The Hypocrisy of NATO's Illegal War On Iran - Part 6

Whatever the actual form of this monopolistic competition, the underlying reality was that it required expanding markets, and those expanding markets meant the creation of multinational states, such as is in formation with the EU, and the various similar blocs across the globe. Global imperialist competition, now, takes the form of competition between these various large, multinational blocs. As with the previous shifting alliances between nation states, so too these blocs form their own shifting alliances as they jockey for position.

For a long time, after WWII, as US imperialism was hegemonic, and as the other imperialist states faced the USSR, they subordinated themselves to US imperialism, and its determination of what constituted “international law”. The US created NATO, with its subordinated allies in Europe, prompting the USSR to respond by creating the Warsaw Pact. Superficially, NATO acted to “protect” Western Europe from the threat of invasion from the USSR. But, in reality, Western Europe was not under threat of invasion from the USSR. It sought only to hang on to its sphere of influence in Eastern Europe, assigned to it, at the end of WWII, in the conferences at Potsdam and Yalta, to assuage its fears of itself being, again, a victim of invasion from the West, as it had been repeatedly.

US imperialism stationed its troops in Europe for the same reason it created its military bases in 80 countries across the globe, not for any kind of altruistic, defensive reason, but to assert its own global reach, and interests. NATO was the means for US imperialism to spread the cost of its own military expenditure, to serve the interests of US imperialism, just as the US used the role of the Dollar as global reserve currency to pay for its expenditure with increasingly worthless, paper Dollars, which led to the inflation, and global currency crises of the 1970's. Europe acted as an unsinkable aircraft carrier, and early warning system, against any nuclear missile attack from the USSR, the form that any actual war with the USSR would inevitably take, as against any significant, conventional ground offensive.

European countries in NATO, whose real protection against the USSR came from their higher living standards, were obliged to spend money on weapons and weapons systems they were never going to use in Europe, but only ever in support of US imperialism in its militaristic adventures across the globe, for example, in South-East Asia, or Africa and the Middle-East. More than 60% of European military spending goes directly to US arms manufacturers, directly subsidising and justifying the large-scale production of those US companies, and further subordinating European states to the US. Another reason for US imperialism's troops in Europe, was to deter the working-class in Europe from advancing its own interests.

For so long as US imperialism was hegemonic, the role of international law was to represent the interests of US imperialism, and, to a lesser degree the interests of its subordinates in Europe and Japan. The global para state bodies designed to plan and regulate global capitalism, such as GATT/WTO, IMF, and the World Bank also fulfilled that function. But, even within those constraints, as soon as US hegemony began to break down, as US industrial capital went into relative decline, in the face of the rising power of imperialist capital elsewhere, in Europe, Japan, and most notably China, the façade began to erode.

As early as 1971, when France demanded payment of US debts in Gold, at the official exchange rate of $35 an ounce, the US, ended convertibility of the Dollar, bringing the Gold Standard crashing down, and initiating a decade of global currency instability. A surging Japanese industrial capital, dominated world markets, replacing the once dominant US multinationals, and amassing huge trade surpluses with the US in the process, leading to the US using its remaining dominance as global superpower to impose measures on Japan to limit its expansion. Trump is not the first to engage in such actions.

Over the last 40 years, the US has repeatedly imposed tariffs on imports to the US, as its domestic industry has continued to decline relative to its global competitors in Asia, and Europe. Whilst, its actions have been referred to the WTO, it has largely ignored the international rules based order it created, as soon as those rules ceased to operate in its favour. When it comes to other global bodies that has been even clearer. The US, never backed the creation of the International Criminal Court, for example, because it clearly saw, in advance, that its own global military adventures, its own record of military and paramilitary actions, would be a hostage to fortune. It has been its subordinates in Europe that did sign up to the ICC, and ICJ, that again, have been the ones left trying to justify the hypocrisy of an international law that only sought to put defendants from third world countries in the dock, whilst giving worse war criminals from the imperialist states a free pass.

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 36 of 39

“If it were not for this interest, the farmer—the chief agent in agriculture—would not advance the capital for investment in it. Already from this standpoint, the appropriation by the farmer of that portion of the agricultural surplus proceeds which represents interest is, according to the Physiocrats, as necessary a condition of reproduction as the farmer class itself; and hence this element cannot be put in the category of the national “net product” or “net income”; for the latter is characterised precisely by the fact that it is consumable without any regard to the immediate needs of national reproduction.” (p 321)

In other words, to use Marx's formulation, gross output is equal to c + v + s. C, the consumed constant capital (raw and auxiliary materials, and wear and tear of fixed capital) plus the variable-capital (the physical wage goods), must all be reproduced on a “like for like basis”, so that reproduction can occur. Only what is left over after that represents the net or surplus product. Of course, in class societies, the exploiting classes do not see things that way. They, after all, must consume to live, and they justify their consumption on the basis of their functional role in society. Landlords provide land, without which production could not take place; capitalists provide capital, without which production could not occur; money-capitalists provide money, without which some industrial capitalists could not accumulate capital.

The Physiocrats represented the ideas of the rising French bourgeoisie, and, in particular, the capitalist farmers. Like the rising productive-capitalists everywhere, they recognised that the old, aristocratic, landlord class no longer had any functional role. They played no part in agricultural production, as that function was now undertaken by the capitalist farmer. If the landlords didn't exist, then, what the Physiocrats saw as the mystical power of the land to create a surplus product (output greater than inputs) would still exist. If the farmers did not have to hand over that rent to landlords to consume unproductively, production not only would still take place on the same scale, but those rents could be used productively, to cultivate additional land.

In Britain, this same perception led the bourgeoisie's ideologists to argue for land nationalisation. If land was nationalised, they argued, rents paid to the aristocracy would instead go to the capitalist state, so that it would not need to levy as much in tax, which is a deduction from profit. That would leave more profit, and so a greater potential for capital accumulation and economic growth. This is the opposite to the Keynesian argument set out earlier, which argues that increased taxes by the state used, for example, in arms spending can act to increase capital accumulation, employment and growth. Keynes' argument was just a 20th century version of the argument put forward by Malthus as paid apologist of the landed aristocracy. Malthus plagiarised Sismondi's arguments in relation to the inevitability of an overproduction of commodities, and put forward as the solution, increases in the revenues of the landlords, clergy and state, so that the capitalists had less to use to increase production, and all of these other parasitic and unproductive classes had more to spend to increase demand.

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The Hypocrisy of NATO's Illegal War On Iran - Part 5

So long as capitalism exists, competition will exist. That competition is no longer the free market competition that existed even in the early days of capitalist production, let alone in the period of small-scale, independent commodity production that preceded it. It is globalised, monopoly-capitalist (imperialist) competition, but it is competition no less.

“In practical life we find not only competition, monopoly and the antagonism between them, but also the synthesis of the two, which is not a formula, but a movement. Monopoly produces competition, competition produces monopoly. Monopolists are made from competition; competitors become monopolists. If the monopolists restrict their mutual competition by means of partial associations, competition increases among the workers; and the more the mass of the proletarians grows as against the monopolists of one nation, the more desperate competition becomes between the monopolists of different nations. The synthesis is of such a character that monopoly can only maintain itself by continually entering into the struggle of competition.”

(Marx - The Poverty of Philosophy)

In the preceding era of free market competition, each producer sought to increase their market share by undercutting other producers. It was this plethora of small capitals, and petty-bourgeois commodity producers that determined the market-value of commodities, and it was the small number of larger-capitals that were, thus enabled to obtain, surplus profits/rent by selling at these market-values that exceeded the individual value of their own production. It was this same plethora of small private capitals, in conditions of all-out free market competition that led to the crises of overproduction of commodities, such as that of 1825.

By the latter half of the 19th century, it was already the large monopoly-capitalist (imperialist) producers that dominated the economy. It was their production that now determined the market-value of commodities, thereby, removing the conditions that enabled them to obtain, surplus profit/rent. It was now, the remaining small-scale private capitals and petty-bourgeois producers that had to sell at these lower market-values, and who, thereby, obtained lower than average profits, facilitating their ultimate dissolution and subordination to the large monopoly capitals. These large monopoly capitals themselves began to plan their production over the long-time horizons required to justify the investment in huge amounts of fixed capital equipment.

They found that the old free market competition of seeking to gain market share by price-wars was destructive.

“... if one firm out of a small group of firms raises its price, all the others, who at the old price were happy with the volume of sales they were enjoying, would see that volume of sales increase without their doing anything. Hence they might be expected to be reluctant to follow a price increase. On the other hand, one firm lowering its price would take customers from them, if they did not respond. Hence, to avoid this possibility these other firms would be likely to follow a price cut. And not only is there a priori plausibility here; there is also a certain amount of evidence from questionnaires circulated to firms that they do indeed tend to expect their competitors to react this way – not following a price increase, but following a price cut.”

(David Laidler - “Introduction to Microeconomics, p 69-70)

As I have set out, elsewhere, in conditions where social productivity rises by an average of around 2% p.a., the unit value of commodities, also, continually falls, which, if the standard of prices remained constant, would translate into continual falling unit prices. For, one thing, a consequence of that would be that firms would, also, need to reduce nominal wages, each year, which workers would resist. So, imperialist states created central banks in the early part of the 20th century, which presided over fiat currencies. In so doing, they could inflate the currency supply, and, thereby, depreciate the currency/standard of prices so that, despite falling unit values of commodities, prices themselves did not fall, including the price of labour-power/wages.

The monopolies rather than generally competing against each other on the basis of price, sought to compete on the basis of costs. If each firm maintained its prices in line with others, but was able to reduce its production costs, it would make bigger profits. Bigger profits facilitated increased capital accumulation, but that was only useful if the market itself was expanding enough to absorb the additional supply. Otherwise, this increased production could only be sold at the expense of other monopolies. One solution to that, if prices were not to be reduced, was to offer real or supposed improvements in what was being sold. The development of brands, was a part of that. But, bigger profits, if not used for capital accumulation could also enable larger dividends to shareholders, which, then, resulted in a higher share price for the company. A higher share price for one monopoly against another, transferred the competition between them to the stock market, enabling the more valuable company to simply buy-up a controlling stake in another's shares.

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SNNS 36

 

Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 35 of 39

Above, I set out that the real explanation for the existence of surplus value is the surplus labour undertaken by labourers. That surplus value is produced in industry as well as in agriculture, contrary to the belief of the Physiocrats. On the one hand, they could only explain the unequal exchange between town and country by claiming that it was a result of the town selling its output above its value. However, they have a similar problem with the surplus value produced in agriculture. Its output was 5 milliards, and only 2 milliards was required to replace its working-capital, which it did in natura. That left a surplus product of 3 milliards, of which only 2 milliards is handed over as rent to landlords.

“The third milliard of the surplus constitutes the interest on the total invested capital of the farmers, that is, ten per cent on ten milliards. They do not receive this interest—this should be carefully noted—from circulation; it exists in natura in their hands, and they realize it only in circulation, by thus converting it into manufactured goods of equal value.” (p 320-21)

The argument of the Physiocrats is that, were it not for this interest, the farmers would not advance the 10 milliard of capital required for production. In this, already, however, we see the need to distinguish within the productive class between the capitalist farmer and the labourers employed by them. It is the capitalist farmer that advances the capital not the labourer, who, in fact, is exploited by it. As Marx sets out in Capital and Theories of Surplus Value, however, this begs the question of where the surplus value of 1 milliards, which takes the form of this “interest” comes from. Moreover, why is it only this 1 milliard that is required as “interest”, rather than 2 milliard or ½ milliard?

According to the Physiocrats, the surplus product arises as a free gift of the land. Its on that basis that the landowner claims the 2 milliard of rent, but, again, why not, then, the whole 3 milliards? In fact, the argument is like that put forward by Duhring, which is stood on its head from the real situation. It would mean that the whole surplus of 3 milliards is due to the landlords, but that they “pay” to the capitalist farmer 1 milliard as the required interest to advance their capital!

The reality, of course, as Marx sets out in Capital III, is that the surplus value is produced by the agricultural labourers, and appropriated as profit by the capitalist farmer. Because of the lower organic composition of capital in agriculture/primary production, it produces surplus profits, i.e. profits above the average annual industrial rate of profit. This makes possible Absolute Rent. In addition, because some land is more fertile than others it produces even greater surplus profits, which are the basis of Differential Rent.

The capitalist farmers, having appropriated the profits produced by their workers, hand over a portion of it, the surplus profit, to the landlord. There is nothing, then, arbitrary in this amount, but, as Marx sets out, is now objectively determined. The landlord obtains these revenues, but without giving anything of equal value in exchange. That the landlord, or the state and church, then, hand back some of these revenues to the farmer, in exchange for actual commodities, does not change that situation. It is the original version of the ridiculous Keynesian argument, used today, that claims that economic expansion can be produced by having the state engage in arms spending. The opposite is the truth.

The state finances arms spending by taxes (even if it borrows to finance it, it must eventually repay the loan plus interest on it out of its tax revenues). Taxes, like rent and interest, are a deduction from surplus value/profit. So, that spending reduces the amount of profit available for capital accumulation, and capital accumulation is the basis of economic expansion. That the state spends some of that tax buying arms from some arms companies, who may, then, employ additional workers, does not change the fact that it has done so by reducing the profits available for capital accumulation in the rest of the economy.

What is more, unlike real capital accumulation, which creates new value (because more labour is employed), which goes back into the economy, arms spending does not create any new value that goes back into the economy. That is particularly the case, where, say, the UK government uses those taxes to buy US arms, fighter jets and so on, which creates jobs in the US, not Britain.

If the government uses tax revenue to build a bridge, the bridge itself is a use-value. It raises productivity, by reducing the time required to transport commodities. It feeds back into the economy. The same is true if the government uses tax revenue to build a new school or hospital. It takes part in the production and maintenance of labour-power, just as much as the food produced by a farmer that is then sold to workers.

But, at best, tax spent on arms, results in a stockpile of weapons that sit there and rust away! Non-use values. At worst, it is used destructively – means of destruction, negative use-values – and so further damages real capital accumulation. Obviously, as Marx sets out, in Theories of Surplus Value, states, sometimes, need to spend money on arms, and employing workers unproductively, as soldiers, where they fear invasion. But such diversion of resources is a reduction in its potential capital accumulation and growth forced on it, and the opposite of being a means of stimulating growth.

If Robinson Crusoe had the choice of spending his surplus labour hours building additional animal pens and stocking them, or building sea defences against an unlikely invasion, what do you think his rational choice would be? The ridiculous claims of the British government about the possibility of a Russian invasion of Britain – the same Russia that has spent more than 3 years just trying to advance a few dozen miles into Eastern Ukraine – are simply a means of it justifying its own additional arms spending, as part of NATO's global imperialist ambitions. The suggestion that such spending would have the benefit of creating jobs and spurring the economy is equally ludicrous. The money would be better spent on repairing the crumbling roads, rail network, schools and hospitals, which is where the real threat to the well being of British workers is to be found.

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The Hypocrisy of NATO's Illegal War On Iran - Part 4

This objective reality that The Law of Value drives societies to continually seek to raise productivity so as to be able to produce more use-values with any given amount of social labour is not just a matter of each society doing that in order to increase its own real wealth and well-being. Unless it does so, it puts its own existence as a society in peril. It has no insurance against natural disaster, such as crop failures and so on. But, it also has no protection against other societies that seek to resolve their own problems by the use of force against them. As Engels sets out, in detail, in Anti-Duhring, against the latter's “force theory”, force, of itself, cannot explain why some in society become the rulers, nor why some societies are able to exert rule over others. Force itself is a function of production, and the more developed is production, the more the producer is able to gain access to superior force.

To raise productivity, societies are led to engage in technological development, and that creates new productive and social relations, which, in turn, creates new forms of property and social classes as the personification of that property. But, technology's ability to raise productivity is itself limited by the purpose of its use. There would have been little point Robinson Crusoe or a medieval peasant household introducing a piece of technology that enabled them to increase their production of food ten-fold, because they simply could not have consumed the food they produced. Time spent producing fishing nets, or animal pens that raise productivity by, say, 10 or 20%, however, are worthwhile, and free up time to produce other use-values.

So long as the demand for these products is severely limited, which it always is when their production is geared to consumption by the individual producer, so too, the development of productivity by the use of technology is limited. It is only when societies begin to produce commodities on a large scale, and that production becomes geared to this production of commodities in a market, that the benefits of the use of technology/machines comes into its own, because the larger the market/demand for any commodity, the greater production of it is justified, and any producers that can meet this demand most effectively, will benefit. The larger the market, the more the use of technology/machines by any producer is justified, and profitable.

It was this reality that led to the need to create ever larger single-markets, so that, as capitalist production expanded, particularly machine production from the time of the Industrial Revolution, the old principalities, and small kingdoms became a fetter on the development of society, and were replaced by the nation state, as part of the bourgeois-national revolutions. At that time, the nation state was, therefore, an objectively progressive development, required for the further development of the productive forces, just as, at that time, the role of the individual private industrial capitalist was objectively progressive, as a means of centralising and developing the means of production as capital.

But, everything has its time and season, and what was once progressive, turns into its opposite. The private industrial capitalist is, today, an historical anachronism. Even by the second half of the 19th century, as Marx and Engels describe, the private industrial capitalists (the expropriators of the small producers) were being themselves expropriated (expropriation of the expropriators) by the large-scale socialised capital that was itself the inevitable consequence of capitalist production on an ever larger-scale, which leads to the development of state-monopoly capitalism (imperialism). And, as this capital in its imperialist phase expands production on an even greater scale, so it requires ever larger single-markets, making the nation state a fetter on production, and objectively requiring its destruction and replacement by ever larger multinational states, as described by Trotsky earlier.

That long historical process inevitably unfolded violently, as the most powerful states sought to annex their weaker neighbours. England annexed Wales, and in conjunction with Scotland, annexed Ireland. Prussia annexed the other German states and so on. In France, more than 200 nationalities were forged into the French nation state. In America, European colonialism created nation states, and in North America, that initial process was supplemented by a violent civil war to assert the dominance of the Northern industrial capitalists over the Southern states, and to assert the dominance of a centralised Federal State over the individual states themselves. In Europe, faced with this dynamic, and the need to compete with an already dominant Britain, the two main continental European powers, France and Germany, sought to assert their dominance, in the creation of a single, European state.

This same process continues to play out on every continent on the planet. The war in Ukraine, and in Iran, is a manifestation of it.

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 34 of 39

Engels proceeds, then, to look at these series of exchanges, starting from the initial material balances in the hands of the three classes, and the 2 milliards in money in the hands of farmers.

The farmers, out of their production of 5 milliards, in the previous year, replace their working-capital of 2 milliards directly from that production, just as a farmer replaces seed corn out of their output of corn. That leaves them with 3 milliards of output. They also have the 2 milliards of money. They pay this to the landlords as rent.

“Circulation passing between only two of these three classes is called imperfect by the Physiocrats; circulation which takes place between all three classes is called perfect.” (p 319)

The landlords buy 1 milliard of means of subsistence from the farmers (imperfect), thus handing back half of the rent they had received. Quesnay does not refer any further to the state or church, which received a portion of these revenues as taxes and tithes, so all of this is subsumed under the heading of the transactions with the landlords.

“In regard to the landlord class proper, however, he says that its expenditure (in which that of all its retainers is included) is unfruitful expenditure, at least as regards the great bulk of it with the exception of that small portion which is used “for the maintenance and improvement of their lands and the raising of their standard of cultivation”. But by “natural law” their proper function consists precisely in “the provision of good management and expenditures for the maintenance of their patrimony”, or, as is explained further on, in making the avances foncieres, that is, outlays for the preparation of the soil and for the provision of all equipment needed by the farms, which enable the farmer to devote his whole capital exclusively to the business of actual cultivation.” (p 319-20)

A parallel could be drawn with the ruling-class of, today, whose revenues come from their renting out of money-capital, i.e. coupon payments on bonds, and dividends on shares. The vast majority of capital accumulation comes from reinvested, realised profits, not from additional financing from the issue of new shares. Only a tiny fraction of the shares traded on stock markets is of new shares issued to raise finance for capital investment. The majority of trading is just speculation – the buying and selling of existing bonds and shares.

And, of course, in relation to that portion of capital accumulation that is financed by the issue of new shares or bonds, the owners of money-capital that buy these shares and bonds do so with money previously paid to them (revenues) as interest/dividends out of realised profits. In other words, a payment of a revenue to them for which nothing was provided of equal value.

The landlords use the second milliard of rent to buy manufactured goods from the sterile class to buy means of subsistence from the farmers (perfect). The farmers, now, have the full 2 milliards of money, paid in rent, back in their hands. At the same time, of the 3 milliards of products they had, they have now sold 2 milliards – 1 milliard to landlords, and 1 milliard to the sterile class.

The farmers, now, use 1 milliard of the money returned to them to buy manufactured goods from the sterile class, which it sells from its initial stock.

“... a large part of these goods consists of agricultural implements and other means of production required in agriculture.” (p 320)

The sterile class, then, uses this same 1 milliard of money to buy raw materials from the farmers to replace its own working-capital consumed in the previous year's production (imperfect).

“Thus the two milliards expended by the farmers in payment of rent have flowed back to them, and the movement is closed. So this is the solution of the great riddle,

“What becomes of the net product, which has been appropriated as rent, in the course of economic circulation?”” (p 320)

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The Hypocrisy of NATO's Illegal War On Iran - Part 3

This reality that the world is unfair, that it favours the more able to adapt and survive within it, whether that be a stronger, or more skilled or intelligent labourer, or a large producer as against a smaller producer, or an imperialist state as against a less developed state, is the foundation of the world outlook and philosophy of the moral socialist. It is an outlook, as a basis for understanding the world and its development, that Marxists reject. As Marx and Engels set out as against the likes of Sismondi, Proudhon and Duhring, and as Lenin set out in response to the Narodniks, and Trotsky set out in response to Burnham and Shachtman, it is a thoroughly reactionary outlook.

Writing to Nikolai Danielson, Engels, noting that Danielson and others were still looking to the old Russian village communes as the basis of their vision of the future, as their “anti-capitalism” took the form of resisting the capitalist development of Russia, which they saw as an alien imposition imposed by imperialist powers in the West, and a diversion from Russia's true path, says,

“... capitalism opens out new views and new hopes. Look at what it has done and is doing in the West.”

Marx and Engels noted that, although the introduction of laws, regulations and even planning were only introduced by the big industrial capitalists because, at the stage of development of state-monopoly capitalism (imperialism), it was to their benefit, that did not, also, mean that it was not to the benefit of society and its development, overall, including that of the industrial labourer. Not only did it provide them with higher living standards, and better conditions, but, by replacing the anarchy and chaos of unfettered markets with the need to increasingly regulate and plan production across the economy, and, as the minimum scale of production continually rose, to continually increase the size of the economy, ultimately, the creation of a world economy, it created the very conditions required for Socialism. Our outlook is not to hold back that progressive development, as the petty-bourgeois moralists would have us do, in the interests of the small capitalists, the self-employed and so on, or the small, less developed economies. It is to continually defend the interests of the global working-class within it, in preparation for the working-class seizing control over it.

We do not advocate for a large capitalist monopoly, be it one controlled by shareholders, or a state controlled monopoly, but nor do we advocate against it. We simply point out the progressive, but limited, nature of such a development. And that applies to the development of the world economy too. As Trotsky put it,

“Capitalism has transferred into the field of international relations the same methods applied by it in “regulating” the internal economic life of the nations. The path of competition is the path of systematically annihilating the small and medium-sized enterprises and of achieving the supremacy of big capital. World competition of the capitalist forces means the systematic subjection of the small, medium-sized and backward nations by the great and greatest capitalist powers. The more developed the technique of capitalism, the greater the role played by finance capital and the higher the demands of militarism, all the more grows the dependency of the small states on the great powers. This process, forming as it does an integral element of imperialist mechanics, flourishes undisturbed also in times of peace by means of state loans, railway and other concessions, military-diplomatic agreements, etc. The war uncovered and accelerated this process by introducing the factor of open violence. The war destroys the last shreds of the “independence” of small states, quite apart from the military outcome, of the conflict between the two basic enemy camps.”

(The Programme of Peace)

And our response to that is not to moralistically argue for clinging to the past, for the rights of national self-determination of small nations.

“For the revolutionary proletarian the peace programme does not mean the demands which national militarism must fulfil, but those demands which the international proletariat intends to impose by its revolutionary struggle against militarism of all countries. The more the world revolutionary movement unfolds the less do the peace questions depend on the purely military position of the belligerents, the less becomes the danger that peace conditions may be understood by the masses as war aims.”

(ibid)

Trump at least, in his idiocy, simply lays bare what the imperialists of NATO tried to obfuscate.  His mafia regime makes no secret of its intentions in seeking to use war for its ends, to seize Venezuela, Greenland, the Panama Canal, or The Straits of Hormuz.  He even strips away the previous façade and describes the Department of War  of the US, honestly, in place of the lying label of Department of Defence.

If workers in a small company are faced by being taken over by a larger company, Marxists do not argue against the takeover. We seek to ensure the greatest unity of the workers in both companies. We point to the benefits of being within the larger company structure, for the purposes of the workers strength and bargaining capacity, and the fact that the larger capital is better able to make these concessions. But, nor do we suggest to the workers of either company that this is a solution to their problems, which rest on the exploitation of their labour by capital. Similarly, its clear that the interests of workers in small nations are advanced by being part of a larger state, and so the ability to join with other workers within that state.

As Lenin and the Bolsheviks put it,

“The Social-Democrats will always combat every attempt to influence national self-determination from without by violence or by any injustice. However, our unreserved recognition of the struggle for freedom of self-determination does not in any way commit us to supporting every demand for national self-determination. As the party of the proletariat, the Social-Democratic Party considers it to be its positive and principal task to further the self-determination of the proletariat in each nationality rather than that of peoples or nations. We must always and unreservedly work for the very closest unity of the proletariat of all nationalities, and it is only in isolated and exceptional cases that we can advance and actively support demands conducive to the establishment of a new class state or to the substitution of a looser federal unity, etc., for the complete political unity of a state.”

(Lenin – The National Question In Our Programme)

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 33 of 39

For the reasons set out earlier, because the Physiocrats equate use-value with value, they also equate the value created by labour with the value of labour-power, and they equate the value of labour-power with the value of the agricultural products consumed by the labourer. That is why they cannot see the possibility of the industrial labourer producing a surplus value. In other words, industry obtains agricultural products as raw materials and food, and the value of the output of industry cannot be greater than the value of these agricultural inputs. It simply transforms them into industrial products.

“Although it is itself divided into capitalists and wage-workers, according to Quesnay's basic conception, it forms an integral class which is in the pay of the productive class and of the landlords.” (p 318)

The landlords are included, here, because, as set out earlier, industry does not just sell to the farmers, but also to the landlords. The landlords, however, buy from industry with 1 milliard of the rent received from the farmers. As will be seen, this 1 milliard, eventually, finds its way back to the farmers, by way of industry, which buys agricultural products with it.

“The total industrial production, and consequently also its total circulation, which is distributed over the year following the harvest, is likewise combined into a single whole. It is therefore assumed that the annual commodity production of the sterile class is entirely in its hands, at the beginning of the movement set out in the Tableau, and consequently that its whole working capital, consisting of raw materials to the value of one milliard, has been converted into goods to the value of two milliards, one-half of which represents the price of the means of subsistence consumed during this transformation.” (p 318)

So, as described earlier, for the Physiocrats, the value of the industrial production resolves into the value of the raw materials plus the value of the labour expended on processing them. But, in fact, the value of “labour”, here, is actually the value of the labour-power, i.e. the cost of reproducing the labourer. The actual value added to the raw material in the process of production is equal not to the value of labour-power, but to the amount of labour undertaken. Indeed, that is the case with agricultural production as well as industrial production. It is the fact that this quantity of labour undertaken is greater than the necessary labour required to reproduce the labourer that results in the creation of surplus value, both in agricultural production and industrial production.

It is this that explains what might appear as an objection, and which the Physiocrats could only explain by arguing that the “sterile class” sells part of its output to the farmers above its value. In other words, the sterile class consumes part of its own production. If the value of its total production is equal to the value of raw materials and food obtained from the farmers, it should sell all of its output to the farmers – an exchange of equal values. But, it doesn't. It consumes part itself. So, the other part, sold to farmers, must be sold above its value – an unequal exchange. In reality, the towns did sell commodities to rural areas above their values, but that is not the real explanation, here. The real explanation is that the value of the industrial production is greater than the value of raw materials and wages. It is greater by the amount of surplus value created by the industrial labour.

“This, however, does not affect the figures of the Tableau, for the two other classes receive manufactured goods only to the value of their total production.” (p 319)

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 32 of 39

Similarly, therefore, the farmers pay 2 milliards in rent to the landlords, but the landlords, having consumed their own stock of food, during the year, must replace it at the end of the year, which they do by handing back to the farmers 2 milliards in exchange for the food they require for the following year.

“This, then, is how the money paid by the farmer class to the landlords as rent for the year 1757 amounting to two milliards, flows back to it at the close of the year 1758 (the Tableau itself will show how this comes about), so that the farmer class can again throw this sum into circulation in 1759. But since, however, as Quesnay observes, this sum is much larger than is actually required for the total circulation of the country (France), in which payments are constantly being repeated piecemeal, the two milliard livres in the hands of the farmers represent the total money in circulation in the nation.” (p 317)

In other words, as described earlier, if the farmers bought industrial commodities 10 times during the year, rather than one large purchase, they only require a money hoard of £100 rather than £1,000. The reality of multiple, simultaneous purchases, not only by the three classes in aggregate, but, also, of individuals within each of the classes means that money hoards are required by individuals within each class. For example, industrial producers would not be waiting to obtain £100 from farmers, before making their own purchases of commodities, and so would require their own separate money hoards for that purpose. As Engels describes, the 2 milliards is the sum total of the money hoards required, but placed, initially, in the hands of the farmers, in the Tableau, for the purposes of exposition.

“The class of landlords drawing rent first appears in the role of receivers of payments, which incidentally is the case even today. On Quesnay's assumption the landlords proper receive only four-sevenths of the two milliards of rent: two-sevenths go to the government, and one-seventh to the receivers of tithes. In Quesnay's day the Church was the biggest landlord in France and in addition received the tithes on all other landed property.” (p 317)

The landlords (and the state and church), having received this 2 milliards in rent, at the start of the year, then use it to buy commodities, replacing their own consumed material stocks. But, they do not consume only agricultural products. They also consume industrial commodities bought from the sterile class. Not all of the 2 milliards in rents, therefore, returns, directly, to the farmers.

“The working capital (avances annuelles) expended by the “sterile” class in the course of a whole year consists of raw materials to the value of one milliard—only raw materials, because tools, machinery, etc., are included among the products of that class itself. But the many different roles, played by such products in the industrial enterprises of this class do not concern the Tableau any more than the circulation of commodities and money which takes place exclusively within this sphere.” (p 317-8)

In other words, the sterile class (industry) has a working-capital consisting of agricultural products (food and raw materials) and industrial products (machines, intermediate goods etc.), but the Tableau is only concerned with the exchanges between agriculture and industry. Within the sterile class, different producers of machines and intermediate goods will exchange with each other, as described earlier. They will also produce industrial commodities for personal consumption, such as clothes consumed by industrial capitalists and workers. The Tableau assumes that these industrial products for personal consumption are not bought by the productive class, which meets its own requirements, in that regard, from its own direct production.

So, the numerous exchanges of industrial products, either for productive or personal consumption, by the sterile class, are outside the concern of the Tableau, and it is only its aggregate exchanges with the farmer and the landlords that are analysed.

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 31 of 39

The production of the current year, assuming simple reproduction, i.e. no accumulation of capital, must first replace those material balances, i.e. must replace the physical use-vales that comprise the means of production (c), and of consumption, (v + s). The physical replacement of these use-values is effected by labour undertaken in the current year, but its value is necessarily greater than the value newly created in the current year, precisely because it includes the value of the consumed constant capital produced in the previous year/s. It does not include the value of the consumed means of consumption, produced in the previous year, because it forms no part of the output of the current year. It is consumed by workers and exploiters to reproduce themselves, but it is not a part of new value production itself.

It is not labour-power that creates new value, but labour. Only the new value created by labour in the current year forms a part of the value of output (v + s), in addition to the preserved value of the consumed constant capital.

So, at the starting point of the Tableau, there are existing material balances of stocks of food and raw materials. Part of these are in the hands of the farmers – the 2 milliards of working-capital. Another part is in the hands of the landlords, who must also consume prior to current production and the payment of their rent out of it. Finally, a part is in the hands of the “sterile class”, the industrial capitalists and workers, in the form of food and raw materials.

Similarly, there are material balances of industrial products. Because the Physiocrats assumed that the “productive class” met its consumption needs from direct production, its stocks of industrial products comprise only means of production. The sterile class also holds stocks of industrial products, both as means of production and consumption. As with Marx's analysis in Capital II, III and Theories of Surplus Value, there are, of course, material balances existing, also, in the form of fixed capital. But, the large part of this fixed capital does not need to be replaced during the year, because only a small part of the fixed capital is consumed, i.e. wear and tear. So, if there are 10 ploughs comprising the fixed capital, and the average life of a plough is 10 years, only 1 plough per year, on average, needs to be replaced out of current production.

Marx sets out that the circuit of industrial capital begins and ends with material balances.  In between, production transforms them into new commodities.  The surplus product and surplus value is the result of surplus labour being undertaken in that process.

In the current year, the gross product of agriculture was 5 milliards, and 2 milliards replaced the working-capital (consumed c + v). Of the remaining 3 milliards, 2 are in food, and 1 in raw materials. The productive class must, however, replace the material balances of agricultural products in the hands of the landlords and sterile class. The farmers pay 2 milliards to the landlords as rent. Because the Physiocrats only see agricultural labour as productive, and the source of the surplus product/value, arising from the land, they see only this 2 milliard as “Net Income”. In other words, it is equal to the surplus product, gifted by the land, and the landowners appropriate it as rent.

“But before the movement described in the Tableau begins, there is also the whole "pécule", two milliards of cash in the hands of the farmers, in addition to the “total reproduction” of agriculture amounting to five milliards in value, of which three milliards enter into general circulation.” (p 316)

As I have set out, elsewhere, if there is only one transaction a year, for example, the farmers buy £1,000 of industrial products from the sterile class, then, the farmers must have this £1,000 as a money hoard. The fact that the sterile class, then, buys £1,000 of agricultural products from the farmers does not change that, but, simply, means that, now, the farmers receive back this same £1,000, replacing their initial cash balance. However, if the farmers buy £100 of industrial products, they only need £100 in cash. Then, this £100 comes back to them, and they can use it again to buy £100 of industrial products. So, instead of 1 transaction per year, 10 transactions per year means that only £100 of money is required. It is why Marx notes that the velocity of circulation of currency is inextricably tied to the rapidity of transactions, i.e. PT = MV.

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 30 of 39

Revenue is equal to the labour undertaken in the year/National Income, which is equal to v + s, i.e. wages and profit (the latter dividing into rent, interest, taxes, and profit of enterprise), which is also equal to GDP, which measures not the value of output, but only the amount of value added by labour during the year. The total value of output, as Marx sets out, however, is equal not to v + s, but c + v + s, i.e., it also includes the value of all of that consumed constant capital – raw and auxiliary materials, energy, and wear and tear of fixed capital – produced in the previous year/s.

“Since, as we have seen, constant prices and simple reproduction on a given scale are assumed, the money value of the portion which is thus taken from the gross product is equal to two milliard livres. This portion, therefore, does not enter into general circulation. For, as we have noted, circulation which takes place merely within a particular class, and not between one class and another, is excluded from the Tableau.” (p 316)

In other words, the 2 milliards is the amount of consumed means of production/constant capital that must be replaced to maintain production on the same scale – simple reproduction. Given that in simple reproduction, all surplus value is consumed unproductively, the fallacy of the argument put forward by Michael Roberts, set out earlier, is obvious. If all surplus value is consumed unproductively, then, where would the demand for constant capital come from, according to Robert's schema, in which it all comes from profit?

In reality, as Marx sets out in Capital II, and Theories of Surplus Value, there are numerous exchanges – circulation – between producers, but the net effect is they cancel out so that it is the same as if each producer replaces their consumed constant capital, in natura, from their own production, in the same way that a farmer replaces seed from their own production of corn. For example, a coal producer replaces the coal consumed in their steam engines out of the coal they produce, using those steam engines. But, the coal producer also has to replace steel for worn out rails, and so on. They exchange coal for steel. Similarly, the steel producer replaces their own worn out equipment with steel from their own output, but they also replace the coal consumed in their furnaces with coal from the coal producer, exchanged for steel.

As Marx puts it, if all constant capital were produced by one enterprise, it would replace all of its consumed means of production, directly, from its own output. There would be no exchange with revenue/Department II, in respect of this part of its production. There would only be exchange with revenue/Department II, in respect of the replacement of Department II's constant capital, i.e. Department II (c) = Department I (v + s).

“After the replacement of the working capital out of the gross product there remains a surplus of three milliards, of which two milliards are in foodstuffs and one in raw materials. But, the rent which the farmers have to pay the landlords is only two-thirds of this sum, equal to two milliards. It will soon be seen why it is only these two milliards which figure under the heading of “net product” or “net income”.” (p 316)

Again, contrary to Duhring, the importance of analysing the Tableau, and the same applies to Marx's schemas of reproduction, in terms of material balances, and their replacement, is seen, here. Each cycle must begin with existing material balances, be they of raw materials, machines, buildings, and so on, required for production. You cannot produce unless you have something to produce with. It cannot be produced just by an act of current labour. Similarly, workers – and exploiters – cannot wait until production has taken place, before they can consume. At the very least, there must be existing material balances of food, available to consume, whilst production is undertaken.

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 29 of 39

Quesnay used actual prices for this production from the time.

“It comes to five milliard livres, a sum which roughly expresses the money value of the gross agricultural production of France based on such statistical estimates as were then possible. This and nothing else is the reason why Quesnay in his Tableau “operates with several milliards”, to be precise, with five milliards, and not with five livres tournois.” (p 315)

The significance of the assumption of constant prices is seen, here. Contrary to Duhring, the use of money prices is simply a mean of expressing the physical quantities more conveniently. The same is true in Marx's schemas of reproduction, where these same assumptions are made, and the money values represent only the money equivalent of the physical commodities being reproduced.

“The whole gross product, five milliards in value, is therefore in the hands of the productive class, that is, in the first place of the farmers, who have produced it by advancing an annual working capital of two milliards, which corresponds to an invested capital of ten milliards.” (p 315-6)

The ten milliards comprises, in addition to the 2 milliards of working-capital, the fixed capital. As Marx sets out, in Capital II, III, and Theories of Surplus Value, in calculating rates of turnover of capital, it is the circulating capital that is used, but, to calculate the annual rate of profit, it is the total advanced capital, including the fixed capital, that is used.

“The agricultural products—foodstuffs, raw materials, etc.—which are required for the replacement of the working capital, including therefore the maintenance of all persons directly engaged in agriculture, are taken in natura from the total harvest and expended for the purpose of new agricultural production.” (p 316)

Again, Marx uses this same methodology in his schemas of reproduction, and to illustrate Adam Smith's “absurd dogma”, that the value of commodities resolves entirely into revenues, and its concomitant that the total national output resolves entirely into National Income. The difference in Marx's analysis, given that he was discussing a developed industrial capitalism, in which the cottage industry of the agricultural labourer was not simply “auxiliary to agriculture”, i.e. there is no direct production and consumption, is that it is only the reproduction of the consumed constant capital that, in aggregate, is taken “in natura”, from the total output, and so has no revenue equivalent.

Given that it is this constant capital component that grows relative total output, at least quantitatively if not, necessarily, in value terms, the significance of that can be seen in considering the extent to which GDP is a misrepresentation of total output, as a result of Smith's “absurd dogma” being accepted by economists down to today. For example, Michael Roberts states,

“The demand for goods and services in a capitalist economy depends on the new value created by labour and appropriated by capital. Capital appropriates surplus value by exploiting labour-power and buys capital goods with that surplus value. Labour gets wages and buys necessities with those wages. Thus it is wages plus profits that determine demand (investment and consumption).”

It is quite clear that, as soon as we have an accumulation of constant capital (or, in pre-capitalist production, means of production), not provided gratis by Nature, as in hunter-gatherer societies, but as a result of labour expended on it, this constant capital has value, as seen in the earlier example. Wild corn may be a free gift of nature. Its only value is the labour that must be expended to gather it, for consumption, just as the value of the meat a tribe consumes is the labour it expends in hunting. But, as soon as wild corn is collected, but not all of it is consumed, and, instead, a portion is accumulated to be used as seed (means of production – constant capital) this seed, and its value is, then, consumed productively as raw material/means of production/constant capital, in the following year. It can have no revenue equivalent in the year in which its use-value/value is productively consumed, because its revenue equivalent existed in the previous year. Means of production/capital is always accumulated out of revenue, though, as Marx sets out, in Capital III, not necessarily from profit, as bourgeois ideology would have it.

The seed/means of production/constant capital set aside in Year 1, out of revenue, i.e. out of that year's labour, has a value determined by the labour expended on its production, i.e. collection of wild seed provided gratis by Nature. That value is preserved and reproduced in the corn produced in the following year, now the product of settled agriculture. That value can have no revenue equivalent in the year it is then consumed as seed. Its value, and its use-value, is reproduced, in natura, in the output of corn. As Marx puts it in Capital III, and Theories of Surplus Value, it is reproduced, “on a like for like basis”, out of capital, not out of revenue.

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The Hypocrisy of NATO's Illegal War On Iran - Part 2

The introduction of national laws and rules, by the capitalist ruling-class, which created a “level playing field”, like all bourgeois right, is, as Marx describes it in The Critique of The Gotha Programme, a right not to equality, but inequality.

“But one man is superior to another physically, or mentally, and supplies more labour in the same time, or can labour for a longer time; and labour, to serve as a measure, must be defined by its duration or intensity, otherwise it ceases to be a standard of measurement. This equal right is an unequal right for unequal labour. It recognizes no class differences, because everyone is only a worker like everyone else; but it tacitly recognizes unequal individual endowment, and thus productive capacity, as a natural privilege. It is, therefore, a right of inequality, in its content, like every right. Right, by its very nature, can consist only in the application of an equal standard; but unequal individuals (and they would not be different individuals if they were not unequal) are measurable only by an equal standard insofar as they are brought under an equal point of view, are taken from one definite side only – for instance, in the present case, are regarded only as workers and nothing more is seen in them, everything else being ignored. Further, one worker is married, another is not; one has more children than another, and so on and so forth. Thus, with an equal performance of labour, and hence an equal in the social consumption fund, one will in fact receive more than another, one will be richer than another, and so on. To avoid all these defects, right, instead of being equal, would have to be unequal.”

Marx is not even talking about the conditions existing under commodity production, or capitalist production, here, but about the conditions that would exist under socialism, in its initial phases. It is the critique of the fundamental flaw in the concept of meritocracy, which, inevitably entrenches the existing natural abilities of some as against others. Under capitalism, there is no material basis for society seeking to go beyond this “equality of right”, which inevitably means an inequality of outcomes, given the actual “inequality of being”. It is the fundamental flaw of welfarism, which purveys the idea that such “equality of outcome”, or, at least, a mollification of inequality can be achieved, by a complex, inefficient, bureaucratic and costly system of taxes and benefits, itself requiring huge numbers of people involved in its administration, who could have been more usefully employed.

And, this is true in terms of imperialism too. The developed, capitalist economies, with their existing masses of fixed capital, let alone their more advanced technology, produce commodities whose individual value is much lower than that of the same commodities produced by less advanced capitalist countries, that have less fixed capital, and less advanced technology. But, in the world market, as in every market, commodities are sold not at their individual value, but at their market value (if we ignore the question of prices of production), as Marx sets out in Capital I and III. The large, monopoly-capitalist (imperialist) producers, can always sell their commodities at lower prices, and so undercut their smaller competitors.

The large, monopoly-capitalist (imperialist) producers, thereby, obtain surplus profits (rents), even though they often sell their commodities at prices slightly below that of their smaller competitors, and despite the fact that they can, as Engels described above, and as Marx set out in Capital I, pay their workers much higher wages, and provide them with better conditions. Marx noted that European textile workers, were paid wages only half that of English textile workers, and yet English textile production persistently undercut the European producers, and provided higher profits for English producers.

Demanding that less developed economies abide by the same rules and regulations and standards as the advanced capitalist economies, within the confines of a continuation of global capitalism, is as utopian as the welfarist demands for equal outcomes, for unequal individuals. It is simply a manifestation of that petty-bourgeois, social-democratic, managerialist ideology that the interests of capital and labour are the same, and require only a negotiation as to the process of distribution. It imposes the false concept of the idea of “the people”, as though the entire historical process of the differentiation of that “people”, into “bourgeois” and “proletarians”, that took place at an accelerating pace, from the 15th century onwards, had never occurred.

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 28 of 39

So now, to return to Engels' exposition.

“The first premise of the Tableau is that the farming system and with it large-scale agriculture as understood in Quesnay’s time, had been generally introduced, Normandy, Picardy, Île-de-France and a few other French provinces serving as prototypes. The farmer therefore appears as the real leader in agriculture, representing the whole productive (agricultural) class in the Tableau and paying the landlord a rent in money.” (p 314)

In other words, we have capitalist production, in agriculture. The social function of the landlord, in organising agricultural production, has ceased, and the landlords, now, simply receive capitalist ground-rent from the farmer, in the same way that, today, the social function of the private capitalist has ended, and the ruling-class of shareholders (owners of fictitious-capital) simply receive their revenues in the form of interest/dividends.

“An invested capital or inventory of ten milliard livres is assigned to the farmers as a whole; of this sum, one-fifth, or two milliards, is the working capital which has to be replaced every year—this figure too was estimated on the basis of the best-managed farms in the above provinces.” (p 314-5)

The “working-capital” is what Marx refers to, elsewhere, as circulating-capital. It is what is required for wages (variable-capital), raw materials, auxiliary materials (circulating constant capital) , and to cover the wear and tear of fixed capital. Because the physiocrats lump together the capitalist farmer with the agricultural labourers – as the productive class – they make no distinction between wages and profit in agriculture.

“Further premises: (1) that for the sake of simplicity constant prices and simple reproduction prevail; (2) that all circulation which takes place solely within one class is excluded, and that only circulation between class and class is taken into account; (3) that all purchases and sales taking place between class and class in the course of the industrial year are combined in a single total sum. Lastly, it must be borne in mind that in Quesnay’s time the home industry of the peasant family itself provided by far the greater portion of its needs other than food in France, as more or less in all Europe, and that it is therefore taken for granted here as accessory to agriculture.” (p 315)

The premise of constant prices simply removes the distraction of changes in productivity, which might lead to the previously discussed issues of tie-up or release of capital. It also removes the distraction of inflation, i.e. changes in the standard of prices. The premise of exchanges only between classes is, also, a simplifying assumption, were it not for the fact that the Physiocrats lump together the capitalists and labourers into the “productive” and “sterile” classes. In doing so, they fail to recognise the actual basis of the creation of surplus-value, in both these “classes”, as the surplus labour performed, and its appropriation by the capitalists.

The assumption of a single annual exchange between the classes is a simplifying assumption, and, in Marx's analysis in Capital and Theories of Surplus Value, he sets out the effects of breaking this down into multiple exchanges, during the year, on the circulation of money and capital. Marx' and Engels' analysis of the rate of turnover of capital is an extension of that.

The description of cottage industry as accessory to agriculture, indicates the extent to which industrial production of commodities was the preserve of the towns, and the “sterile class”, and provided means of production, and items of consumption, for the exploiting classes.

Its also notable, given the earlier discussion, that, in the Tableau, Quesnay's starting point is the total harvest, and is described as “total reproduction”, a phrase emphasised, here, also, by Engels. It is the basis of Marx's determination of value as “current reproduction cost”, and of his schemas of reproduction, in which what is reproduced is not money-values, but the physical elements of capital, i.e. the use-values.

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Anti-Duhring, Part II, Political Economy, X – From The Critical History - Part 27 of 39

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 the 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. This is labour over and above what is required simply to consume, i.e. to reproduce their labour-power (necessary labour).  If they collect a ton of seed, which, left to Nature, would have produced 2 tons of corn, and, by cultivating it, they may obtain 10 tons of corn. That represents an improvement in their real wealth of 500%.

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