Elsewhere, I have set out the way in which a rise in productivity results in a release of capital. In other words, the opposite condition applies to that set out above. Higher productivity results in a fall in unit values, i.e. more use-values are produced by a given amount of labour, so that each unit contains less labour/value. That lower unit value, means that each unit of output has a lower value than the unit value/historic cost of the same use-values used in production, as inputs. Looked at in the same context as that set out above, as a snapshot, this seems to result in a reduction in the mass of profit, and fall in the rate of profit, just as, in the case of a crop failure, the reverse seems to be true. But, again, that is an illusion caused by a focus on money values/prices.
A rise in productivity, resulting in lower unit values, gives the appearance, if only a single year is considered, of reducing profit, but represents only a capital loss – the most obvious example of that is Marx's analysis of moral depreciation. But, on the basis of continuing production, this rise in productivity, and fall in unit values, means that a smaller portion of total output is required to replace the consumed constant and variable capital. It produces a release of capital. Although this release of capital manifests as an increase in profit, it is again, an illusion. But, the fact that it also reduces the value of labour-power means that it does raise the rate of surplus value, and so does raise the mass of profit. Moreover, any given mass of profit, now, represents a higher rate of profit, because the value of c and v are reduced, so that s/(c +v) rises. This is what happened in the 1980's and 90's.
The Physiocrats made the same mistake of failing to distinguish between labour and labour-power that continues in the work of Smith, and is found in the work of Proudhon. It manifests differently, because the Physiocrats were concerned with use-values, whereas Smith was concerned with values – though, as Marx sets out in Theories of Surplus Value, Smith, also, slips back into Physiocracy in places. The Physiocrats argued, as set out above, that 1,000 tons of corn is used as seed (constant capital), 1,000 tons as wages (variable-capital), but 3,000 tons is the output, with the 1,000 tons surplus mystically arising from the land, providing the basis for he owner of the land to obtain rent.
But, as set out earlier, this assumes that the 1,000 tons of corn paid as wages, which is equal to a value of 1,000 hours of labour, or £10,000, is the same as the new value created by that labour. It isn't. The value of labour-power, the use-value of being able to perform labour, is equal to the value of the 1,000 tons of corn required to reproduce that labour-power, i.e. is equal to 1,000 hours of labour. The workers, however, perform not this 1,000 hours required to reproduce their labour-power, but 2,000 hours, 1,000 hours of surplus labour, manifest in the surplus product of 1,000 tons of corn.
Suppose we go back to an initial condition where, as noted earlier, Nature provides its gifts freely. In other words, we have nature, by its own evolutionary processes creating corn. Early humans are able to consume this corn, just as cows consume grass in a field, as a use-value, gratis. It has no value, no labour has been expended on its production. Value is just the label, the scientific term we give to this labour required to take the free gifts of Nature, and to enhance them, by transforming them in some way. It may be, for example, taking the seeds from plants, and, instead of relying on Nature to cast them, haphazardly, we plant them in dedicated areas, and tend them so as to raise the output.
In this case, we start with seed corn that has no value, no labour has been spent on it. To use the terms applicable to capitalist production c = 0. But, the first farmers must collect the seed, they must create seed drills into which they plant the seeds, and they must cultivate the seed, watering it and so on. If they collect a ton of seed, which, left to Nature, would have produced 2 tons of corn, by cultivating it, they may obtain 10 tons of corn. That represents an improvement in their real wealth of 500%.
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