The social division of labour goes hand in hand with the development of commodity production and exchange, and, thereby, the development of the market. The social division of labour, the use of specific types of labour to produce specific types of commodity for exchange, precedes the technical division of labour in the workshop/factory.
“If we consider commodities as values, we consider them exclusively under the single aspect of realized, fixed, or, if you like, crystallized social labour. In this respect they can differ only by representing greater or smaller quantities of labour, as, for example, a greater amount of labour may be worked up in a silken handkerchief than in a brick. But how does one measure quantities of labour? By the time the labour lasts, in measuring the labour by the hour, the day, etc. Of course, to apply this measure, all sorts of labour are reduced to average or simple labour as their unit.” (p 43-4)
So, Marx notes, it might be asked if the value of commodities is determined by the amount of labour required for their production is there any great difference in this to measuring their value by wages? The answer is clearly yes, because wages are only the price of labour-power, and in no way comparable to the amount of labour used in the production of the commodity.
“Suppose, for example, equal quantities of labour to be fixed in one quarter of wheat and one ounce of gold. I resort to the example because it was used by Benjamin Franklin in his first Essay published in 1721, and entitled A Modest Enquiry into the Nature and Necessity of a Paper Currency, where he, one of the first, hit upon the true nature of value.
Well. We suppose, then, that one quarter of wheat and one ounce of gold are equal values or equivalents, because they are crystallizations of equal amounts of average labour, of so many days' or so many weeks' labour respectively fixed in them. In thus determining the relative values of gold and corn, do we refer in any way whatever to the wages of the agricultural labourer and the miner? Not a bit. We leave it quite indeterminate how their day's or their week's labour was paid, or even whether wage labour was employed at all.” (p 44-5)
The wheat may have been produced by a peasant farmer who does not receive a wage, but sells the wheat on the basis of its value, determined by the labour-time required for its production. But, even if we assume that wage-labour is used, those wages may be very unequal. The wages of workers in the gold mine may be high, and those of agricultural workers low by comparison, Yet, this does not change the proportion in which the new value created by that labour resolves into wages, as against surplus value.
“Their wages can, of course, not exceed, not be more than the values of the commodities they produced, but they can be less in every possible degree. Their wages will be limited by the values of the products, but the values of their products will not be limited by the wages. And above all, the values, the relative values of corn and gold, for example, will have been settled without any regard whatever to the value of the labour employed, that is to say, to wages. To determine the values of commodities by the relative quantities of labour fixed in them, is, therefore, a thing quite different from the tautological method of determining the values of commodities by the value of labour, or by wages.” (p 45-6)
Indeed, as capitalism develops the productivity of labour, the proportion of wages in relation to the new value created by labour continually falls, and the proportion of surplus value continually rises. This may seem paradoxical given what I said, elsewhere, about crises of overproduction of capital arising when the demand for labour causes wages to rise, and so profit to stop increasing. It is not. If profits are £1 million, and an additional capital of £10 million produces a further £1 million of profit, this is not overproduction of capital. The £10 million acts as capital, producing additional profit. However, if profits are ten times bigger, at £10 million, and an additional capital of £10 million produces no additional profit, this is an overproduction of capital, because it does not act as capital, does not produce profit. It is not the absolute amount of profit that is determinate, but whether it continues to expand.
Moreover, as productivity expands, so that a much larger volume of use values are produced, even a higher annual rate of profit, and mass of profit, takes the form of a smaller profit margin per unit. If a capital of £1 million is advanced, producing an annual rate of profit of 10%, or £100,000, then, with output of 100,000 units, that is £1 of profit per unit. But, if capital of £100 million us advanced, with an annual rate of profit of 20%, or £20 million, whilst output is, now, 200 million units, the profit per unit is only £0.10. Consequently, it becomes much easier for this small profit margin per unit to disappear, and for the large total profits to become large total losses.
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