Wednesday, 11 September 2019

Theories of Surplus Value, Part III, Chapter 22 - Part 23

Marx turns to Ramsay's analysis of changes in the value of luxury goods. Ramsay says, 

“Because these commodities “help to make up neither fixed capital nor circulating, it follows that profit can in no way be affected by any alteration in the facilities for raising these. Such are luxuries of all kinds” (loc. cit., pp. 169-70). 

“Master-capitalists gain by the abundance” (of luxuries) “because their profits will command a greater quantity for their private consumption; but the rate of this profit is in no degree affected either by their plenty or scarcity” (loc. cit., p. 171).” (p 349) 

There are a number of things wrong with this. Some luxury goods also enter as raw material into other products. Marx cites grapes used in wine production, and gold used in jewellery production. These examples show just how much workers' living standards have risen, and what were once luxury goods have become wage goods. 

The value of luxury goods can only fall in the same way that the value of any other commodity falls. Either productivity in its own production must rise, or else, productivity in the industries supplying it with constant capital must rise. Gold mines may become more productive, because new machines or techniques are introduced, because new, more fertile mines are opened. Similarly, not only may better machines be developed, but machine production may become more productive, reducing the value of fixed capital, wherever it is used. As well as increased productivity from a greater division of labour, new chemical processes, such as in dyeing can raise productivity. 

If the value of luxury goods falls, this has no effect on the value of labour-power. Workers may consume, particularly during periods of boom, and high wages, some of these luxury goods, but they do not form part of the basket of wage goods that determines the value of labour-power. Marx points out that if a rise in productivity in luxury goods production results in workers in those industries being laid off that would have the effect of pressing down on wages, but that is not the same as a fall in the value of labour-power. Either wages would have been above the value of labour-power, and are reduced to it, or else wages are pushed below the value of labour-power. 

Because luxury goods do not affect the value of labour-power, a fall in their value cannot affect the rate of surplus value. However, a fall in the value of luxury goods, which results in a rise in the rate of profit in that sector, will result in a general rise in the rate of profit. Capital from other spheres will migrate to luxury goods production, in search of the higher profits. That reduces supply in these other sectors so that the price of these other commodities rise, causing the rate of profit in these other spheres to rise. 

This is the other side of the argument that Marx made in Value, Price and Profit, against Weston, arguing that a rise in wages does not cause a rise in prices. Marx argues there that a rise in wages causes a fall in profits, an increase in demand for wage goods, fall in demand for luxury goods, and a reallocation of capital from the latter to the former. 

"What would be the consequence of this difference in the rates of profit for capitals employed in the different branches of industry? Why, the consequence that generally obtains whenever, from whatever reason, the average rate of profit comes to differ in different spheres of production. Capital and labour would be transferred from the less remunerative to the more remunerative branches; and this process of transfer would go on until the supply in the one department of industry would have risen proportionately to the increased demand, and would have sunk in the other departments according to the decreased demand. This change effected, the general rate of profit would again be equalised in the different branches. As the whole derangement originally arose from a mere change in the proportion of the demand for, and supply of, different commodities, the cause ceasing, the effect would cease, and PRICES would return to their former level and equilibrium. Instead of being limited to some branches of industry, the fall in the rate of profit consequent upon the rise of wages would have become general. According to our supposition, there would have taken place no change in the productive powers of labour, nor in the aggregate amount of production, but that given amount of production would have changed its form. A greater part of the produce would exist in the shape of necessaries, a lesser part in the shape of luxuries, or what comes to the same, a lesser part would be exchanged for foreign luxuries, and be consumed in its original form, or, what again comes to the same, a greater part of the native produce would be exchanged for foreign necessaries instead of for luxuries. The general rise in the rate of wages would, therefore, after a temporary disturbance of market prices, only result in a general fall of the rate of profit without any permanent change in the prices of commodities. If I am told that in the previous argument I assume the whole surplus wages to be spent upon necessaries, I answer that I have made the supposition most advantageous to the opinion of Citizen Weston. If the surplus wages were spent upon articles formerly not entering into the consumption of the working men, the real increase of their purchasing power would need no proof. Being, however, only derived from an advance of wages, that increase of their purchasing power must exactly correspond to the decrease of the purchasing power of the capitalists. The aggregate demand for commodities would, therefore, not increase, but the constituent parts of that demand would change. The increasing demand on the one side would be counterbalanced by the decreasing demand on the other side. Thus the aggregate demand remaining stationary, no change whatever could take place in the market prices of commodities."

(Value, Price and Profit, Chapter 2)

Because a fall in the value of luxury goods does not affect the value of labour-power, or rate of surplus value, it cannot result in a rise in the rate of profit due to the latter. If the value of luxury goods falls, because of a rise in productivity, in that sector, it may result in a fall in the mass and rate of profit in that sector. If the rise in productivity results in workers in the luxury industry being made redundant, then the smaller quantity of employed labour will produce less new value, and surplus value. 

“In practice, therefore, the manufacturer of luxury articles seeks to depress the wages of labour below its value, [below] its minimum. This he is able to do because of the relative surplus population engendered by increasing productivity in other branches of industry, for example among knitters. Or—as likewise happens in these branches—he seeks to extend the absolute labour-time, thus, in fact, producing absolute surplus-value. It is correct, however, that productivity in the luxury industries cannot reduce the value of labour-power, it cannot produce any relative surplus-value and, in general, cannot produce that form of surplus-value which results from the growing productivity of industry as such.” (p 350) 

No comments: