Friday, 2 August 2019

Theories of Surplus Value, Part III, Chapter 21 - Part 71

The amount of capital accumulation, Marx explains, depends, not on the rate of profit, but on the mass of profit. This is a repetition of a point made in Capital III. So, he says, if we take two capitals one of 100 and one of 1,000 if labour produces 20 of surplus value in the first, and 100 in the second, the rate of profit, in the first is 20%, and only 10% in the second. But, its clear that a greater amount of accumulation can be made out of 100 than out of 20. 

“Thus the flow of capital or its “accumulation” continues (apart from the reduction in its value as a result of the increase in productive power) in proportion to the force it already possesses, but not in proportion to the size of the rate of profit. This explains that accumulation—its amount—may increase in spite of a falling rate of profit, apart from the fact that, while productivity rises, a larger portion of the revenue can be accumulated, even when the rate of profit declines, than when there is a higher rate of profit together with lower productivity.” (p 301) 

And, as previously described, a high rate of profit, based on a high rate of surplus value, derived from long hours and absolute surplus value, goes along with generally low levels of productivity, and low living standards for workers. If wages rise, capital introduces labour-saving machines. Productivity rises. The proportion of material in final output rises; the proportion of labour (paid and unpaid) falls. The organic composition of capital rises, and the rate of profit falls, even as the rate of surplus value rises. 

The condition of a high rate of profit, high rate of absolute surplus value, low wages and low rate of accumulation is typical of less developed economies. 

“It is possible because the workers’ needs, and therefore the minimum wage, are small, although the labour is unproductive. The lack of energy with which the labour is performed will correspond to the low level of the minimum wage. Capital is accumulated slowly in both cases despite the high rate of profit. The population is stagnant and the labour-time which the product costs is high, although the wages received by the workers are small.” (p 301-2) 

But, this is also the effect of the conservative economic policies introduced in Britain and the US, in particular, from the 1980's onwards. It is apparent in the continual droning of Tory politicians about high levels of UK employment, seemingly oblivious to the appallingly low levels of productivity that go with it. Conservatives adopt this strategy because, in the short-term, it meets the needs of the small capitalists, which make up their core membership, and voter base. Unlike the big socialised capitals, whose high levels of productivity are driven by large amounts of fixed capital, and whose main cost of production, therefore, is for constant capital, a large part of the cost of production for the small capitalists is their wage bill. The small capitalist needs wages to be kept low, the bigger capitalists not so much. In fact, for them a higher general level of wages, means that all those firms that have proportionately more workers, are a larger source of demand for the products of the larger companies, and so of realising their profits. The bigger capitalists see their cost of production rise by a smaller proportion than the small capitalists, when wages rise generally, so that their rate of profit rises relative to that of the small capitalists, whilst because they gain proportionally in the increased demand for their output, it makes it easier to realise this increased profit. Capital then moves out of the lower profit, smaller capitals, and into the higher profit larger capitals, to equalise the rate of profit. The consequence is a further concentration and centralisation of capital. 

The other large constituent of support for conservatives, the owners of fictitious capital, also gain, in the short term, from such a strategy of low wages. If they do not have to lend additional money-capital to finance capital accumulation, in the form of new large scale investment in fixed capital, and yet profits rise, by squeezing wages, these profits can then be paid out in higher dividends/interest and rent. Of course, for the functioning capitalist, it should go to finance additional capital accumulation, but in the large socialised capitals, control rests with the shareholders and their appointees, who look after their own short-term interest, not the interest of the company. The capitalised value of shares, bonds and property then rises. But, these short-term gains are illusory. In a global economy, the lack of investment, and consequent low levels of productivity makes the underlying productive-capital uncompetitive. No amount of squeezing of the workers can compensate for it, which is the problem that less developed economies have in competing with developed economies. Eventually, competition forces capital accumulation to occur to remedy the situation, raise productivity and efficiency. The demand for money-capital, or the greater allocation of profits to internal accumulation, thereby reducing the supply of money-capital into money markets, causes interest rates to rise. As interest rates rise, the capitalised values of assets fall, and the asset price bubbles inflated in the previous period are burst, as happened in 2008. 

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