In Theories of Surplus Value, Marx sets out the stages by which capital, goes about raising absolute surplus value. Firstly, where workers are not already working up to the normal working-day, capital can simply extend the length of the individual working-day. In conditions, where labour is plentiful, capital can do this without paying additional wages, and without fear that it will cause a rise in the value of labour-power. Under these conditions, surplus value rises in proportion to the rise in the length of the working-day. So, if necessary labour is 8 hours, the working-day is 10 hours, so that surplus labour is 2 hours. If the working-day rises by 2 hours, the amount of surplus value doubles, if it rises by 4 hours, it trebles, and so on. The rate of surplus value is, thereby increased, as well as the mass of surplus value. On this basis, an overworked employed population goes along with an underworked, unemployed population.
There is a limit to this, because, at a certain point, the excess labour supply begins to be used up, both because the overworking of the workers wears them out, and because the increasing mass of surplus value causes capital to accumulate faster, and thereby increases the demand for labour. At a certain point, then, capital has to begin to pay for the additional labour. If wages simply rise at a flat rate, the rate of surplus value, then, does not rise, but the mass of surplus value does. If wages are £10 per hour, and the worker works for 8 hours, during which they create £160 of new value, surplus value is £80. If, then the working day rises to 10 hours, so that £200 of new value is created, whilst wages rise to £100, then £100 of surplus value is produced.
At a certain point, capital must pay overtime rates for this additional labour. As Marx sets out, these overtime rates compensate for the fact that with these longer hours, the value of labour-power itself rises. But, as a consequence, they do not represent a real increase in wages, or rise in living standards, only a reflection of the fact that labour's cost of reproduction itself has increased, that labour is being worn out more quickly and so on. As a consequence, however, the rate of surplus value on this additional labour is lower than for the rest of the working-day, but that has the effect of reducing the rate of surplus value for the whole working-day itself. The rate of surplus value falls, but the mass of surplus value continues to rise.
Finally, capital is faced with paying not just overtime rates, but also of paying higher hourly rates of pay for the whole day, because it must compete for available labour supplies. Before this point is reached, capital seeks other ways of increasing absolute surplus value. For example, particularly in newly industrialising countries, it seeks to draw in additional labour reserves from the countryside. Existing peasant producers, facing destitution and loss of their means of production, are drawn into the towns and cities as industrial labourers. Women and children are also drawn into production alongside male workers, and usually this can be done without any significant overall increase in the wage bill, because the wages of male workers that previously had to cover the whole costs of the household, and of reproducing labour-power, are now shared amongst the wages of the entire household. Initially, wives and children are brought into employment as assistants to the male head of the household, and often it is the head of household who pays the wages to their wives and children. In addition, particularly in more developed capitalist economies, capital expands the workforce by drawing in immigrants. All of these methods enable capital to increase absolute surplus value, even where the individual working day is not increased, by instead increasing the social working-day.
When capital cannot expand absolute surplus value any further by either extending or intensifying the individual working-day, or else by increasing the social working-day, by increasing the number of simultaneously employed workers, it faces a crisis of overproduction of capital. If absolute surplus value cannot be increased further, then any increase in the amount of capital employed, must result in a fall in the rate of profit. Any further increase in capital, leading to further rises in the demand for labour, will cause wages themselves to rise, so that the rate of surplus value will fall, and the mass of surplus value itself will fall, profits are squeezed by these rising wages. This is the situation that Marx describes in Capital III, Chapter 15.
“As soon as capital would, therefore, have grown in such a ratio to the labouring population that neither the absolute working-time supplied by this population, nor the relative surplus working-time, could be expanded any further (this last would not be feasible at any rate in the case when the demand for labour were so strong that there were a tendency for wages to rise); at a point, therefore, when the increased capital produced just as much, or even less, surplus-value than it did before its increase, there would be absolute over-production of capital; i.e., the increased capital C + ΔC would produce no more, or even less, profit than capital C before its expansion by ΔC. In both cases there would be a steep and sudden fall in the general rate of profit, but this time due to a change in the composition of capital not caused by the development of the productive forces, but rather by a rise in the money-value of the variable capital (because of increased wages) and the corresponding reduction in the proportion of surplus-labour to necessary labour.”
This crisis of overproduction, can only be resolved by capital overcoming this problem of the relative shortage of labour, and by reducing the amount of necessary labour so as to raise the rate of surplus value. In this, capitalism has an advantage over feudalism, because capital itself has the power to reduce necessary labour-time, by raising labour productivity. This is part of its historic mission. At the point of crisis, capital cannot reduce wages, because it faces a shortage of labour, which causes wages to rise. Capital is forced to invest in the production of new labour-saving technologies. These technologies mean that less labour is required to produce a given mass of output, so that a relative surplus population is created. This excess supply of labour means that wages fall. These new technologies, by increasing productivity, reduce the labour-time required to produce the wage goods required for the reproduction of labour-power. They reduce the value of labour-power, and so increase relative surplus value, so raising the rate of surplus value, and rate of profit, and so overcoming the crisis of overproduction.
The relative surplus population means that capital can again, now take back some of the concessions it made in relation to the length of the working-day, number of holidays, retirement age and so on. In other words, it can begin to increase the length of the individual day, once more, and thereby to again extract additional absolute surplus value. It can be seen, in the extension of the state retirement age, overturning of reductions in the working-week, reduction in holiday entitlements, requirement for workers, in certain jobs, to be available outside work, to work on laptops etc. on their way to work, and so on.
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