level of efficiency, which is usually the smaller capitals. Their capital is taken over by larger capitals at liquidation prices. 

“This process would soon bring capitalist production to a head if it were not for the fact that, alongside the centripetal forces, counteracting tendencies exist, which continuously exert a decentralising influence; this need not be described here, for it belongs to the chapter dealing with the competition of capitals). It is this separation which constitutes the concept of capital and of primitive accumulation, which then appears as a continual process in the accumulation of capital and here finally takes the form of the centralisation of already existing capitals in a few hands and of many being divested of capital.” (p 311-2) 

Marx gives a justification here for his assumption that the rise in the rate of surplus value does not fully counteract the relative reduction in the mass of employed labour. Firstly, Marx says, the rise in the productivity may affect some spheres but not others. Its only the rise in productivity in the production of wage goods that reduces the value of labour-power, and thereby increases the rate of surplus value, but labour may be reduced relatively in all spheres. Moreover, 

“... the workers themselves, although they cannot prevent reductions in (real) wages, will not permit them to be reduced to the absolute minimum; on the contrary, they achieve a certain quantitative participation in the general growth of wealth.” (p 312) 

This last statement shows how far Marx was from the Lassallean view of the immiseration of the working-class, or the view of capitalism creating poverty, as well as his distance from the various catastrophists, and proponents of the idea that capitalism had, somehow, become absolutely in decline. 

Marx summarises the difference between his law of the tendency for the rate of profit to fall and those of his predecessors, like Smith, Ricardo and Malthus. Marx's law is based upon rising social productivity, and a rising rate and mass of surplus value, but an even larger rise in the mass of processed raw material. His predecessors explained it on the basis of rising wages, causing a squeeze on profits. The rising wages were caused by capital expanding faster than the growth of the labour supply, so that wages rose due to demand and supply (Smith), or because less fertile land had to be cultivated, to feed the workers, causing food prices and rents to rise (Ricardo). 

“The rise and fall in the rate of profit—insofar as it is determined by the rise or fall of wages resulting from the conditions of demand and supply [in the labour market], or caused by the temporary rise or fall in the prices of necessaries compared with those of luxuries, as a result of the changes in demand and supply and the rise or fall in wages to which this leads—has as little to do with the general law of the rise or fall in the profit rate as the rise or fall in the market prices of commodities has to do with the determination of value in general. This has to be analysed in the chapter on the real movement of wages. If the conditions of demand and supply are favourable to the workers and wages rise, then it is possible (but by no means certain) that the prices of certain necessaries, especially food, will rise correspondingly for a time.” (p 312) 

In other words, Marx does not at all deny the fact that, at certain periods, the rate of profit does fall for these other reasons, indeed, that is the basis of his argument in Capital III, Chapter 15, in relation to the overproduction of capital. But, this squeeze on profits, at certain points of the cycle, as capital expands, and the demand for labour rises to a point where wages rise, so as to squeeze profits, are temporary, short-term phenomenon that are then reversed, and more than reversed in the subsequent period of crisis and stagnation. 

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