The American economist Carey, believed that it was these different levels of productivity that accounted for different levels of wages, and this same misconception is presented today, that it is rising productivity that leads to higher wages. In fact, the opposite is the case. It is higher wages, which squeeze profits, which lead to capital engaging in technological innovation to develop new machines so as to replace labour, which raises productivity. Higher levels of productivity certainly means that necessary labour-time is reduced, but there is no reason why the expanded surplus labour-time should be used to raise wages/living standards, because the whole purpose of capital in engaging in such activity is to increase profits. Living standards, for some, will undoubtedly rise as a result of the increased productivity, especially for the reasons set out by Marx in the quote on the Civilising Mission, because released capital and labour will go to produce a wider range of products, but, for workers, they will not rise proportionate to the rise in productivity, and so consequently profits will rise by a larger proportion.
What is true is that it is these increases in productivity that bring about increases in relative surplus value, that also facilitate rises in living standards. But, it is rising wages, resulting from a relative shortage of labour, i.e. an overproduction of capital, that leads to capital engaging in technological innovation to replace labour that leads to the rising productivity to begin with. Moreover, the rising productivity leads to falling rather than rising wages. It does so for two reasons. Firstly, rising productivity, by creating a relative surplus population, leads to rising unemployment, and so competition between workers drives down the wages that had previously been driven up, as a result of the shortage of labour. Secondly, rising productivity, reduces the value of wage goods, and thereby reduces the value of labour-power. Wages are the phenomenal form of the value of labour-power, and so as the value of labour-power falls, so wages fall. The consequence is that relative surplus value rises.
Marx makes the point that, even as wages fall, living standards for those workers actually in employment can, and usually do rise. That is because the value of wage goods falls by more than wages. If 6 hours of labour is required to produce 100 units of necessary wage goods, if these 100 units can now be produced in 3 hours, wages may fall to 4 hours of labour, but this 4 hours of wages will still buy a third more wage goods (133 units) than previously were bought by 6 hours. Consequently, even though the living standard of the employed worker will have risen, they will be producing 2 hours more relative surplus value for their employer.
This form of relative surplus value is then produced by increasing productivity in the production of wage goods, and unlike the form of relative surplus value discussed previously, it does not disappear, when all producers use the same technology, and obtain the same levels of productivity. On the contrary, because productivity in the production of wage goods, generally, is raised, thereby reducing the market value of these commodities, it brings about a more widespread reduction in the value of labour-power, and consequent rise in relative surplus value.
The most obvious manifestation of this is where productivity rises in the production of wage goods directly. If productivity in the production of food rises, food becomes cheaper, and so workers need to spend less of each working-day producing the value required to buy the food required to reproduce their labour-power. Money wages can, thereby fall, whilst workers are able to buy the same quantity of food. As money wages fall, money profits rise, and so relative surplus value, and the rate of surplus value rises. The same effect is achieved if workers have access to cheaper food, as happened with the repeal of the Corn Laws, which meant that cheaper European corn was imported to Britain, pushing down prices of bread, flour and so on. Similarly, if other costs and frictions on trade are removed, this has the same effect. By removing borders inside the EU, for example, goods can move more freely, and so the prices of wage goods are reduced, thereby reducing the value of labour-power, and raising the mass and rate of surplus value. Workers do not like to accept lower money wages, even if they go with actual rises living standard. Oligopolies also do not like falling money prices. So, at the start of the 20th century, central banks were established to try to ensure that money prices did not fall, and that falling real wages were hidden by rising money wages. They did this by devaluing money tokens by a greater degree than the fall in the value of commodities, brought about by rising productivity.
But, this process also works indirectly. A tractor is not consumed by workers, other than productively if they are agricultural labourers. But, a tractor is used to produce food, and the value of wear and tear of the tractor enters into the value of the food consumed by the worker. If productivity in tractor production rises, so that the value of tractors falls, the value of wear and tear of tractors entering into the value of food consumed by workers also falls, and so the value of the food falls. Similarly, steel is used in the production of tractors. If productivity in steel production rises, the value of steel falls, and so the value of tractors falls, and so the value of wear and tear of tractors in food production falls, and so on. The more remote from the actual production of the particular wage goods, the smaller the impact of any rise in productivity will have in reducing those values, and thereby increasing relative surplus value.
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