Marx's theory requires a recognition of the role of The Law of Value as a natural law, applying throughout all modes of production, and then an historically specific analysis of the conditions existing under any particular mode of production. That means that categories themselves have to be understood as historically specific. Yet, Roberts says,
“Then from 1450 to 1600 the population (and labour supply) recovered and real wages fell. In 1630, the English economy was back to almost exactly the same point it was at in 1300.”
This is a strange argument for a Marxist to make. Capitalist production begins in the towns in the 15th century, as the towns grow, creating the minimum size of market required for capitalist production to be able to undercut the independent handicraft producers. Its why, as Marx describes, capitalism has to begin in the towns and such industrial production rather than in agriculture.
Engels spells it out clearly in his Supplement to Capital III. He describes the first areas in which a capitalist industrial rate of profit is established. Indeed, a study of Marx's analysis of capitalist rent, itself shows that you cannot have capital invading agriculture, and producing capitalist rent (surplus profit) unless first you have had developed an average annual industrial rate of profit, which determines what is a surplus profit and what is not! The first areas listed by Engels, of capitalist production are shipping, mining and textiles.
"Shipping on the scale practiced by the Italian and Hanseatic maritime republics was impossible without sailors, i.e., wage-laborers (whose wage relationship may have been concealed under association forms with profit-sharing), or without oarsmen — wage-laborers or slaves — for the galleys of that day. The guilds in the ore mines, originally associated workers, had already been converted in almost every case into stock companies for exploiting the deposits by means of wage-laborers. And in the textile industry, the merchant had begun to place the little master-weaver directly in his service, by supplying him with yarn and having it made into cloth for his account in return for a fixed wage — in short, by himself changing from a mere buyer into a so-called contractor.
Here we have the first beginnings of the formation of capitalist surplus-value. We can ignore the mining guilds as closed monopoly corporations. With regard to the ship-owners, it is obvious that their profit had to be at least as high as the customary one in the country, plus an extra increment for insurance, depreciation of ships, etc. But how were matters with the textile contractors, who first brought commodities, directly manufactured for capitalist account, into competition with the commodities of the same sort made for handicraft account?"
Engels describes this initial development of capitalist production, as industrial production in textiles, as the merchant capitalists becoming buyers up, as Lenin describes also in Russia, and then actual employers of former independent producers as wage workers. As Engels describes, in conditions where these independent producers still have their own small plot of land, in the towns, to provide for their own subsistence, its not their labour-power they have difficulty in reproducing, but the value of their means of production. The greater the proportion of means of production in their output, i.e. the higher the organic composition of capital, the bigger a problem this is for them. So, for those independent producers who fail, it is those whose production has such a high organic composition that first lose them, and become dependent upon merchant or money-capitalists to provide them. Where the merchant sold means of production to the independent producer, now they provide them free, but appropriate the ned product in return only for a payment of what amounts to wages.
But, Marx in Theories Of Surplus Value, as with Lenin's account in "On the So Called Market Question", and other essays, and most notable in "The Development of Capitalism in Russia", describes how the more efficient independent commodity producers, were also able to accumulate capital, and become capitalist producers.
And, it is this process, again as Lenin describes in "On The So Called Market Question", which undermines the domestic industrial production of the peasant households, upon which they increasingly relied for money revenues, which leads to their ruination, and conversion into wage labourers too, creating the basis for a large market for agricultural products and the invasion of agriculture by capital.
"The next step in the subjugation of industry by capital takes place through the introduction of manufacture. This, too, enable the manufacturer, who is most often his own export trader in the 17th and 18th centuries — generally in Germany down to 1850, and still today here and there — to produce cheaper than his old-fashioned competitor, the handicraftsman. The same process is repeated; the surplus-value appropriated by the manufacturing capitalist enables him (or the export merchant who shares with him) to sell cheaper than his competitors, until the general introduction of the new mode of production, when equalization against takes place. The already existing mercantile rate of profit, even if it is levelled out only locally, remains the Procrustean bed in which the excessive industrial surplus-value is lopped off without mercy.
If manufacturing sprung ahead by cheapening its products, this is even more true of modern industry, which forces the production costs of commodities lower and lower through its repeated revolutions in production, relentlessly eliminating all former modes of production. It is large-scale industry, too, that thus finally conquers the domestic market for capital, puts an end to the small-scale production and natural economy of the self-sufficient peasant family, and places the entire nation in service of capital. "
(ibid)
But, its precisely for this same reason that the numbers of wage workers employed in capitalist production remains tiny, compared to the number of petty-commodity producers, and peasants. Indeed, as Marx writes in The Critique of the Gotha Programme, even in the middle of the 19th century, in Germany, peasants comprised the majority of society.
So, the role of wages in relation to living standards, for the majority of society, can play little role during this period. This analysis seems similar to that of Lange, which was criticised by Marx, and of Struve, who utilised Lange’s argument in relation to Russia, and was criticised by Lenin, who also dismissed Lange’s argument. Even if we assume that the number of non-capitalist wage workers increased – in other words workers employed by the feudal lords as retainers etc., and paid wages – this still represents a small proportion of society.
As Lenin points out, dismissing this same argument from Struve and Lange, its not wages that determine the living standard of the direct producing peasant, but a) the fertility of their land, and b) the proportion of their product taken from them by the landlord in feudal rents, by the Church in tithes and the state in taxes. What does happen, during this period of growing capitalist industry in the towns, is that the feudal lords find themselves requiring a larger surplus product, as commodity economy expands, and they seek to buy this wider range of industrial products, especially, as Marx explains, given the towns, on the basis of this capitalist production, begin to exploit the countryside via unequal exchange.
The growing merchant class bring in exotic products from oversees, as global trade expands, also creating a basis for capitalist industrial production, as Marx sets out in The Manifesto. The feudal lords arena of consumption is expanded, and its this which causes the landlords to not only move from Labour Rents, through Rent in Kind to Money Rents, as they need money to buy this expanded range of industrial commodities, but leads them to increase the proportion of the peasants output that must be handed over as rent. Its that which impacts the living standards of the peasants not changes in wages, given that the peasants, be they serfs or freeholders, are not paid wages!
The need of the peasants to acquire money to pay rents, tithes and taxes, where previously they only needed to supply surplus labour or surplus product, means that peasants must now also begin to produce commodities, rather than engaging entirely in direct production. As Lenin describes, its this boost to commodity economy, as the peasants must engage in increased domestic production, and begin to divert a portion of their agricultural output to commodity production, to sell to an increasing town workforce, which creates the basis for the differentiation of the peasantry, which is not possible until capitalist development in the towns promotes this demand for agricultural commodities, and so, commodity production in agriculture. Even, then, of course, as Marx describes, and Lenin also establishes in “On The So Called Market Question”, this commodity production in the countryside is not capitalist production, unlike that already established in the towns. But, the commodity economy now implanted in the countryside creates the basis for the differentiation of the peasantry into proletarians and bourgeois, just as the differentiation of the independent commodity producers in the towns had done previously.
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