Ramsay says,
““… were we to suppose the labourers not to be paid until the completion of the product, there would be no occasion whatever for circulating capital. […] industry would be carried on on a scale quite as great […] Nothing can prove more strongly that circulating capital is not an immediate agent in production, nor even essential to it at all, but merely a convenience rendered necessary by the deplorable poverty of the mass of the people” (op. cit., p. 24).” (p 327)
Ramsay, here, recognises that what is significant, in terms of the value of the commodity, is not the value of the wages, but the advance of the actual labour in production. That is also significant in determining the rate of profit, not on the basis of when wages are paid, but on the basis of the actual living labour advanced to production. If €100 of materials are advanced to production, along with €100 of labour-power, which produces €50 of surplus value, then the value of the output is €250, and the rate of profit is 25%. It does not change matters that the €100 of wages is not paid until after the commodity is sold. The value was determined by the advance of the labour, which created €150 of new value, in production, not the payment of the €100 of wages. Even if no wages were paid at all, it would not change the amount of new value created. It is the labour advanced that creates the new value, and only in so doing enables the value of labour-power to be reproduced. It is the advance of the labour, which creates the surplus value (as an excess over the wages), and it is, therefore, from the advance of the labour, not from the payment of wages, that the turnover of the capital is calculated, and the rate of profit for that turnover period calculated.
An important element that is brought out by this chapter is that Marx's analysis is based upon the premise of ongoing production; it is an analysis based upon social reproduction, and not comparative statics. Social reproduction, in all modes of production, is a reproduction of material balances. It requires the reproduction, on a like for like basis, of the means of production, and of the means of subsistence of the producers. Any output in excess of that is a surplus product, and the proportional relation of this surplus product to the other two represents the extent to which expansion has occurred, and that can form the basis for accumulation.
Marx's analysis is an analysis of this process of social reproduction, under the specific historical conditions of capitalism. His determination of the rate of profit, therefore, is not influenced by something as trivial as when the wages of workers are actually paid. The determining factor is that, for social reproduction to occur, the variable-capital must be reproduced out of the total current production, alongside the reproduction of the constant capital consumed in that production.
Ramsay is quite right to say that the circulating capital/variable capital plays no part in the production process, and determination of the value of output. It is only the constant capital and the actual living labour that plays that role. But, Ramsay fails to set this within the specific historical context of capitalism. So, as Marx puts it, for Ramsay,
“Labour is a condition of production, but wage-labour is not, and neither, therefore, is it necessary that the workers’ means of subsistence confront them as “capital”, as an “advance by the capitalist”. What Ramsay overlooks is that if the means of subsistence of the workers did not confront them as “capital” (as “circulating capital”, as he calls it), neither would the objective conditions of labour confront them as “capital”, as “fixed capital”, as he calls it. Ramsay attempts in earnest, and not merely in words as the other economists do, to reduce capital to “a portion of the national wealth, employed, or meant to be employed, in favouring reproduction” (op. cit., p. 21); he therefore declares wage-labour and consequently capital—that is the social form which the means of reproduction assume on the basis of wage-labour—to be unimportant and due merely to the poverty of the mass of the people.” (p 327-8)
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