The worker does not sell labour, nor the product of their labour, to the capitalist, but their labour-power. In doing so, they put that labour-power, that ability to perform labour, at the disposal of the capitalist, for a given, contracted period of time, say 12 hours a day, six days a week. Exactly how long this contracted period is is not determined by the value of labour-power, but by the general social conditions existing in society, i.e. the social relations existing, between capital and labour.
It will never be the case that capital will knowingly employ labour for a shorter duration than is required to cover the wages paid to the worker, because capital is only advanced in order to produce a profit. So, the capitalist will always be in the driving seat, in this relation. The worker, now, no longer having their own means of production, must sell their labour-power, in order to live. But, the capitalist can simply live off their own capital. They only allow the worker to work if they agree to work for a sufficient period to produce the required surplus value, i.e. to provide the capitalist with free labour. Competition between workers for available employment, pushes wages down to the value of their labour-power.
That is why the notions about the workers “obtaining the full fruits of their labour” are utopian nonsense. Were that the case, there would be no profit, and so no capital advanced. But, as Marx, also, sets out, in The Critique of The Gotha Programme, its also impossible under Socialism too, because a surplus is required for accumulation and so on.
However, at certain times, conditions may be more or less favourable to workers. When capital expands, rapidly, more workers are employed, and the simple laws of supply and demand push up wages at the expense of profits. Its here that Smith's explanation of crises of overproduction of capital, as also set out by Marx, in Capital III, Chapter 15, and Theories of Surplus Value, Chapter 21, apply. But, capital has a response to this too. In Capital III, Chapter 15, Marx notes,
“Given the necessary means of production, i.e., a sufficient accumulation of capital, the creation of surplus-value is only limited by the labouring population if the rate of surplus-value, i.e., the intensity of exploitation, is given; and no other limit but the intensity of exploitation if the labouring population is given.”
So, capital responds to this squeeze on profit, caused by an overproduction of capital/lack of supply of labour, by engaging in technological innovation. New machines raise productivity so that the existing output can be produced with less labour. A relative surplus population is created, the laws of supply and demand, now cause wages to fall, and profits to rise.
Engels briefly describes what Marx sets out at length in Capital I, that it does not matter whether the wages take the form of time-wages, or piece wages. The latter are calculated on the basis that the average worker would produce a given number of pieces in the normal working day. Consequently, whilst some workers might produce more (and so get higher wages), others produce less, so that the total paid in wages is the same. It does, however, encourage workers to work faster on average.
“In our present-day capitalist society, labour-power is a commodity like any other, and yet quite a peculiar commodity. It has, namely, the peculiar property of being a value-creating power, a source of value, and, indeed, with suitable treatment, a source of more value than it itself possesses. With the present state of production, human labour-power not only produces in one day a greater value than it itself possesses and costs; with every new scientific discovery, with every new technical invention, the surplus of its daily product over its daily cost increases, and therefore that portion of the labour day, in which the worker works to produce the replacement of his day's wage decreases; consequently, on the other hand, that portion of the labour day in which he has to make a present of his labour to the capitalist without being paid for it increases.” (p 12)
Trotsky goes on to list the places where such parliaments had been established, including Egypt, India, Ireland and South America. Its not necessary to support bourgeois-democracy, or to cease explaining its sham nature, to still utilise it, the better to expose it. Its no different to not supporting bargaining within the system, as against explaining its sham nature and limitations, and need to abolish the wages system, whilst continuing to support workers who have not yet reached that revolutionary consciousness, and who do continue to strike and bargain within the system. Our goal is to utilise such periods to explain these things to the workers to gain their support, and, thereby, develop that revolutionary consciousness.
“What reason is there for asserting that after the crushing of the revolution which has just taken place, China will not pass through a parliamentary or pseudo-parliamentary phase, or that it will not go through a serious political struggle to gain this stage of evolution? Such an assertion has no foundation at all.” (p 194-5)
If the idea is put forward that workers should focus on struggling for higher wages, presenting such activity as class struggle, and, on this basis, place all of its activity on such behaviour, then, that represents economism and opportunism. It is a fallacy in representing such activity, and the claim that such struggle results in a change of workers' consciousness. The concept involves a spontaneous development of class consciousness, as proposed by Luxemburg, along with the potential to recruit individuals to centrist and syndicalist organisations, on the basis of building the party. It is even worse, when it amounts simply to social-democracy, and a restriction to merely trades union consciousness. Those involved, as much as they like, can claim to be pursuing a revolutionary agenda, but the reality is that they are not, no matter how much they emphasise “more militancy”.
It is not the extent of their demand for more militancy, and left-wing rhetoric that is revolutionary. To be revolutionary, it requires that a program, based on transforming the consciousness of workers, is put forward. Its not raising wages, but recognition of the need to abolish the wages system, the need to exercise control over capital, to establish soviets and so on.
In conditions where such a revolutionary situation arises, it is those ideas that revolutionaries must put all of their activity into developing, not simply strikes for higher wages, building a bigger demo, and so on. It is always the case that Marxists explain that rises in wages are a dead-end, just as it is to explain that bourgeois-democracy is a sham, but their emphasis on that, as against their patience in supporting workers, and their pursuit of those goals, is a function of the actual conditions that exist.
Engels sets out the problem that the Classical Economists faced, however, solely in relation to simple labour. The cost of production of such a worker, Engels assumes, to be 3 Marks a day. If we assume that the worker is a machinist, who, each day, produces part of a machine, then, this part also comprises materials, wear and tear of the machines used to produce it, of the factory and so on. As with the earlier examples of The Putting Out System, the capitalist bears these costs, which can be deducted from the value of the produced component.
Engels assumes these costs to be 21 Marks, which, adding in the wages, comes to 24 Marks. However, the capitalist calculates that they will be able to obtain 27 Marks, being the value of the component, as determined by the competition in the market, with all other such producers. In other words, the value added by labour is 6 Marks, whilst the value of that “labour”, as reflected in the wage was only 3 Marks. So, where did the 3 Marks of surplus value come from? 21 Marks came from the value of materials, and wear and tear of fixed capital, required for production (constant capital). That production also entailed a day's labour – 12 hours – by the worker. Consequently, we can see that a day's labour produces 6 Marks of new value, whereas the worker is paid wages of 3 Marks for providing that labour.
It is, then, clear that the worker is not paid for providing a day's labour, or the product of a day's labour, but, on the assumption that exchanges have taken place on the basis of equal values, not cheating, we can't explain this as being the result simply of the worker being cheated. The answer, as described earlier, is that the worker does not sell labour, or the product of their labour, to the capitalist, but their labour-power. The value of this labour-power is equal to its cost of production, 3 Marks, i.e. the equivalent of 6 hours, or ½ a day's labour, not 12 hours.
As Marx describes, this is different to the situation in relation to simple commodity production and exchanges by individual commodity producers. It may well be the case that producer A can reproduce their labour-power in this same 6 hours, but works for 12 hours, creating a new value 6 Marks. The same would be true for producer B. When they exchange their commodities, ignoring other costs, A sells and receives 6 Marks, which they use to buy the product of B's labour, also for 6 Marks. Both have exchanged 12 hours of labour for 12 hours of labour in some other form. These are equal exchanges of labour with labour, revenue with revenue.
If B is a gardener, then, A might pay them 6 Marks to provide 12 hours of labour tending their garden, which is an exchange of revenue with labour. So, what is it that enables the capitalist to be able to obtain 12 hours of labour from the worker, whilst only paying the equivalent of 6 hours of labour for it? It is the fact that this is an exchange of capital with labour, and this signifies a different set of social relations to those of simple commodity production and exchange. The capitalist pays the worker 3 Marks as wages, and this is, indeed, an exchange of equal values, because this is the value of what the worker actually sells, which is, no longer, the product of their labour, in the form of some commodity, or a labour-service (for example, gardening, cooking, sexual services), but is their labour-power.
The value of this capital (variable-capital) is, in fact, greater than the value of the commodities/money that comprises it. It is, in this instance, equal to a value of 6 Marks, because, in the given historical and social conditions, it can buy 12 hours of labour. In terms of this variable-capital, equal to what is paid out as wages, its value, as capital, is determined by the rate of surplus value, which is, here, 100%. In other conditions, it might buy 15 hours of labour, a 150% rate of surplus value, giving it a value of 7.5 Marks, or it might buy only 10 hours of labour, giving it a value of 5 Marks.
If the value of labour-power falls to say 1.5 Marks, because the value of wage goods fall, the capitalist, for the same expenditure in wages, could employ twice as many workers. If they continued to work for 12 hours, each worker would produce the same 6 Marks of new value, but, as there are twice as many workers, twice as much new value is produced, by the same quantity of variable-capital. In practice, firms must employ materials, machines etc. (constant capital) as well as labour-power, an so it is the relation of the surplus value to this total capital advanced (s/(c + v)), which determines the rate of profit. The actual value of capital, as capital, therefore, as against the value of the commodities that physically comprise its components, is determined by the average rate of profit, but that is for a further discussion.
Because Marxists are concerned with proletarian, not bourgeois power, proletarian not bourgeois democratic revolution, Permanent Revolution explains, not only why the workers must remain independent of these other class forces, even as they ally with them for immediate practical activity, but why, if it does not do so, it will inevitably suffer the consequences when the bourgeoisie and petty-bourgeoisie split from it, as happened in 1848, and in 1927, in Shanghai and Wuhan. Moreover, as Trotsky describes, and Lenin also set out, in his Letters On Tactics, if the workers' party fails to take up and struggle for these demands of the workers, then, as with Kerensky, in 1917, the workers will simply abandon them.
By contrast, the adoption of the ideas of Permanent Revolution, in such conditions, does enable the use of demands in a transitional manner. In such a revolutionary situation, even distributional demands for higher wages, become transitional, because, as employers baulk at paying them, and close workplaces, so it leads to the need to occupy the workplace, to institute real workers' control of production, and so on. Its true that, in such conditions, the ruling-class will not sit idly by, relying on the institutions and procedures of formal democracy. It will prepare a counter-revolutionary assault, using its state, fascist paramilitaries, and often both.
But, that does not, at all, mean that, in a non-revolutionary situation, the ruling-class will not utilise, or even establish, bourgeois-democracy, because, as Lenin described, in State and Revolution, it is the most effective and efficient political regime via which it rules.
“If, during “decisive moments” of the revolution, bourgeois democracy is inevitably torpedoed (and that not only in the colonies), this in no wise signifies that it is impossible during inter-revolutionary periods.” (p 193-4)
In 1925-7, a revolutionary situation did exist in China, and so the principles of Permanent Revolution applied. But, it was the ECCI which failed to apply them. They obstructed the formation of workers and peasants soviets, because, in order to retain an illusory support from the bourgeoisie, represented by the KMT, they rejected the idea of the independence of the workers and peasants, and insisted it subordinate itself to, and liquidate itself inside, the KMT. In doing so, it facilitated the coup of Chiang Kai Shek, and, then, the betrayal of Wang Chin Wei. It let a revolutionary period slip, and a counter-revolutionary period to commence, just as it had done in Germany and Britain.
“Now, before a new “decisive moment”, a long period must be passed through, during which the old questions will have to be approached in a new manner.
To assert that in the colonies there can be no constitutional or parliamentary periods of evolution, is to renounce the utilization of methods of struggle which are essential to the highest degree, and is, above all, to make hard for oneself a correct political orientation, by driving the Party into a blind alley.” (p 194)
As Marxists, we do not support bourgeois-democracy, nor propagate the lie that the workers can achieve their class goals through it. We are not parliamentarists, and, time and again, as with Chile, in 1973, the truth of that assessment has been demonstrated. As Ralph Miliband described in “Parliamentary Socialism”, the sham of bourgeois-democracy puts up one barrier after another against workers being able to even elect a real Workers' Party into the position of majority government. Even the bourgeois workers parties, like the Labour Party, face obstruction of any measures in workers' interest that significantly challenge the ruling-class. Wilson's Labour government, was reformist and compliant, and yet faced the possibility of a coup organised by sections of the ruling-class. But, that does not mean the ruling-class will never utilise bourgeois-democracy, as against fascist or authoritarian political regimes, nor that, when it does, Marxists shun it.
“To say that for China, as, moreover, for all the other states of the world, there is no way out towards a free, in other words, a socialist development, by following the parliamentary path, is one thing, is right. But to claim that in the evolution of China, or of the colonies, there can be no constitutional period or stage, that is another thing, that is wrong.” (p 194)
On the basis of their theory, the economists arrived at the contradiction, and dead end, described earlier. If labour, and not labour-power is sold as a commodity then what is the value of an hour's labour? The question is meaningless. If we take labour not only as the essence of value, but also its measure, it is like asking what is the length of a metre? Well, its a metre, and we have moved forward not one jot. To say the value of an hour's labour is an hour's labour is a sterile tautology, but also leads to the contradiction faced by Smith. If the worker sells an hours' labour, then equal exchange requires they get the equivalent of an hour's labour in wages, equal to the value of an hour's labour in wage goods, or money.
If capital buys 10 hours of labour, at its value, it pays the equivalent of 10 hours labour for it, either in money wages or commodities, but, then, if wages equal 10 hours labour, and the worker creates the same 10 hours of new value, there can be no surplus value/profit! To explain profit, you, then, have to revert to Mercantilist theories based on cheating and unequal exchange – many liberals, Stalinists, and Third Worldists reverted to this pre-Marx/pre-Smith theory as, also, the basis upon which to explain so called “super-exploitation” by imperialism – which contradicts the theories of commodity production and exchange, which assume an exchange of equal values.
Moreover, as Marx explains, whilst such cheating and unequal exchange might explain the individual profits of this or that capital, they cannot explain the existence of profit overall, because the profit obtained by such cheating, requires losses on the part of those cheated, so that profits and losses cancel to zero. For liberals, Stalinists and Third Worldist, the logic of that is, necessarily “the development of underdevelopment”, the profit from unequal exchange for imperialism, must have as its counter, an equal loss for the counter party in the “less developed” economies, leading to their further lack of development. In which case, the actual development of nearly all economies across the globe, and the particularly rapid development, and capital accumulation of some of those former less developed economies, becomes impossible to fathom!
“Classical economics, therefore, essayed another turn. It said: the value of a commodity is equal to its cost of production. But, what is the cost of production of “labour"? In order to answer this question, the economists are forced to strain logic just a little. Instead of investigating the cost of production of labour itself, which, unfortunately, cannot be ascertained, they now investigate the cost of production of the labourer. And this latter can be ascertained. It changes according to time and circumstances, but for a given condition of society, in a given locality, and in a given branch of production, it, too, is given, at least within quite narrow limits.” (p 8)
Of course, we come back, here, to the question of concrete as against abstract labour. The cost of production of a brain surgeon is greater than that of a machine minder, because the former requires much more expenditure of resources for education and training. It is the concrete labour-power of the worker that the capitalist buys, and for which they pay the given wage, as the phenomenal form of the value of this labour-power. There is no correlation between this wage/value of labour-power, and the value created by the application of this labour, because the latter depends on the relative value that consumers place on it, in the market.
However, suppose that the value of an hour's labour-power of a brain surgeon is £10, and that of a weaver £2, but that, in the market, consumers value the product of an hour's labour by the former to be £20, and that of the weaver to be £10, the rate of surplus value for the latter is five times that of the former. For one brain surgeon, a capitalist can employ 5 weavers, and where the former produces £10 of surplus value, the latter produces £40. Capital would, then, all else being equal, move into weaving, and out of brain surgery. The price of cloth would fall, whilst weavers' wages would tend to rise above their value. The opposite would apply in relation to brain surgery. But, the other consequence would be that the capitalist, in the latter sphere, would look to reduce the cost of producing the labour-power of surgeons.
“Naturally, when the revolution (and certainly not only in the colonies) “draws close to the decisive moment”, then every mode of action in the Guomindang style, that is to say, all collaborationism, is a crime involving fatal consequences: one can then conceive only of a dictatorship of the possessors or a dictatorship of the workers. But as we have already seen, even in such moments, in order to triumph over parliamentarism as revolutionists, one must have nothing in common with the sterile negation of it.” (p 193)
In other words, its not a question of whether this or that demand can be supported, but whether the purpose of doing so flows from an opportunist or revolutionary perspective. As Trotsky sets out, elsewhere, it is quite different to support a demand for workers' control, where the bourgeoisie is firmly in control, and where it is simply code for class collaboration and corporatism, as against supporting such a demand in a revolutionary situation, in which it actually means the workers seizing control of their means of production, and defending it, arms in hand, as part of a struggle for workers' power in the whole of society.
This is why the use of transitional demands, by much of the “Left”, today, is ill-informed. They are used as some kind of talisman, or else a clever device to trick workers into a revolutionary course. That is not at all the nature of transitional demands. It is not the demand (i.e. the form of words) that makes it transitional, but the set of social conditions existing at the time, which determines whether its use is simply adventurist phrase-mongering, opportunist, or revolutionary. In 1938, when The Transitional Programmewas published, Trotsky, wrongly, believed that a revolutionary situation still existed, as prior to WWI. Yet, even in The Transitional Programme, Trotsky sets out the conditional nature of those demands, dependent on the existence of this revolutionary potential in society. For example, in relation to the demand for the nationalisation of the banks.
“However, the state-ization of the banks will produce these favourable results only if the state power itself passes completely from the hands of the exploiters into the hands of the toilers.”
Italy, for years, had a legislated Sliding Scale of Wages (The Scala Mobile), and Heath's Tory government, in the 1970's also introduced an indexation of wages to prices. Heath's Three Day Week, in 1974, could also be viewed as a sort of Sliding Scale of Hours. None of these measures had any transitional, let alone revolutionary content. The same is true of nationalisation by the capitalist state, for example, the nationalisation of banks in 2008.
The position of the ECCI, in criticising support for the demand for a Constituent Assembly as opportunist, simply reflected the Stalinist zig-zag from its own opportunist errors, in Germany, Britain and China, to insane ultra-Left sectarianism that was to become The Third Period. Trotsky quotes Strakhov,
“There [in the colonies], bourgeois democracy cannot exist; only the bourgeois dictatorship, operating openly, is possible It cannot have there any constitutional path.” ( p 193)
That was clearly wrong, even though based upon a correct idea. It again fails to take account of the points above, in relation to different periods and social conditions. The idea behind Permanent Revolution is that it sets out the conditions in which, during a bourgeois-democratic, national revolution, the workers can and do take the lead. It does not mean they will do so, but, where they do, the consequence of this is also that the workers will be led to assert their own class interests, at which point the bourgeoisie and petty-bourgeoisie will turn against them.
Then, as Marx sets out, these independent commodity producers, still based on handicraft production, are brought into the handicraft workshop or manufactory. They continue to operate as individual producers, within it, and, as with The Putting Out System, sell their end product to the workshop/factory owner. Again, it appears, superficially, that they have sold their labour, or product of their labour, to the capitalist. That is enhanced by the fact that they bargain individually with the capitalist over the prices paid. This is why a lot of the early analysis focuses on the prices paid for that labour, and the explanations/justifications for the existence and extent of profit, as discussed in Capital I. In fact, the explanation for the existence of, and large amount of profit resides in this fact that what is being bought is not labour or the product of labour, but labour-power.
The next stage comes as the division of labour takes place inside the workshop/factory. The culmination of this process is that each individual worker, now, forms merely a cog in the production process, responsible, only, for an increasingly small part of the end product. The product is, now, that of a collective labourer, so that it becomes manifest that the individual worker does not sell their product to capital. The capitalist appropriates the product of the collective worker, and the collective worker, therefore, negotiates the wages paid, via their trades unions. Yet, it still appears that these wages are the payment for the labour supplied by the collective labourer, leading to all of the delusions of social-democracy, and calls for workers to be paid the full fruits of their labour, a fair day's wage and so on.
Engels notes that the prices of commodities continually fluctuate, apparently on the basis of pure chance. One of the first tasks of economic science, therefore, was to show that these prices were not all the product of chance, and that the appearance of chance was itself the product of economic laws. The fluctuations in prices that appear the product of chance are merely fluctuations around a given point (equilibrium price) whose determination can be discovered on the basis of those laws.
“Classical economics then found that the value of a commodity is determined by the labour contained in it, requisite for its production. With this explanation, it contented itself. And we, also, may pause here for the time being.” (p 7)
In fact, as Marx sets out, in A Contribution To The Critique of Political Economy, and The Poverty of Philosophy, and, in more detail, in Capital, this notion of embodied labour was also wrong. Engels summarised why in his Preface to The Poverty of Philosophy. The labour embodied in a commodity is concrete labour, whereas the labour that creates and measures value is abstract, universal labour, and it is only that labour required, currently, to produce the commodity, i.e. socially necessary labour that creates value; it is also not the labour used to produce existing commodities, i.e. their historic cost that determines their value, but the current cost/labour-time required to replace them, i.e. their current reproduction cost.
“Marx was the first to investigate thoroughly into the value-forming quality of labour and to discover that not all labour which is apparently, or even really, necessary to the production of a commodity, imparts under all circumstances to this commodity a magnitude of value corresponding to the quantity of labour used up. If, therefore, we say today in short, with economists like Ricardo, that the value of a commodity is determined by the labour necessary to its production, we always imply the reservations and restrictions made by Marx.” (p 7-8)
Marx, in Value, Price and Profit, and in Wage-Labour and Capital, and elsewhere, sets out that trades union/industrial struggle is not class struggle. Lenin makes the same point, in“On Strikes”. A strike, unless it is a political, General Strike, does not constitute class struggle. It is a purely distributional struggle, no different from industrial capitalists seeking a bigger share of profits, at the expense of landlords or money lenders. It remains entirely within bourgeois limits of bargaining inside the system, and is consequently a dead-end, which, ultimately, the workers will lose from. In fact, this bourgeois, trades unionist consciousness, is not just an illusion, but it strengthens that very bourgeois ideology, legitimising it, and making it seem part of some natural eternal law. As Marx sets out, it reinforces that bourgeois ideology that workers, capitalists, landlords, and money lenders are simply receiving their appropriate factor rewards for the contributions each make to the value of society's wealth.
It is an indication that, even the more advanced, engaged and militant workers have not escaped from the domination of bourgeois ideas. Yet, whilst Marx repeatedly points this out, and spells out the lesson that the workers had to create cooperatives, and demand their rightful control over the other forms of socialised capital, it did not lead him to call on workers to abandon their unions and such strikes. They too formed a basis for Marxists to intervene and better convey these lessons to those more advanced workers – again being an undisclosed, or informal United Front. As Lenin put it, strikes do not constitute class struggle, but they are schools for such struggle.
“Strikes, therefore, teach the workers to unite; they show them that they can struggle against the capitalists only when they are united; strikes teach the workers to think of the struggle of the whole working class against the whole class of factory owners and against the arbitrary, police government. This is the reason that socialists call strikes “a school of war,” a school in which the workers learn to make war on their enemies for the liberation of the whole people, of all who labour, from the yoke of government officials and from the yoke of capital.
“A school of war” is, however, not war itself. When strikes are widespread among the workers, some of the workers (including some socialists) begin to believe that the working class can confine itself to strikes, strike funds, or strike associations alone; that by strikes alone the working class can achieve a considerable improvement in its conditions or even its emancipation. When they see what power there is in a united working class and even in small strikes, some think that the working class has only to organise a general strike throughout the whole country for the workers to get everything they want from the capitalists and the government. This idea was also expressed by the workers of other countries when the working-class movement was in its early stages and the workers were still very inexperienced. It is a mistaken idea.”
(Lenin – On strikes)
In conditions where workers engage in such struggle, it is ultra-left sectarian madness for socialists to refuse to engage with those workers, instead demanding “Socialism Now!” Similarly, Marx and Engels vehemently opposed welfarism and other forms of statism, as Marx describes in The Critique of The Gotha Programme, and Engels in hisCritique of The Erfurt Programme. But, when the bourgeoisie, for its own ends, engages in such welfarism, and created “free” public education, socialised healthcare and so on, it would, again, be sectarian madness for socialists to demand that workers boycott this provision, instead demanding that only worker owned and controlled provision will suffice. (See: Political Indifferentism)
Of course, it does not mean we stop pointing out the bourgeois nature and purpose of such provision, and raising the need for our own provision, or even supporting demands that the state-capitalist provision be improved and democratised. We simply point out, during all such struggles, why that will never happen, because it is not in the interests of the ruling-class and its state to do so. As with money wages, the social wage (welfarism) is determined by the laws that Marx and Engels set out. Both may rise, under certain conditions, but only in so far as it is compatible with the needs of capital, and as soon as it is not, then those wages – money and social wages – will be reduced. As with bourgeois-democracy itself, there may also be times when a greater or lesser degree of apparent democracy might exist, for example, the creation of elected Health Boards, but that democracy will always be a sham, and will be curtailed, as soon as it threatens the interests of capital.
The very gradual, small, long-term, tendency for the rate of profit to fall, Marx explains, arises from this same rise in productivity, because it means that the mass of raw material processed rises significantly, relative to the labour required to process it, i.e. c rises relative to v + s. Consequently, even though s rises in absolute terms, it falls relative to c. Even if v falls, as a result of the rise in productivity, reducing the value of wage goods, s will still tend to fall, relative to c + v, thereby, causing the rate of profit to fall.
In Theories of Surplus Value, Chapter 23, Marx, however, explains why this fall in the rate of profit, is very small, even over long-time periods. Whilst the mass of material processed rises (a rise in the technical composition), the rise in social productivity also reduces its unit value (reducing the value composition). So, it requires that the technical composition of capital rises by more than the fall in the value composition of capital, so causing the organic composition to rise. There is no reason why this has to be the case. Moreover, the value of labour-power also falls, increasing the rate and mass of surplus value, so that s may rise, relative to c + v, causing the rate of profit to rise.
These processes are also fundamental to the questions addressed in Wage Labour and Capital, in relation to the best conditions for workers, arising from this, wages to rise, but why this, within the constraints of capitalism, necessarily, then, leads to wages squeezing profits, a crisis of overproduction of capital, workers being laid-off, a technological revolution that brings in labour-saving machines that raise productivity, and the cycle begins again, as these conditions lead to a period of stagnation, in which net output rises relative to gross output, until that leads to a new period of long-wave expansion.
Given the nature of the pamphlet as a propaganda pamphlet, aimed at workers, therefore, Engels says he feels sure that Marx, himself, would have updated it, in accordance with how he would have written it in 1891, not 1849.
Engels explains that his alterations centre on the distinction, elaborated above, between labour-power and labour, as “one of the most important points in the whole range of political economy”. (p 6)
“Classical political economy borrowed from the industrial practice the current notion of the manufacturer, that he buys and pays for the labour of his employees. This conception had been quite serviceable for the business purposes of the manufacturer, his bookkeeping and price calculation. But naively carried over into political economy, it there produced truly wonderful errors and confusions.” (p 6-7)
As I have described, elsewhere, Marx detailed the way in which the individual, independent commodity producers became employed by capitalists, in a series of distinct stages. Engels, also, describes this in his Supplement to Capital III. If we take the Putting Out System, for example, the merchants, who previously sold material to producers, and bought from them the finished commodity, extracting only a merchant's profit, on the basis of unequal exchange, now become employers of that same labour-power.
A producer that failed, now, found themselves in the position that the merchant, instead of selling material to them, supplied it free, but on condition of appropriating the whole of this end product, for they only paid the producer for the labour they had provided. Superficially, it appeared that the producer had sold this labour to the merchant and been paid for it. In fact, the merchant paid to the producer the equivalent of a wage, equivalent not to the value added, by their labour, but the value of their labour-power, i.e. the value of reproducing the labourer. By this means, the merchant appropriated not just their previous commercial profit, but the whole of the surplus value produced by the labourer, equal to the difference between the value of their labour-power, and the new value created by their labour.
As Engels describes, this is why capital first enters those spheres of production where the organic composition of capital is high, i.e. where the relative quantity of material, or the unit value of material is high, because its in those spheres where the failure of the independent producer most makes them dependent on the merchant for supply of those materials.
We have a Tory Party that is in melt down, as a result of its take-over by its reactionary, petty-bourgeois base, and the contradictions that have flowed from that, as it tried to implement those policies, most obvious in the case of the failure of Truss/Kwarteng. Much as with the Tories in the 19th century, and their split over The Repeal of The Corn Laws, the Tories are splitting again, as they, are now caught between the impossibility of Brexit nationalism, and the continued demands for it from that petty-bourgeois base. They now face destruction at the hands of Reform, as the continuation of the Brexit Party.
At the same time, Blue Labour has also collapsed into the same reactionary nationalism, as it assumes that anti-Toryism is enough to ensure that progressive voters will suck it up, and vote for their equally reactionary, nationalist agenda, whilst that agenda is designed to appeal to those same racists, bigots and generally unsavoury elements that voted for Brexit, even though all the evidence shows that many of those, now, recognise it was a huge mistake, and they were lied to. This is a reflection of the extent to which British capitalism is in decline, and the main bourgeois parties - Tory and Labour - which used to represent the interests of large-scale industrial capital, have now become, merely mouthpieces of the small business class that has increased in its social weight since the 1980's.
The Liberals, have themselves, sunk beneath the waves at the very time that their USP, of support for the EU, might have been thought to have led them to be shouting it from the rooftops. My guess is that, after the election, as the Tories split, with the hard right, moving over to Reform, the Tories will return to their former position of being the advocates of large-scale capital, and will merge with the Liberals in some form. That will leave Blue Labour and Reform fighting over which bunch of reactionary nationalists can grab that vote.
At the moment, anti-Toryism does, indeed, drown out everything else, but that cannot last for long. Blue Labour will immediately have to begin attacking workers' pay, conditions and rights, and the totalitarian, Bonapartist regime of Starmer, will inevitably, lead to political confrontations, at a class-wide level with workers. That is inextricable from the petty-bourgeois nationalist agenda of Blue Labour. A merged Tory-Liberal party, returning to its natural position as advocate for large-scale capital, which requires a return to the EU, will retrieve the support from the ruling-class.
That will set it up as an alternative to Blue Labour, which will find itself, as the Tories are now, dragged further Right, as it competes with Reform, and other populist/fascistic forces that develop to take advantage of the rapid disillusion with Blue Labour, as it attacks workers, and its empty aspirations disappear into the air. Socialists, therefore, need to intervene in the current mobilisations to re-join the EU-despite their, current domination by liberal, bourgeois ideas. We need to do so to mobilise a progressive, internationalist alternative to the nationalism of the Tories and Blue Labour, and to guard against a future false prospectus offered by Tories and Liberals, as Blue Labour inevitably collapses, itself.
As I have written in the past, an analysis can enable predictions of the future, based upon a scientific understanding of material reality, and the laws that govern its movement. In fact, these are not “predictions”, as such, but simply a description of what already exists, and is in process of becoming. These predictions can be made more certainly than predictions of what may happen tomorrow, or next week. All such predictions are conditional, but the conditions play a more significant role in the short term. The scientist must always set out this conditionality.
“In general, it is impossible to establish a prognosis with which the leaders of the proletariat would, in the future, no longer have need of analysing the situation. A prognosis has not the significance of command but rather of an orientation. One can and one must make reservations on the point up to which it is conditional. In certain situations, one can furnish a number of variants of the future, delimiting them with reflection. One can, finally, in a turbulent atmosphere, completely abandon prognosis for the time being and confine oneself to giving the advice: Wait and see! But all this must be done clearly, openly, honestly.” (p 191)
That was not the method of the Stalinists. Their prognoses were always written in this manner that allowed them, at a later date, to basically say, “We were right”. Moreover, they were written in such a way as to constitute traps for national leaders, and lower strata of the bureaucracy. Every bureaucracy works in this way, utilising the lower echelons to act as scapegoats for the errors of the top bureaucrats.
“The principal aim of the “prognoses” is: to inspire veneration towards the wisdom of the leadership, and in case of defeat, to save its “prestige”, that supreme fetish of weak people. It is a method of oracular announcement and not of Marxian investigation. It presupposes the existence on the scene of action of “scapegoats”. It is a demoralizing system. The ultra-leftist mistake committed by the German leadership in 1923 flowed precisely from this same perfidious, double-meaning manner of formulating the question on the subject of the “two waves of revolutionary progress”. The resolution of the Sixth Congress can cause just as many misfortunes.” (p 191-2)
Within a revolutionary period, there are waves of ebb and flow. That was seen, for example, in the period from around 1968-85. Short of an actual revolution, the intensity of the revolutionary struggle cannot be maintained permanently at a high or rising level. Some of those involved become worn out and must recuperate, whilst other, new forces enter the fray. But, in a counter-revolutionary period, the struggle is defensive, with the ebb heavily outweighing the flow, and this flow, often assumes a sporadic, adventurist, putschistic or terroristic nature.
The ECCI resolution noted, the necessity of utilising “all discontentment against the landed proprietors, the bourgeoisie, the generals, the foreign imperialists ...” (p 192) In a revolutionary period, that has different implications than during a counter-revolutionary period. Every increase in discontent and rebellion, in a revolutionary period, can signify the end of an ebb, and start of a new wave of upsurge. In those conditions, revolutionary and transitional demands take centre stage, as the basis of a program of action. It becomes necessary to begin to develop revolutionary organs of workers' power, from factory and peasant committees to soviets and from defence squads to militia. This is a necessary condition of utilising a revolutionary situation, and preparing the ground for an effective insurrection, as the Bolsheviks had done prior to October 1917.
But, in conditions of a counter-revolutionary period, such actions become adventurist and putschistic. Such was the case, in Germany, and in Canton. The extension of it is seen in terrorism and urban and rural guerrilla warfare.
“But the Sixth Congress does not possess this “bagatelle”, a correct historical perspective, on any question. The Fifth Congress was a failure because of this deficiency. It is on this score that the whole Communist International can also break its neck.” (p 192)
And, the correct historical perspective is required, when considering the opposite of this adventurism and putschism, i.e. opportunism. The ECCI resolution, also, criticised the raising of the demand for a National Assembly, as such opportunism, but, as set out earlier, in conditions where a majority of the masses still have illusions in that formal democracy, it is ultra-Left sectarianism, as described by Lenin, to refuse to participate in it, or refuse to support the masses in their struggle for it. After all, as Marx described, we do not share workers illusions in their ability to resolve their situation, by strikes, to raise their wages, and so on, but that does not mean we refuse to support their strikes, which, rather, we use to demonstrate their actual futility. As seen in 1917, that is true even in a revolutionary situation. It is even more true in a counter-revolutionary situation.
That does not make Marxists proponents or supporters of that formal democracy, only realists, who recognise the need to break the masses from it, by standing alongside them in that struggle. We are not supporters of the bourgeois ideology and politics of the Labour Party, or other such social-democratic parties either, but, that does not prevent us working alongside the workers who retain illusion in such parties, either directly via an entryist tactic (undeclared United front), or via an openly declared United Front, where we are strong enough to propose it.
Owen Jones, in this recent video, is, more or less, 100% correct about why socialists, and even consistent democrats cannot support or vote for Starmer's reactionary, Blue Labour Party. He is wrong in concluding that they should abandon the party, itself, to Starmer, and his reactionary Bonapartist gang.
Of course, no self-respecting socialist, nor consistent democrat can vote for Starmer's Blue Labour policies. But, then, nor should they have been able to vote for the bourgeois, anti-working class policies of Wilson, or Callaghan, let alone Blair, Brown and Miliband. Indeed, the policies and ideology of the Labour Party have always been bourgeois, going back to its inception. The much eulogised Atlee government of 1945, was no different.
It spent billions on developing nuclear weapons, at a time when it was implementing rationing of food and other essentials for workers; it sent troops to fight in an imperialist adventure in Korea, in support of US imperialism; as well as keeping thousands of troops in the British colonies, holding millions in bondage. It also sent troops to break the strikes of British workers. Yes, it nationalised bankrupt, core industries, necessary for the British economy, but that was precisely the point. It did that for the benefit of British capital, not British workers, just as, in 2008, the banks were nationalised to save the interests of capital.
The Attlee government invested in, and rationalised those bankrupt industries, but for the benefit of capital, not workers. The former owners, that had failed to invest in them, and so, drove them into bankruptcy, were heavily compensated for decades after nationalisation, but, for example, in the coal mines, the reward for workers was to be given the sack in their droves. The Attlee government was responsible for far more mine closures, and job losses than was the rightly hated Thatcher government of the 1980's. In those coal mines that actually were owned and controlled by workers, as cooperatives, they, too, were taken over by the state, and the one bit of actual workers ownership and control was lost along with it.
Yet, as Owen says, he, his parents, grandparents, and great grandparents, were members of, and loyally canvassed and voted for these bourgeois Labour governments. In the absence of a socialist workers' party, this has always been a problem. The organisation that nominally went by that label - The SWP/International Socialists - was placed in the invidious, and totally unprincipled position, in the past, of condemning the Labour Party, and those socialists that fought inside it, but then, on election day, calling on workers to vote for it! As one of its leading members, Paul Foot, once wrote, during the election he would be the most loyal Labour supporter.
In 1979, some socialists inside the Labour Party, like myself, formed the Socialist Campaign For a Labour Victory, as a means of resolving this contradiction.
We argued that socialists could not simply vote for Labour's official programme, in the way that the SWP proposed, and nor were the adventures of various Left sects, a credible or progressive alternative. We proposed, instead, that we would draw up a socialist programme of demands that we sought to mobilise around, and to have Labour candidates, CLP.s, branches and trades unions sign up to, and campaign on. That meant that we could, go out during the election campaign to argue for those positions, to encourage workers to vote for those policies, and to join the Labour Party so as to take part in the political struggle to transform it, democratise it, and to replace the existing right-wing leadership, and party machine. One of the supporters of the SCLV was Jeremy Corbyn.
Now, today, is not 1979. despite Rachel Reeves channelling of Margaret Thatcher, as Blue Labour prepares a similar Thatcherite assault on workers' pay, conditions, and freedoms. The labour movement, in 1979. was strong. It had had all of the 1950's, 60's and 70's to have built up its organisations, and confidence from the ground up. It had defeated Wilson and Castle's anti-union proposals in In Place of Strife; it had defeated Heath's warned up attempt to implement such laws; it had defeated and then thrown out Heath's government, via the 1972 and 1974 Miners' Strikes; and it had defeated The Social Contract of Callaghan, during the Winter of Discontent. All of that, also fed through into a political reflection inside the Labour party itself, with the leadership being serially defeated in conference votes.
Today, although we have the same conditions as those that arose in the 1950's, and early 60's, with labour becoming scarce, enabling workers to begin to regain confidence, gain strength, and rebuild their organisations, it is still at an early stage. The rise of Corbyn was a harbinger, as with Sanders, Podemos, Syriza and so on, but the confused, inadequate Stalinoid/populist politics of those movements, inevitably, led to their defeat, and has, itself, set back the movement, temporarily. In the same way that the failure of conservative social-democracy has opened the door to right-wing populism, so the failure of these left populists has opened the door for the failed conservative social-democrats to, again, seize bureaucratic control over workers' parties.
Owen Jones is absolutely right that the experience of Germany, and, now, in the US, shows that the result of that will be, as these "centrists" fail, abysmally, again, and do so whilst inflicting even greater attacks on workers, that, the beneficiaries will be the far right, as with Trump, the AfD, Le Pen, and so on. The best antidote to that lies not in abandoning the field of political struggle to Starmer, but to mobilise the working-class to fight back against those attacks, and, on the back of the mobilisation and radicalisation that inevitably flows from it, to draw it into the Labour Party, and to again throw out the reactionary leadership of Starmer and his gang. Indeed, that political struggle is fundamental to the process of creating a truly socialist, mass workers' party itself, as opposed to the gaggle of petty-bourgeois sects that fight like rats in a sack, and offer no alternative to workers.
The reality, is, of course, unlike 1979, that, we cannot easily and openly organise a SCLV. To do so is to invite immediate expulsion, though even a political struggle surrounding such expulsions can be radicalising and mobilising. The Internet, and social media, however, provides ample alternative means of organising, and propagandising, in ways that the Bolsheviks could have only dreamed about, when organising their secret operations, after 1903. Owen Jones, himself, talks about voting for Labour candidates that offer such an alternative. The problem with his approach is that it leaves things at a purely electoralist, parliamentary level, meaning that individuals who pursue this course, are left atomised. It offers no way forward.
The Left often talk about the Labour Party as a bourgeois party, but the reality, currently, is worse than that. As Lenin noted, in his polemics against the Narodniks, the bourgeoisie is more progressive than the petty-bourgeoisie, including the petty-bourgeois socialists of the type of the Narodniks themselves. Much of the Left, today, is of a similar type of petty-bourgeois socialist, and even simply petty-bourgeois nationalists. If it were the case that Starmer's Blue Labour were bourgeois, as with, say, the party of Attlee, Wilson, Callaghan, or Blair, it would not be so bad. Those parties were internationalist in outlook, and based upon the needs and interests of large-scale industrial capital.
That is not the case with Starmer's Blue Labour. It has sunk to become a clone of the petty-bourgeois nationalism of the Tories, as exemplified by its support for Brexit, collapse into jingoism, and attempts to wrap itself, to ever more ridiculous degrees, in the flag. That makes it all the more necessary to oppose those outright reactionary policies, and that ideology. It is more like the kind of petty-bourgeois nationalism of Pilsudski, Mussolini or Moseley, but without their more radical economic programme.
Socialists, should stay, organise, propagandise, and mobilise inside the Labour Party, and we should use the next few months of heightened political activity, in the run up to the elections, to draw others into the party to engage in that struggle, a struggle that inevitably must be conducted on the shop floor, in the communities, and in the trades unions and cooperatives.
We should draw up a minimum platform of positions upon which to mobilise and campaign upon, in order to try to commit labour movement bodies and activists to such an alternative. That is the basis of developing a movement that extends beyond just the constraints of electoralism, and beyond the elections.
In reality, the question of the vote itself is less important. We know that Blue Labour is going to win with a huge majority, and that is just the start of its troubles, as it has cut off all avenues of a solution other than a huge attack on workers conditions. In Spring 2019, we know that 60% of Labour members, let alone Labour voters, voted for pro-Remain parties, in the local and Euro-elections. Labour members cannot advocate a vote for other parties, as to do so means instant expulsion, but, as 2019 showed, campaigning for a series of progressive policies, such as an immediate commitment to re-join the EU, oppose austerity, an immediate ceasefire in Gaza, and end to arming the Zionist state, opposition to the imperialist war in Ukraine, the repeal of all anti-union laws, and legislation of positive rights for workers, means that voters will have a clear steer on which candidates they should vote for in their constituency.
The value of a commodity is determined by the value of the consumed constant capital (including wear and tear of fixed capital), and the labour-time required to process it. That may be, say, 10 hours (c) plus 20 hours of current labour, giving a value of 30 hours. Assuming no change in the value of labour-power, and no change in productivity, in this sphere, a rate of surplus value of 100%, gives 10 hours v and 10 hours s. However, as Marx sets out in Capital III, Chapter 6, and in Theories of Surplus Value, if between the time of sale of the commodity, and the purchase of the replacement means of production, the value of c rises to 12 hours, then, 12 hours of the value of the commodity, must now resolve into this replacement cost. The amount of surplus value produced, remains as 10 hours, but, now, 2 hours of it is tied up, simply to be able to reproduce the constant capital, so that profit appears as only 8 hours. The opposite occurs, if the value of constant capital falls. And, as Marx demonstrates, the same thing applies if the value of labour-power falls.
Smith's natural price for the factors of production is the price the owner of that factor requires to sell it, determined by the interaction of supply and demand. The demand for capital, was greater than its supply, raising its price, whereas the supply of labour was greater than demand reducing its price. But, Smith saw the supply of capital rising, relative to demand, whereas the supply of labour would fall relative to demand, as the supply of capital rose. This was the basis of Smith's explanation for the long-run, progressive fall in the rate of profit, leading to crises. In Theories of Surplus Value, Chapter 17, and in Capital III, Chapter 15, Marx explains why this can explain periodic crises, but does not explain the long-run, tendency of the rate of profit to fall. These are two related, but distinct phenomena.
Ricardo rejected Smith's argument for abandoning the LTV, but did so without resolving the underlying contradiction between the value of wages, as a price for labour, as against the value created by that labour, which Smith had grappled with. Ricardo's account of Smith's error, in abandoning the LTV, was correct, but, without resolving the distinction between labour and labour-power, both were stuck in a dead-end. In fact, as Marx describes, both Smith and Ricardo had the solution for that staring them in the face, because both recognised that the value of labour-power, like any other use-value/product/commodity is determined by the labour required to reproduce it. Had they simply recognised this distinction between labour-power and labour the contradiction they faced would have disappeared.
Ricardo also rejected Smith's explanation for the long-run tendency for the rate of profit to fall. He argued, correctly, that capital would continue to be able to recruit the additional workers required. However, basing himself on the theories of Malthus, and the concept of diminishing returns, in agriculture, he saw this increased workforce, and demand for agricultural products, resulting in higher prices, passed on into higher wages, and so causing a squeeze on profits.
Again, in Theories of Surplus Value, Chapter 17, and in Capital III, Chapter 15, Marx explains that, whilst this too can result in periodic crises of overproduction of capital, squeezed profits and short-run fall in the rate of profit, as with Smith's account, it cannot explain the long-term tendency for the rate of profit to fall. In fact, both Smith's and Ricardo's accounts involve a squeeze on profits, causing the fall in the rate of profit, certainly seen as a precursor to crises of overproduction of capital, or symptom of it, whereas, on the contrary, the conditions leading to the long-term tendency for the rate of profit to fall (higher social productivity, rising proportion of value accounted for by raw materials), results in a much greater mass of profit, being produced as the rate and mass of surplus value rises from that higher productivity.
“Naturally, to affirm that the popular masses can and should never and under no conditions “leap” over the “constitutional” step, would be to manifest a ridiculous pedantry in the spirit of Stalin. In certain countries, the epoch of parliamentarism lasts long decades and even centuries. In Russia, it was only prolonged for the few years of the pseudo-constitutional régime and the one day of existence of the Constituent. From the historical point of view, one can perfectly well conceive of situations where even these few years and this one day would not exist.” (p 189)
To fight for a bourgeois-democratic or national revolution, permanent revolution posits the need for the independent organisation and programme of the proletariat. Can a bourgeois-democratic transformation occur without that? Yes, of course it can, just as imperialist wars can end with the victory of one camp over the other, rather than socialist revolution. The era of colonialism, based on mercantilism and unequal exchange, passed, and modern imperialism, based on industrial capital, and creation of surplus value in production, prefers to rule via bourgeois-democracy, where possible, because it has lower overheads, gives the ruling-class greater direct control over the state, and acts to delude and, thereby, control the proletariat. US imperialism acted as a goad to break apart the old colonial empires after WWII, just as western imperialism financed and supported the overthrow of Tsarism, by Milyukov/Kerensky.
But, the goal of Marxists is not bourgeois-democracy, just as its not some utopian pacifist end to an imperialist war, which simply results in the victory of one camp, and acts as an interlude to the next war. Our goal is Socialism, and all of these transformations from above are geared to minimise the active role of the proletariat and its ability to make the revolution permanent.
“... if the revolutionary policy had been correct, if the Communist Party had been completely independent of the Guomindang, if the soviets had been established in 1925-27, the revolutionary development could already have led China today to the dictatorship of the proletariat by passing beyond the democratic phase. But even in that case, it is not impossible that the formula of the Constituent Assembly, not tried by the peasantry at the most critical moment, not tested, and consequently still containing illusions, could, at the first serious difference between the peasantry and the proletariat, on the very morrow of the victory, become the slogan of the peasants and the petty bourgeoisie of the cities against the proletariat. Important conflicts between the proletariat and the peasantry, even in face of favourable conditions for the alliance, are quite inevitable, as is witnessed by the experience of the October revolution.” (p 189-90)
Under these conditions, formal democracy becomes the potential for a counter-revolutionary assault on the proletariat. Just consider Brexit, Trump, or the Tory government, or indeed, the actions of Zelensky's government in its own anti-working class measures against Ukrainian workers.
Trotsky quotes from the ECCI resolution, adopted following Bukharin's report. It is, Trotsky says, a classic example of doublespeak, designed to enable the leaders to cover their backs, whatever transpired in the future. It talked about China being between two revolutionary periods, thereby, avoiding discussion of the counter-revolutionary period it had entered, as a result of the past mistakes.
“A revolutionary situation does not develop uniformly, but by successive waves of ebb and flow. This formula has been chosen with premeditation, so as to be able to interpret it as recognizing the existence of a revolutionary situation, in which there takes place simply a “calm” before the tempest. At all events, they will also be able to explain it by pretending to acknowledge a whole period between two revolutions. In both cases, they will be able to begin the new resolution with the words: “as we foresaw” or “as we predicted”.” (p 190-91)
I am working from the Progress Publishers, Moscow, 1970 Edition.
Engels' Introduction was written in 1891.
“The following work appeared as a series of leading articles in the Neue Rheinische Zeitung, from April 4th, 1849. It is based on the lectures delivered by Marx in 1847 at the German Workers' Society in Brussels. The work as printed remained a fragment; the words at the of No. 269 “to be continued,” remained unfulfilled in consequence of the events which just then came crowding one after another: the invasion of Hungary by the Russians, the insurrections in Dresden, Iserlohn, Elberfeld, the Palatinate, and Baden, which led to the suppression of the newspaper itself (May 19th, 1849.) The manuscript of the continuation was not found among Marx's papers after his death.” (p 5)
As with Engels; work in editing Volume II, and III of Capital, he was faced with the question of whether to keep to Marx's original wording and formulations. For Capital, he decided to do so, other than where whole sections, and even chapters were missing, which he inserted under his own name, or, in relation to various calculations, and examples that had to be reworked or replaced.
He did so, because the manuscripts for Capital and Theories of Surplus Value were the product of Marx's mature analysis of capital and capitalist relations, and so, Engels argued, the reader was owed Marx's words and thoughts, not those of anyone else. The 1891 Edition, however, was being published as a propaganda pamphlet, in a run of 10,000 copies, coming at the time of the new upsurge in the labour movement, resulting from the start of the new long wave uptrend (circa 1890-1914). So, Engels says, the question arose as to whether Marx himself would have wanted to update some of those ideas and formulations that he had developed in the 1840's, when he was only commencing upon his economic studies. In the later editions of other works from that time, such as The Poverty of Philosophy, Marx had already done so.
“In the ’forties, Marx had not yet finished his critique of political economy. This took place only towards the end of the fifties. Consequently, his works which appeared before the first part of A Contribution To The Critique of Political Economy (1859) differ in some points from those written after 1859, and contain expressions and whole sentences which, viewed from the point of view of the later works, unfortunate, and even incorrect.” (p 5)
As with the later editions of The Poverty of Philosophy, those expressions revolve around the distinction, made by Marx, in the 1850's, between labour (value creating activity), and labour-power (use-value, commodity), which, as wage-labour, is sold at its value (the labour-time required to reproduce the labourer), as a commodity, and bought by capital. It is this distinction that resolved the contradiction, faced by Smith and Ricardo, of explaining the existence of surplus value. It had led Smith to abandon The Labour Theory of Value, because he could not reconcile the existence of surplus value, in the exchange with landed property (rent), or capital (profit). If the labourer was paid the value of their labour, then, under pre-capitalist relations, there was no room for surplus value in the form of rent, paid to the landlord. Similarly, under capitalist relations there was no room for surplus value as profit paid to the capitalist.
Smith's confusion led him to abandon the Labour Theory of Value, when considering society following the introduction of landed property and capital. He fell into a cost of production theory of value, which is a precursor of the later marginalist theories of value/price. According this theory, Smith says that the value of a commodity is a composite of the natural prices of labour and capital. His use of the idea that the value resolves into the revenues of these factors of production, plays into this confusion, and has also affected the ideas of the TSSI.
The idea that the value resolves entirely into revenues (Smith's Absurd Dogma, as Marx calls it), is itself wrong, because it fails to take into account the value of constant capital transferred to end production, which resolves not into revenues, but capital. It also forms the basis of Say's Law, and the errors of Malthus, and later Keynes. But, as Marx also describes, in Capital III, and Theories of Surplus Value, the idea of the value of a commodity, resolving into these components, is not at all the same as saying that the value of the commodity is a composite of the values of those components.
In order that social reproduction proceeds, on at least the same scale, the use-values (means of production and labour-power) consumed in current production, must be replaced “on a like for like basis”, but the unit values of these commodities may have changed, by the time the realised value of the commodity has to buy them anew. A rise in values, causes a tie-up of capital, and a fall in values a release of capital.
