Friday, 10 January 2020

Theories of Surplus Value, Part III, Addenda - Part 31

[4. The Process of Ossification of the Converted Forms of Surplus-Value and Their Ever Greater Separation from Their Inner Substance—Surplus Labour. Industrial Profit as “Wages for the Capitalist”] 

Marx summarises the process by which surplus value first assumes the form of profit, as competition between capitals, in search of the highest annual rate of profit, results in the formation of an average annual rate of profit, as commodities no longer sell at their exchange-value, but their price of production. The fact that an average rate of profit arises means that there are always some capitals that obtain more, and some less, than the average rate. Some spheres will enjoy a higher annual rate of profit, because the organic composition of capital is lower than the average, or the rate of turnover is higher than average. Within each sphere, some firms will obtain higher and others lower rates of profit than the average for that sphere, because some firms will be more efficient, and produce commodities with a lower individual value than the market value. Other will get a lower rate of profit, because they are less efficient and produce commodities with a higher individual value than their market value. 

The fact that all commodities now sell at prices of production, a price that is entirely divorced from the amount of labour required for their production, obscures both the underlying role of the law of value, and, thereby, the nature and source of the surplus value. All that is now seen is that each capital obtains profit, and this profit is proportionate to the size of the capital, not the quantity of labour employed. The price of the commodity is likewise seen as unrelated to the labour required for its production, i.e. cost of production plus an amount of average profit

Already, therefore, value and surplus value have disappeared from view, and been replaced by price and profit. The formation of an average rate of profit depends upon the absence of barriers and frictions, so that capital can move from low profit spheres to high profit spheres. Where there are barriers and frictions this process is frustrated so that surplus profits persist. The persistence of such surplus profits means that rents arise. These rents may take a legal or disguised form. In other words, where capital cannot move freely into primary production, because of the existence of landed property, the rent takes the form of a legal agreement between landlord and tenant. But, such frictions arise in industry too. The most obvious example is that of monopoly, or more usually, oligopoly, whereby the scale of production has become so enormous that only a very few capitals can engage in that sphere at a sufficient level of output to operate efficiently. In these cases, it may be that capital does not flow freely into those spheres so as to raise output to a level whereby prices fall to prices of production. In that case, the oligopolies obtain surplus profits, a part of which, economically, therefore, constitutes rent. In fact, research by Marxist economists in the 1980's and 90's suggests that this is not usually the case, because there is intense competition between these global oligopolistic producers. They also found that as well as there being these barriers to entry, there were also, equally, barriers to exit, as astronomical amounts of investment in fixed capital cannot be easily moved from one sphere to another. (See: Willi Semmler – Theories of Competition and Monopoly, C & C 18, Winter 1982). 

The rent paid by industrial capital to a landlord, be it rent by a farmer to farm more fertile soil, a miner to extract more plentiful supplies of ore, or by a commercial capitalist for a more central location, in a city centre, all appear to be payments related to the specific land in question, and the rent a payment in respect of the value contributed by that land. The fact that the land has no value, and so can contribute no value to the output is then wholly obscured. The fact that the rent is merely an appropriation of the surplus profit, obtained by these particular capitals, is also thereby obscured. Finally, as a consequence of this, the fact that the surplus profit, as with the profit, is only a derivation from the surplus value, is also further hidden. 

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