Individual Value and Market Value
There is another reason that an increase in productivity may create the illusion that it results in an increase in value created, and that is because of the difference between individual value and market value. Production of any commodity, such as yarn, is undertaken by a range of producers, and each of these producers operate at different levels of efficiency/productivity. If there are three producers of yarn, one may produce 100 metres in 9, hours, a second in 10 hours, and a third in 11 hours. In other words, each producer produces 100 metres of yarn, with a different individual value.
However, competition, transforms these individual values, into a single market value, equal to 10 hours. When each producer comes to sell their yarn, it is this market value which determines how much they will be paid for it, irrespective of how much labour they expended on its production. The lower level of efficiency of the third producer, who expended 11 hours of labour, but is paid only 10 hours equivalent, appears to mean that the value of this labour itself was lower, and vice versa for the producer who expended 9 hours, but obtains the equivalent of 10 hours labour.
Suppose, then, that the third producer, introduces a machine, which enables it to produce the 100 metres in only 8 hours. Now, the average of these three individual values is only 9 hours. The third producer goes from a condition in which they expended 11 hours, but received the equivalent of only 10, to one in which they expend 8, but receive the equivalent of 9, whilst the second producer continues to expend 10, but receives only 9, and the first producer, who expended 9 but obtained 10, obtains now only 9. (Another way of viewing this is that, in 10 hours the producer who introduced the machine will produce 110 metres, with a consequent increase in the amount of money they receive from it, and this increase in the value of their output, will appear to be a direct result of the machine, its marginal revenue product, as bourgeois economics sees it).
It is not, however, the fact that the labour has become more productive, as a result of the introduction of the machine, that accounts for the additional value that this producer obtains, in the form of additional surplus value/profit, but the fact that the higher level of productivity reduces the individual value of their production, relative to the market value at which they sell it. In other words, not an increase in value, but a reduction in value.
The increase in productivity does not increase the amount of new value produced, but reduces it from 30 to 27. The machine, enhances the productivity of labour, manifest not in an increase in the amount of value produced, but in the amount of use values produced in any given amount of time, just as more fertile land enhances the productivity of labour, not by increasing the amount of value produced, but by increasing the quantity of use values produced by a given amount of labour and capital. It is this which is the basis of differential rent. If all three producers introduced the machine, which competition forces them to do, equalising their productivity, they would all produce 100 metres in just 8 hours, manifest in a fall in the value per metre, from 10 to 8.
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