New Value Created and Congealed Value Preserved
The labour process is one in which use values are transformed. That transformation takes the form of either a transformation of one use value into some other use value, or else takes the form of the movement of a use value from one location to another. Before Man could engage in the first form, and create products, it was necessary that Nature must do so, so that Man could consume, by engaging only in the second form. Nature produced plants that hunter-gatherers could simply pick and eat; it produced stones and sticks that could be picked up and used as the first tools and weapons with which to hunt other animals, and so engage in production themselves. The greater the productivity/fertility of Nature, the more of these use values existed for Man to consume and utilise. This is fundamental to understanding the Marxian theory of rent – and is also fundamental to Marx and Engels' materialist analysis of the role of The Law of Value, in the evolution of successive forms of social organism.
Value is a function of time, as Marx puts it in The Poverty of Philosophy,
“Time is everything, man is nothing; he is, at the most, time’s carcase.”
Of course, as Marx sets out, there, and in A Contribution To The Critique of Political Economy, and Capital, for commodity production, this time is a measure, not of concrete labour, the actual labour embodied in products/commodities, which all varies in quality, and may or may not be socially necessary, but of universal labour. It is purely the duration of this universal labour-time that determines the new value created, irrespective of the quantity of new use values created during that time. So, if we take a commodity such as yarn, the new value created, which resolves into the revenues wages and profit (v + s), is a function of this labour-time expended, irrespective of the productivity of the labour, measured in terms of the quantity of use values produced.
If 100 metres of yarn is produced by 10 hours of current universal labour, then the new value component of the yarn is equal to 0.10 hours per metre. If the labour doubles in productivity, so that it produces 200 metres in 10 hours, then the new value produced is still only equal to 10 hours, but the new value component of each metre, now falls to just 0.05 hours per metre.
Does this mean that the total value produced does not rise, even though the amount of new value created has not risen? No, because the value of the 200 metres of yarn does not consist solely of the new value created by labour, and resolved into revenues (v + s). It comprises also constant capital in the form of raw material (cotton), as well as the wear and tear of fixed capital (machines, buildings etc.) The value of this constant capital is merely preserved and transferred to the value of the output. It is not a function of time, but of the quantity of use values produced. This is also why GDP, which measures only the new value created by labour, is not the same as total output, and changes in GDP do not measure changes in total output.
For example, 100 metres of yarn, may require 100 kilos of cotton to produce it, but, then, 200 metres of yarn will require 200 kilos of cotton for its production, and the wear and tear of machinery would also increase as a result of the greater mass of production. If 100 kilos of cotton has a value of 10 hours labour, then, assuming no change in productivity, in cotton production, and ignoring the wear and tear of fixed capital, 200 kilos of cotton will have a value of 20 hours labour. Comparing the two situations, then, we have:
c 10 + (v + s) 10 = 20 = 100 metres = 0.20 per metre
c 20 + (v + s) 10 = 30 = 200 metres = 0.15 per metre
In other words, as a result of the doubling of productivity, in yarn production, the amount of new value does not rise, but the total value of yarn production does rise, because a greater value of constant capital (cotton value) is consumed in its production, and so a greater value of constant capital is preserved and transferred into the value of output. Despite productivity doubling, therefore, in yarn production, the value of yarn production does not double, but rises only by 50%, accounted for solely by the rise in the value of the consumed cotton, due to the quantity of cotton consumed being doubled. This is also the basis of Marx's Law of the Tendency for the Rate of Profit to Fall.
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