“What is new in Jones’s presentation is that the increase in the auxiliary capital over and above a certain level is contingent on an increase of knowledge. Jones declares that the necessary conditions are: 1) the means to save the additional capital, 2) the will to save it, 3) some inventions by means of which the productive power of labour is increased sufficiently to produce the additional capital and to produce a profit on it.” (p 440)
As I've described previously, where there is extensive accumulation, so that simply more machines of the same kind are employed, there is no consequent rise in productivity. In other words, if 1 worker and 1 machine produce 1,000 units of output, per day, 2 workers and 2 machines will produce 2,000 units per day. Any increase in productivity, here, will result only from economies of scale, or greater division of labour. Its only if 2 workers with 2 machines, of a different kind, are able to produce 3,000 units per day that there is a rise in productivity. So long as the amount of employed labour can be increased (longer social working day) the amount of surplus product/value will rise. But, as soon as the amount of employed labour starts to hit its limits, the rise in the mass of surplus product/value also hits a limit. Moreover, as the demand for labour-power rises, wages rise – first higher overtime payments, then higher hourly rates, etc., – and this causes a squeeze on profits.
But, Marx also introduces another factor here.
“In the production of cotton, for example, the planters in America (like those in India at the present time) were able to plant large areas, but did not have the means for converting the raw cotton into cotton by means of cleaning at the right time. Part of the cotton rotted in the fields. This kind of thing was ended by the invention of the cotton gin. Part of the product is now converted into cotton gin. But the cotton gin does not merely replace its own cost; it also increases the surplus product.” (p 440)
In other words, it is conceivable that the raw cotton could all have been cleaned, in time, had very large amounts of labour been employed in that task. But, all these additional workers would have to have been paid, and this large demand for labour-power would have raised the wages of those workers. This example also illustrates another point made by Marx in Capital I, in relation to the introduction of machines to replace labour. It is not just a question of a machine replacing actually employed labour, but of replacing potentially employed labour. Here, these many thousands of additional workers required to clean the raw cotton were not actually employed. The cotton gin does not replace employed labour, but replaces the labour that would otherwise have had to be employed to achieve the given level of output. So, if previously 1 million kilos of raw cotton was picked and cleaned by 10,000 workers, it would have required 50,000 workers to pick and clean 5 million kilos. The cotton gin enables these 5 million kilos to be picked and cleaned by, say, 20,000 workers. That means that rather than workers being physically replaced, the workforce is doubled. Yet, it is 30,000 less than it would have been for this level of output. The introduction of the machine has saved the labour of 30,000 workers. Provided the machine costs less than the wages of these 30,000 workers, it will have reduced the cost of production of cotton.
If the workers were each paid £10, then to produce the 5 million kilos would have cost £500,000 in wages, but undoubtedly more, as the demand for labour-power would have pushed up wages. If the cotton gin costs £50,000 and now £200,000 is paid in wages, the cost of production is £250,000, representing a saving of £250,000. Now, the whole 5 million kilos can be sold, and the value of the cotton gin, along with the wages of the 20,000 workers is reproduced in the value of the cotton. Moreover, by reducing the market value of cotton, it results in an expanded level of demand, and expansion of the market.
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