Cherbuliez says,
““Evidently the two chief elements in this determination are the price of the raw materials and amount of means of subsistence required to work them up […] the economic progress of society affects these two elements in an opposite way […] it tends to make raw materials dearer by increasing the value of all the products of the extractive industries, which are carried out on land that is privately owned and limited in extent” (loc. cit., p. 70). On the other hand, the means of subsistence decrease (relatively), a matter to which we shall return presently.
“The total amount of products, less the total amount of capital expended in producing them, provides us with the total amount of profit gained during a definite period of time. The growth in the total amount of products is proportionate to the capital advanced and not the capital used up. The rate of profit, or the ratio of profit to capital, is therefore the result of the combination of two other ratios, namely, the ratio between the capital laid out and that used up, and the ratio between the capital used up and the product” (loc. cit., p. 70).” (p 369-70)
The first part of this statement can again be read in different ways. It can mean that the value of constant capital rises, relative to variable-capital, because of a rise in the technical composition, and so organic composition of capital; it can mean that the value of the elements of constant capital rise, whilst the value of wage goods fall, or both. On the basis of the Ricardian assumption of diminishing returns, its easy to see why Cherbuliez should believe that, as the demand for raw materials rises, as they form a greater proportion of output, this would result in a rise in their prices. Ricardo believed that, although rising social productivity would reduce the value of manufactured wage goods, this would not be enough to offset the rise in food prices.
Cherbuliez also makes an error here, in that he associates an increased mass of products with an increased mass of value. That does not follow. If we discount constant capital, if 10 hours of labour produces 1,000 use values, but, then, as a result of a rise in productivity, produces 1200 such use values, these 1200 still only have a value of 10 hours. Its just that each of these use values represents less labour-time.
“Secondly, a comparison between the amount of the product and the quantity of products of which the capital—used up and not used up—consisted, can at best only be made in the way Ramsay does, by comparing the aggregate national product with the constituent elements expended in kind during its production. But as regards capital, the form taken by the product is different from its ingredients in every sphere of production (even in those branches of industry in which, as in agriculture, one part of the product is used in kind as a production element of the product).” (p 370)
In other words, its impossible to equate the quantity of cotton used as input in spinning to the quantity of yarn output, at the other end of the production process, because these are two quite different use values. And, as different use values, not only do they have different values, but these values change relative to each other. So, although, in order to produce 1,000 kilos of yarn, it may be necessary to input 1,000 kilos of cotton (unless some technological change affects this, in relation to waste etc.) so that reproduction, on the same scale, requires the 1,000 kilos of cotton to be reproduced, on a like for like basis, this says nothing about the change in value. That is why this process is only comprehensible by reducing the use values to their money equivalent, based upon their current reproduction cost.
As Marx sets out in Capital II, in the circuit P … C` - M`.M - C … P, M` and M do not represent actual money prices paid or received, but only the money equivalent of the value of C` and C. It is, as Marx makes clear, the use of a money equivalent, where money is merely the unit of account.
“Why does Cherbuliez stray on to this false path? Because, despite his vague idea that the organic composition of capital is decisive for the rate of profit, he in no way uses the contradiction between variable capital and the other part of capital in order to explain surplus-value—which, like value itself, he does not explain at all. He has not shown how surplus-value arises and therefore has recourse to surplus product, i.e., to use-value.” (p 370)
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