Financial analysts today talk about the risk free rate of return, as the basis upon which risk premiums on other financial assets rest, as the means of valuing assets. Ramsay gives an early variant of that.
“Interest is only a measure of net profits where the level of civilisation is such that the “want of certainty” of repayment is not a factor which enters into the calculation. “In England, for instance, at the present day, we cannot, I think, consider compensation for risk as at all entering into the interest received from funds lent on what would be cabled good security” (op. cit., p. 199, note).” (p 355)
Ramsay calls the industrial capitalist the master capitalist. As with the bankers, like Overstone, who believed that only money-capital was capital, and only the owners of money-capital capitalists, Ramsay calls the owners of money-capital capitalists. He correctly notes that it is the master capitalist who acts as the general distributor of revenues – wages, interest, rent – but, on this basis, lumps all of the recipients of these revenues into one class camp, leaving the master capitalists in an opposing class camp.
““He is the general distributor of the national revenue; the person who undertakes to pay […] to the labourers, the wages, […]—to the capitalist, the interest […]—to the proprietor, the rent [… ] On the one hand are masters, on the other, labourers, capitalists and landlords […] The interests of these two grand classes are diametrically opposed to each other. It is the master who hires labour, capital, and land, and of course tries to get the use of them on as low terms as possible; while the owners of these sources of wealth do their best to let them as high as they can” (op. cit., pp. 218-19).” (p 355)
Marx notes,
“What Ramsay writes about industrial profit (and especially, about the labour of superintendence) is on the whole the most reasonable part of his book, although part of his demonstration is borrowed from Storch.” (p 355)
A lot of this is also argued by Marx in Capital III, in his own exposition of the labour of superintendence. As Marx sets out there, the labour of superintendence breaks down into two components. On the one hand, under any mode of production, there is a requirement for the labour process to be organised and coordinated. As Marx describes it, in Capital III, it is like the role of a conductor in an orchestra. The conductor does not play an instrument, and thereby contribute to the music, but, without them, the other musicians performance would be diminished. The larger the scale of production, and the greater the extent of cooperative labour, the more this role of superintendence grows. But, there is a second type of labour of superintendence, and that arises solely due to the antagonism between the producer and the owner of means of production. The slave owner must employ the slave master, the capitalist the foreman etc.
The costs of both types of labour of superintendence represent a necessary cost of production, but it is only the first type that is necessary where the antagonism between labour and capital has disappeared. The wages paid for this labour of superintendence are a part of the variable-capital, and, therefore, already deducted from the general rate of profit. Marx repeats the point made in Capital III that the clearest example of this is shown in the worker owned cooperatives set up in Lancashire textile mills.
“... for these, despite the higher rate of interest they have to pay, yield profits higher than average, although the wages of the general manager, which are naturally determined by the market price for this kind of labour, are deducted. The industrial capitalists who are their own general managers save one item of the production costs, pay wages to themselves, and consequently receive a rate of profit above the average. If this assertion of the apologists [that profit of enterprise constitutes wages for the labour of superintendence] were taken literally tomorrow, and the profit of the industrial capitalist limited to the wages of management and direction, then capitalist production, the appropriation of the surplus labour of others and its transformation into capital would come to an end the day after tomorrow.” (p 356)
In other words, what is actually profit is labelled as wages for labour of superintendence. The larger the capital the larger the profit and the smaller, proportionally, the wages for superintendence. The vast remuneration of members of Boards of Directors and executives, in reality, are simply a portion of the profit. These individuals are involved only minimally, if at all, in any labour of superintendence. They are there only to represent the interests of shareholders as against the interest of the socialised capital, and the associated producers. Conversely, in a very small capital, the profit may be very small, or non-existent. Then, what appears as profit is really only wages for labour of superintendence.
“... this portion of the profit stands in inverse ratio to the size of the capital, it is infinitesimally small in the case of large capital and enormously large where the capital is small, i.e., where the capitalist production is purely nominal. Whereas the small capitalist, who does almost all the work himself, seems to obtain a very high rate of profit in proportion to his capital, what happens in fact is that, if he does not employ a few workers whose surplus labour he appropriates, he actually makes no profit at all and his enterprise is only nominally a capitalist one. (whether he is engaged in industry or in commerce). What distinguishes him from the wage-worker is that, because of his nominal capital he is indeed the master and owner of his own conditions of labour and consequently has no master over him; and hence he appropriates his whole labour-time himself instead of it being appropriated by someone else. What appears to be profit here, is merely the excess [of his income] over ordinary wages, an excess which results from the fact that he appropriates his own surplus labour.” (p 356-7)
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