Wage-Labour and Capital, Section IV - Part 3 of 8

If nominal or money wages remain the same, but the price of wage goods falls, then, real wages will rise.

“But neither the nominal wages, that is, the sum of money for which the worker sells himself to the capitalist, nor the real wages, that is, the sum of commodities which he can buy for this money, exhausts the relations which are comprehended in the term wages.

Wages are above all, also determined by their relation to the gain, to the profit, of the capitalist – comparative, relative wages.” (p 34)

In other words, both nominal and real wages (living standards) may rise, and yet relative wages (wage share) may fall. It only requires that productivity rises by an extent greater than the workers' share of the additional product.

“Real wages express the price of labour in relation to the price of other commodities; relative wages, on the other hand, express the share of direct labour in the new value it has created, in relation to the share which falls to accumulated labour, to capital.” (p 34)

Suppose we have:

c 1,000 + v 500 + s 500 = 2,000 hours of labour.

This 2,000 hours of labour/value is embodied in 2,000 use values/standard commodity units (scu), each with a value of 1 hour. If productivity doubles, the 1,000 of c, now, represents 2,000 scu, and the 1,000 hours of current labour produces 2,000 scu. However, the workers still require only the same 500 scu for the reproduction of their labour-power. The amount of necessary labour falls to 250 hours, meaning surplus labour rises to 750 hours. Even if wages rise to 375 hours, giving the workers a 50% rise in real wages, surplus labour rises to 625 hours, so relative wages/wage share falls, and the rate of surplus value rises.

But, as Marx explains, this rise in productivity and fall in commodity values has further consequences and advantages for capital, for the reasons previously set out, and also detailed by Marx, in Capital III, and Theories of Surplus Value.

1. A fall in the value of commodities means also a fall in the value of fixed and circulating constant capital. That means
   
   
1. A release of capital.
2. A rise in the rate of profit
3. A fall in the value composition of capital
4. The ability to accumulate additional capital, and, therefore, additional labour and surplus value
   
   
2. A fall in the value of commodities means the value of the commodities consumed by capitalists for personal consumption, is reduced, leaving more of their revenue for capital accumulation
   
   
3. A fall in the value of commodities means a fall in the value of commodities previously unaffordable, so that the market expands, as the range of use-values expands, as described by The Civilising Mission of Capital.

“For the capitalist the selling price of the commodities produced by the worker is divided into three parts: first, replacement of the price of the raw materials advanced by him, together with replacement of the depreciation of the tools, machinery, and other means of labour also advanced by him; secondly, the replacement of the wages advanced by him; and thirdly, the surplus left over, the capitalist's profit. While the first part only replaces previously existing values, it is clear that both the replacement of the wages and the surplus profit of the capitalist are, on the whole, taken from the new value, created by the worker's labour and added to the raw materials. And in this sense, in order to compare them with one another, we can regard both wages and profit, as shares in the product of the worker.” (p 34-5)

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