I – Production and Wages
“Citizen Weston's argument rested, in fact, upon two premises: firstly, the amount of national production is a fixed thing, a constant quantity or magnitude, as the mathematicians would say; secondly, that the amount of real wages, that is to say, of wages as measured by the quantity of the commodities they can buy, is a fixed amount, a constant magnitude.” (p 10)
The first premise is clearly false. The quantity of national output changes, not only year to year, but, also, day to day. Firstly, capital is accumulated, and, thereby, more labour is employed, and the additional labour produces additional output. Secondly, the productivity of labour changes, as a result of division of labour, economies of scale, and the introduction of labour-saving technologies.
Nor can it be said that, although the quantity of output changes, the value of that output remains constant. If more labour is employed, it preserves and transfers a greater value of previously produced constant capital into current production, as well as creating a greater quantity of new value.
“Year after year you will find that the value and mass of production increase, that the productive powers of the national labour increase, and that the amount of money necessary to circulate this increasing production continuously changes.” (p 10)
This variable nature of the quantity and value of output is not affected by changes in wages.
“But if before the rise of wages the national production was variable, and not fixed, it will continue to be variable and not fixed after the rise of wages.” (p 11)
On the basis of his assertion that the level of wages is a constant, Weston argued that, although workers could enforce a rise in wages, it would provoke an inevitable response. But, Weston's argument, here, was inconsistent. He recognised that employers did enforce reductions in wages, but, equally, if wages are fixed, that should also provoke a reaction. In which case, that reaction could be workers forming unions to demand a wage rise! Yet, Weston argued against workers doing so.
In that case, Weston had to logically renounce his claim that wages are fixed, and argue that, whilst they can fall, they cannot rise, which would be a variation of the Lassallean Iron Law of Wages. That makes the determination of wages purely subjective, and a function of the greed and will of the capitalists.
“If in one country the rate of wages is higher than in another, in the United States, for example, than in England, you must explain this difference in the rate of wages by a difference between the will of the American capitalist and the will of the English capitalist, a method which would certainly very much simplify, not only the study of economic phenomena, but of all other phenomena.” (p 12-13)
But, such simplification comes at the expense of analysis and understanding, because, in reality, it explains nothing.
“... we might ask, why the will of the American capitalist differs from the will of the English capitalist? And to answer the question you must go beyond the domain of will. A person may tell me that God wills one thing in France, and another thing in England. If I summon him to explain this duality of will, he might have the brass to answer me that God wills to have one will in France and another will in England. But our friend Weston is certainly the last man to make an argument of such a complete negation of all reasoning.” (p 13)
In fact, an analysis would show that, irrespective of workers' forming unions, the determination of wages is far from solely the product of the capitalist's will. Wages are a market price for labour-power, and, as with the market prices of all commodities, are determined by supply and demand, which causes the market price to fluctuate above and below the market value/price of production of the commodity. As Marx sets out in Capital III, Chapter 12, the price of production of labour-power is, then equal to the price of production of the commodities required for its reproduction.
“The history of these Unions is a long series of defeats of the working-men, interrupted by a few isolated victories. All these efforts naturally cannot alter the economic law according to which wages are determined by the relation between supply and demand in the labour market. Hence the Unions remain powerless against all great forces which influence this relation. In a commercial crisis the Union itself must reduce wages or dissolve wholly; and in a time of considerable increase in the demand for labour, it cannot fix the rate of wages higher than would be reached spontaneously by the competition of the capitalists among themselves.”
An analysis requires consideration of the determination of the value of labour-power, and of the factors that lie behind the interaction of supply and demand, for it.
“The will of the capitalist is certainly to take as much as possible. What we have to do is not to talk about his will, but to enquire into his power, the limits of that power, and the character of those limits.” (p 13)
It is always the case that, in the end, capital has more power than labour, because capital only employs labour on condition that it provides a certain quantity of free labour. Capital can always be withheld, where that is not the case. That does not mean that capital ceases to be advanced, simply because a rise in wages results in a fall in the proportion of profits. For one thing, a fall in the proportion of profits is not the same thing as an absolute fall in the amount of profits. Weston, on the basis of his assumption, of a fixed amount of production, was inevitably led into that fallacy. But, if output is £100 million, with £50 million comprising constant capital, £25 million wages, and £25 million profits, the amount of profit will still rise if output rises to £200 million, comprising £100 million constant capital, whilst wages rise to £60 million, leaving £40 million for profits.
Before, wages and profit, both accounted for 50% of the new value created, whereas, now, wages have risen to 60% and profits have fallen to 40%. But, in absolute terms, profits have still risen, and competition between firms means that they are led to continue to advance capital in search of this greater mass of profits. Indeed, the conditions in which wages would rise, in this way, are those of the boom and crisis phases of the long-wave cycle, in which consumption is growing rapidly, raising aggregate demand, which leads firms to compete for market share. It is these conditions, in which labour becomes relatively scarce, pushing up wages. It is only when this culminates in profits no longer increasing, or even falling, as additional capital is advanced, that this results in a crisis of overproduction of capital, and its sudden withdrawal.
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