Friday, 9 August 2019

Theories of Surplus Value, Part III, Chapter 21 - Part 78

What has been shown is that, viewed in terms of the social working-day, there is no limit to the rate of surplus value. Similarly, provided the amount of simultaneously employed labour increases, the mass of surplus value can increase, in line with the increase in the rate of surplus value, and quantity of employed labour. Further consideration, here, as Marx sets out, in Capital II, relates to the annual rate of surplus value, as opposed to the rate of surplus value per turnover period. In other words, the more productivity rises, and the rate of turnover rises with it, the more labour a given amount of capital can employ simultaneously, and so the more surplus value it produces per period. That means the total surplus value per year rises correspondingly. 

The limit on the rate of profit, therefore, is set not by an upper limit on the rate of surplus value, or by the possible growth in the mass of surplus value, but by the growth in a) the mass of constant capital, consequent upon this accumulation of capital, i.e. the rise in the volume of processed material, and the growth in the mass of fixed capital, required to bring about any rise in productivity; and b) the value of the constant capital. In other words, it depends upon the change in the technical composition of capital, and thereby in the organic composition of capital

But, Marx has shown, in Capital III, Chapter 6, that the value of fixed capital falls, as a consequence of technological development. That development not only increases productivity in machine production, so that the labour-time required to produce existing machines is reduced, but it leads to the development of entirely new machines, capable of producing as much output, per hour, as several older machines. The consequence is that fixed capital, like labour, transfers a smaller and smaller proportion of value to final output. 

Moreover, as Marx sets out, machines are only introduced where their value is less than the value of the paid labour they replace. That does not just mean actually employed labour, but also the labour that would otherwise have had to be employed had the machine not been introduced. So, the introduction of machines does not mean that absolutely less labour is employed, only relatively less labour. In fact, as Marx demonstrates, absolutely more labour is employed, and this is the basis of the continued growth in the mass of profit, which is the basis of the continued accumulation of capital. 

The real constraint on the rate of profit, therefore, is the growth in the mass of processed material, implicit in the growth of productivity. As Marx sets out, elsewhere, the unit value of this material falls, as a consequence of the same rise in social productivity. The value of the mass of consumed material rises only because the mass itself rises more than the fall in its unit value. Marx asserts that this is the case, but there is no theoretical reason why it must be the case. Indeed, as I've set out, elsewhere, in today's capitalist economies it is clearly not the case. 

The argument put by Marx depends upon the rise in social productivity bringing about a larger rise in the quantity of raw material processed than the fall in the unit value of that material caused by the same rise in social productivity. But, Marx himself demonstrated the way a) waste is reduced, b) new more effective and cheaper materials are introduced, c) new types of commodities are introduced, d) the rate of turnover of circulating capital is increased. 

Where waste is reduced, any given mass of raw material can be used to produce a larger volume of output. The growth of production of commodities that are bi-products of other forms of production is an illustration of that. Discarded rags, and cloth are used in paper production; saw dust and chippings are used in the production of various forms of chipboard and MDF; the petrochemical industry is based upon the continual use of the waste from one stage of refining being used in the next; a large part of the growth in the efficiency of steam engines came from the use of multiple condensers and so on. The more production is conducted on a larger scale, the more it becomes worthwhile utilising these waste products as the raw material for other commodities, or alternatively, improving the production process so as to reduce the amount of waste to begin with. 

Marx noted that steel rails were introduced in place of iron rails on railroads, and that resulted in a great saving, because although steel was initially more expensive, it was far more durable, and lasted longer than iron, and so was cheaper in the longer run. Artificial materials like nylon, polyester and so on, have been introduced, in place of silk and cotton; carbon fibre replaces steel, glass fibre replaces copper in telecommunications, and so on. 

A whole range of new commodities are introduced that replace older commodities and require less material for their production. Vast ranges of electrical domestic appliances, for example, use much less in materials, for printed circuit boards, or LED screens than did the first such products that used electric valves, large amounts of copper, cathode ray tubes, and so on. A mobile phone uses less material than the original telephones, as well as now replacing other devices such as cameras, music players, SatNav's, and so on. 

In the same way that a rise in the rate of turnover means that a given amount of variable-capital sets in motion a larger quantity of labour, so too it sets in motion a larger quantity of circulating constant capital. Not only, therefore, is it not necessarily the case that rising social productivity leads to a larger mass of material processed than the fall in the unit value of that material, but, in terms of the advanced capital, as opposed to the laid-out capital, the same rise in social productivity means that a given amount of advanced capital will employ a much greater mass of material. The rate of profit may fall, i.e. the profit margin, measured against the cost of production, p/k, but, the annual rate of profit, which is the basis of the general annual rate of profit will rise. 

Finally, as I've described elsewhere, Marx's law was based on any economy in which the production of material commodities predominated. It was that which gave the processing of raw materials the decisive role. In today's economies 80% of value and surplus value production is in service industry. The processing of raw materials is, therefore, only a minor factor. If we take something like a football match, very little in the way of additional material is involved where a match is consumed by 20,000 spectators, at the football ground, as opposed to 1 billion who view it, via satellite TV. The fixed capital involved in creating Satellite TV systems is, of course, very considerable, but, it is spread across many, many products and consumers, so that the unit cost is minimal. Moreover, the additional circulating constant capital involved is negligible. 

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