We think in artificial constructs and categories as part of this common sense, because it fits this superficial experience of reality. For example, returning to the TSSI, we think in terms of, say, a year, when considering a firm's accounts, and its profit and rate of profit. But, as Marx shows, in Theories of Surplus Value, Chapter 22, in relation to Ramsay, and his use of historic pricing, it necessarily leads to error and confusion.
The problem for Ramsay, and his use of historic prices was this. He took the historic prices paid for, say, cotton, by a yarn producer. Let us say this price is £10 per kilo, and he buys 100 kilos (£1,000). Having produced yarn, with an added value of £1,000 (resolving into £500 wages and £500 profit), he can sell the yarn for £2,000, making a 33.33% rate of profit, over the year. However, if the price of cotton rises, in the intervening period of production, to, say, £1,500, the yarn producer, like all others, could sell their yarn for £2,500 (its current reproduction cost), which, with his own costs based on historic pricing being still only £1,500 (£1,000 cotton, £500 wages) appears to give them a profit of £1,000, and a rate of profit of 66.66% for the year.
If we view this metaphysically, as Ramsay did, and does the TSSI, this produces an obvious problem for Marx's Labour Theory of Value. If, instead of considering the capital itself, we consider the specific owner of that capital, Mr. A, we arrive at the position that, viewed over a discrete one year period, Mr. A laid out £1,500 and gets back £2,500, a profit of £1,000. Yet, we can see that the surplus value produced is only £500. As Ramsay concludes, therefore, labour is not the only source of new value and surplus value. The constant capital (cotton) has produced new, additional value, i.e. surplus value. It has self-expanded from £1,000 to £1,500. In that case, Marx's LTV collapses, which is the conclusion the TSSI should, also, be led to.
As Ramsay notes, if Mr. A liquidates their capital, at the end of the year, they will have £2,500, as against the £1,500 they began with, a profit of £1,000, and rate of profit of 66.66%. But, Marx's point is that this bears no resemblance to the reality of capitalist production, which is continuous and involves simultaneity, and does not break down into these discrete periods of time, useful only to perform certain business calculations. Nor is viewing this reality in terms of the specific personification of the capital (Mr. A) useful, rather than considering the capital itself as property.
For example, Mr. A sells the yarn producing business to Ms. B, who pays £2,500 to Mr. A. Out of the £2,500 of yarn, she then sells on the market, she, now, has to spend £1,500 for cotton, and £500 for wages. Assuming no further change, they again sell the resulting yarn for £2,500, producing a £500 profit, i.e. not £1,000 as appeared to be the case for Mr. A, in the previous year, but only the original £500, equal to the actually produced surplus value. What is more, this £500 of profit, now, represents only a 25% rate of profit, as against the original 33.33%.
As Marx sets out in Theories of Surplus Value, Chapter 22, and in Capital III, Chapter 6, the additional “profit” apparently acquired by Mr. A, is an illusion. It is not profit at all, but only a capital gain, obtained as a result of a fortuitous rise in the price of cotton. It is the same illusion that leads to capital gains from rising asset prices being wrongly described as “profits”. What is more, although this capital gain is fortuitous for Mr. A, the rise in the price of cotton that produces it, is hardly fortuitous as a whole, as seen by the fact that, for Ms. B, it means that more capital has to be advanced (a tie-up of capital), and her rate of profit, is seen to be 25%, as against the original 33.33%. The same thing applies, for example, in relation to rising house prices, share prices and bond prices.
Previously, the £500 profit would have enabled the capital to expand by a third, with a third more workers employed, producing a third more surplus value, and for Marx, this is the real understanding of the rate of profit, as the measure of the self-expansion of capital, but, now, it can only be expanded by a quarter. Mr. A's capital gain, is, essentially, Ms. B's capital loss, because she must, now, advance £500 more capital than did Mr. A (just as he would have done had he continued in business), just to replace the 100 kilos of consumed cotton. That is £500 that could have bought additional cotton and labour-power. Here too is the significance of Marx's Labour Theory of Value, in which it is the value of the commodity, which then, resolves into the funds required to physically renew the consumed capital, as against the cost of production theory of value that Smith collapses into on occasion, in which the value of the commodity is determined by compositing the values of the various factors of production.
As Marx describes in Capital III, Chapter 6, it represents a tie-up of capital. In Capital III, Chapter 49, Marx sets out that it is this physical capital – the commodities that comprise the constant and variable-capital – that must be reproduced "on a like for like basis", and so into which this value of output must be resolved, so as to give the real measure of the rate of profit.
“In so far as reproduction obtains on the same scale, every consumed element of constant capital must be replaced in kind by a new specimen of the same kind, if not in quantity and form, then at least in effectiveness. If the productiveness of labour remains the same, then this replacement in kind implies replacing the same value which the constant capital had in its old form. But should the productiveness of labour increase, so that the same material elements may be reproduced with less labour, then a smaller portion of the value of the product can completely replace the constant part in kind. The excess may then be employed to form new additional capital or a larger portion of the product may be given the form of articles of consumption, or the surplus-labour may be reduced. On the other hand, should the productiveness of labour decrease, then a larger portion of the product must be used for the replacement of the former capital, and the surplus-product decreases.”
No comments:
Post a Comment