Unlike Ricardo, Jones understands that a falling rate of profit, in agriculture, does not mean that productivity in agriculture is declining – diminishing returns. But, his explanation of this falling rate of profit falls into the same error as the Ricardians, as arising as a result of a fall in the rate of surplus value. Jones writes,
““A fall of Profits is no Proof of the decreasing Efficiency of agricultural Industry” (p. 257).
“… profits depend partly on the amount of the produce of labour, partly on the division of that produce between the labourers and capitalists; and […] their amount, therefore, might vary from a change in either of these particulars” (p. 260).” (p 409)
So, Jones, here, still accounts for the fall in the rate of profit on the basis of the fall in the rate of surplus value. Either wages may rise, as a result of the market conditions, causing the market price of labour-power to rise, or else changes in social productivity cause the value of labour-power itself to rise. The Ricardian theory basically proceeds as follows. Capital expands, the demand for labour-power rises, causing wages to rise. The rise in wages and increase in the workforce causes the demand for wage goods to rise. Rising productivity in industry means that manufactured wage goods can be produced at lower cost, and so that facilitates a fall in wages, and rise in the rate of surplus value. However, the largest component of wage goods is food, and the increased demand for food necessitates cultivation of less fertile land. So, agricultural productivity falls, the value of agricultural products rises, and this causes the value of labour-power to rise by more than the fall in the value of manufactured wage goods causes it to fall. That means wages rise, and the rate of surplus value falls.
The rise in wages is then first a consequence of a change in the demand and supply for labour-power, which causes its market price to rise. But, the longer term effect is from a rise in the value of labour-power, as the increased demand for wage goods leads to production on inferior land etc. that results in a fall in social productivity. This secondary effect not only affects food production. As manufacturing industry produces more wage goods, it requires more wool, cotton, coal, iron etc., and production of these additional primary products also requires the use of less fertile lands, mines and quarries. This not only passes through into higher prices of manufactured commodities, but it also raises the value of the circulating constant capital, i.e. it causes a rise in the value composition of capital. Furthermore, these higher agricultural prices cause rents to rise, thereby further squeezing profits.
“This is the reason for the incorrect law which he elaborates:
“When, abstracting from the effects of taxation, an apparent diminution takes place in the revenues of the producing classes considered jointly” (what revenue means is not explained here, [whether ] value in use or value in exchange, amount of profit or rate [of profit]), “when there is a fall in the rate of profits, not compensated by a rise of wages, or a fall of wages not compensated by a rise in the rate of profits”, (that is precisely what Ricardo’s law says, and it is wrong) “there has been, it may be argued, some decrease in the productive power of labour and capital”… (p. 273).” (p 409)
No comments:
Post a Comment