“In Nizhni-Novgorod Gubernia there are in all 2,552 handicraftsmen producing this sort of cutlery, of whom 48% (1,236) work for the market, 42% (1,058) work for a master, and 10% (258) are wage-workers. Consequently, here too the independent (?) handicraftsmen are in the minority. And those who work for the market are, of course, only apparently independent; actually they are no less enslaved to the capital of buyers-up.” (p 208)
Taking the data for the Gorbato Uyezd, Nizhni_novgorod Gunernia, 84.5% of all those who worked worked in industry. Lenin notes,
“Exceptionalist Russian economists, who measure Russian capitalism by the number of factory workers (sic!), unceremoniously classify these working people, and the multitudes like them, as part of the agricultural population, who do not suffer from the yoke of capital, but from pressure artificially exerted on the “people’s system” (???!!)” (Note**, p 208)
Lenin sets out the exact data, which was available for 10,808 of the aforementioned 21,983 working in industry. In metal, leather goods, sadlery, felt and hemp spinning, 35.6% of the handicraft workers worked for the market, 46.7% for a master, an 17.7% were wage workers.
“Thus, here too we see the predominance of the domestic system of large-scale production, the predominance of relations under which labour is enslaved to capital.” (p 208)
Lenin affirms the point made earlier.
“Another reason why the “friends of the people” so freely ignore facts of this kind is that their conception of capitalism has not advanced beyond the commonplace vulgar idea that a capitalist is a wealthy and educated employer who runs a large machine enterprise—and they refuse to consider the scientific content of the term. In the preceding chapter we saw that Mr. Yuzhakov dates the beginning of capitalism directly from machine industry, omitting simple co-operation and manufacture. This is a widespread error, which, incidentally, results in the capitalist organisation of our handicraft industries being ignored.” (p 208-9)
The scientific analysis of capital, as provided by Marx, dates capitalist production back to the 15th century, which is long before large-scale machine production. This capitalist production is founded upon a number of necessary material conditions. Firstly, commodity production must have become sufficiently generalised that significant markets exist, at least for a number of specific commodities. These markets must also be concentrated in specific areas rather than being dissipated across a large area. In other words, it requires that towns of a reasonable size have grown, and, within these towns, artisans, performing a number of trades, operate and exchange their goods, as well as selling them to landowners and agricultural producers, in exchange for food and raw materials. Quesnay's Tableau Economique sets out these economic and social relations. As Marx describes, already in these transactions, the towns begin to exploit the countryside in the prices charged for their goods, which reflect high profit margins.
Secondly, some of these artisans must lose their own means of production. The causes of this can be many fold, from sickness, poor business decisions and so on. It leads, initially, to a need to borrow from usurers. At this time, there are often prescriptions against lending by Christians, which leads to usury becoming the preserve of small numbers of Jews and Lombards. The supply of loanable funds is, therefore, very restricted, whilst borrowing is only resorted to in desperation, so that interest rates are very high. In Capital, and Theories of Surplus Value, Marx quotes from Martin Luther to give the picture of the extent of such interest rates.
In previous times, when artisans fell into such circumstances, it resulted in them becoming slaves or serfs. Now, the existence of significant markets, for a range of industrial commodities, means that, instead, the artisan's means of production can be taken over by the usurer or merchant, to cover the debt, or else might be bought by a master craftsmen, who now operates them as capital. The former independent artisan is then employed as a wage labourer, paid a wage equal to the value of their labour-power. Their output continues to be sold as commodities on the market, at its exchange-value. But, now, the difference between this exchange-value, and what the capitalist has paid for the materials provided, and the wage paid to the labourer, i.e. the surplus value, is appropriated as profit by the capitalist. Capital moves first into those industries where the annual rate of profit is highest, and as it continues to move into these industries, prices fall below the exchange value, until they reach the price of production.
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