Thursday, 7 November 2019

Theories of Surplus Value, Part III, Chapter 24 - Part 17

Adam Smith, having identified that value is labour, and so surplus value is surplus labour, realised that the independent commodity producer could produce surplus value, simply because they could engage in such surplus labour over and above what they required for their own reproduction. The independent producer may work for 10 hours per day, producing 10 hours of new value. But, they may need only to work for, say, 6 hours per day, to meet their subsistence needs. It does not matter whether this 6 hours is producing the actual use values they consume directly, or producing other use values, which they produce to exchange for the use values required for their consumption. They will produce 4 hours of surplus value in the working day of 10 hours.  Systems of direct production are never based on the individual producers producing 100% of the use values they consumes themselves, but are characterised by the fact that what is produced, including that part produced to be exchanged, is produced to meet this requirement for consumption by the producer, rather than to create a profit to be used for accumulation.  It is the basis of barter systems, which is what led to the confusion of Say's Law, and its adoption by Ricardo and others, which in turn led to their confusion over the potential for overproduction.

If they exchange their output from this 10 hours of labour, they will obtain money or commodities equally of a value of 10 hours labour. Whether this money or these commodities also represent a quantity of surplus value or not is irrelevant. They all represent a value of 10 hours labour, because 10 hours labour is required for their production. Whether or not these commodities also contain surplus value is dependent only on whether the labour that produced them was itself in excess of the labour required to produce the subsistence requirements of the labourer/s that produced them. For example, if a producer of corn undertakes 10 hours of labour producing corn, but needs only 8 hours labour to reproduce the means of subsistence, the corn they produce has a value of 10 hours, including 2 hours of surplus value. If they exchange this corn for a gram of gold, with a value of 10 hours, there is an exchange of equal values. However, if the gold producer requires 10 hours of labour to produce their own means of subsistence, the gram of gold will contain no surplus value.   When the corn producer exchanges their corn containing 2 hours of surplus value, for the gram of gold containing no surplus value, it does not somehow magically produce 2 hours of surplus value in the gold.  It simply means that the 2 hours of surplus value embodied in the corn is now realised in the gold.

Because Adam Smith starts from the position of independent commodity producers, his analysis starts from the exchange of commodities at their values, as determined by the labour-time required for their production. He begins from a position, therefore, where these commodity values include a portion of surplus value, equal to the surplus labour undertaken by the labourer/independent producer. If A and B exchange commodities, each with a value of 10 hours, they have exchanged equivalent amounts of labour. If both only needed to work for 8 hours to reproduce their means of subsistence, both realise 2 hours of surplus value in the exchange, but it does not matter, in terms of the value, whether the surplus value for either or both was 2 hours, 5 hours or zero. For Smith, The Law of Value is expressed in the fact that the value of commodities is determined by the labour required for their production, and manifest in the exchange of these equal values. 

However, because Smith fails to distinguish between labour as the essence of value, and labour-power, the use value sold as a commodity by wage labour, he is led astray when labour exchanges not with revenue, but with capital. If the wage worker provides 10 hours of labour, but is paid wages that amount only to the equivalent of 8 hours labour, this cannot be an exchange of equal values, and so Smith concludes that, as soon as landed property and capital come into existence, The Law of Value ceases to operate. Its on this basis that Smith slips into his cost of production theory of value, rather than his labour theory of value. So, he argues that, because wage labour is abundant and capital is scarce, labour is sold below its value, and capital above its value, thereby enabling capital to appropriate the surplus labour as profit. This removes the explanation for the existence of profit from production and exploitation to the realm of distribution and market forces. 

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