Chapter 1 – A Scientific Discovery, 2. Constituted Value or Synthetic Value - Part 17 of 20

This is the fundamental role played by The Law of Value in all societies, of driving forwards productivity, by seeking to maximise the quantity of use values produced by any given amount of social labour. It necessarily results in a fall in the unit value of products/commodities. But, it is only in conditions of generalised commodity production that The Law of Value pushes forward this rise in productivity at an accelerated rate, because of the competition between commodity producers. As Lenin also describes, this competition between commodity producers, in conditions of generalised commodity production, is also, then, what leads to the process of differentiation of them into bourgeois and proletarians, as the winners become the bourgeois owners of capital, and the losers, now, do not become slaves, serfs or paupers, but become proletarian sellers of labour-power, which is bought by capital.

“It is important to emphasize the point that what determines value is not the time taken to produce a thing, but the minimum time it could possibly be produced in, and the minimum is ascertained by competition.” (p 63)

Each commodity producer is forced, by competition, to produce at the lowest value, first to ensure they maximise their market share, but also to maximise their profit, when selling at the market value, and so maximising their ability to accumulate capital and produce on an even larger scale. This is important when considering Proudhon's schema, which envisages continued commodity production, but without this role of competition, because each producer would receive a labour note, based on the actual labour provided.

“Suppose for a moment that there is no more competition and consequently no longer any means to ascertain the minimum of labour necessary for the production of a commodity; what will happen? It will suffice to spend six hours' work on the production of an object, in order to have the right, according to M. Proudhon, to demand in exchange six times as much as the one who has taken only one hour to produce the same object.” (p 63)

Nor does it result in the proportional relation and variety of products that Proudhon claimed. Cotton textiles could be produced much cheaper than linen, and so pushed out linen production. A similar thing was seen, in the 1980's, in relation to video recorders. Two formats were available - VHS and Betamax. It was generally accepted that Betamax was a superior format, but VHS producers had a larger share of the market, with more content supplied in that format meaning that consumers could only get the range of content if they had a VHS machine. The decisive factor was that the producers of porn used VHS. So VHS players dominated, pushing the better quality Betamax out of production.

The desire for such harmonious and proportional relations is just a pious wish, which, Marx says, good natured bourgeois economists have always expressed. Marx quotes Boisguillebert and Atkinson as illustrations of this pious wish.

“This correct proportion between supply and demand, which is beginning once more to be the object of so many wishes, ceased long ago to exist. It has passed into the stage of senility. It was possible only at a time when the means of production were limited, when the movement of exchange took place within very restricted bounds. With the birth of large-scale industry this true proportion had to come to an end, and production is inevitably compelled to pass in continuous succession through vicissitudes of prosperity, depression, crisis, stagnation, renewed prosperity, and so on.” ( p 65)

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The Chinese Revolution and The Theses of Comrade Stalin - Part 15 of 47

Trotsky, later, quotes from an internal document submitted by Khitarov, to the Fifteenth Congress of the CPSU, when he had just returned from China.

“Say-O came to the comrades in Shanghai and told them that there was a military coup in preparation, that Chiang Kai-shek had summoned him to headquarters, had given him an unusually cold reception and that he, Say-O, would not go there any longer – because he feared a trap. Chiang Kai-shek proposed to Say-O that he get out of the city with his division and to go to the front; and he, Say-O, proposed to the Central Committee of the Communist Party that they agree that he should not submit to Chiang Kai-shek’s order. He was ready to remain in Shanghai and fight together with the Shanghai workers against the military overthrow that was in preparation. To all this, our responsible leaders of the Chinese Communist Party, Chen Duxiu included, declared that they knew about the coup being prepared, but that they did not want a premature conflict with Chiang Kai-shek. The First Division was let out of Shanghai, the city was occupied by the Second Division of Bai-Sung Gee and, two days later, the Shanghai workers were massacred.”

This report, however, was excluded from the Minutes of the Congress, because it was not simply damning of the Chinese leaders, but of Stalin and the Comintern leadership that was directing them! In fact, as Trotsky, again, later, details, not only did the communists form this government in Shanghai, not only were they warned of the coming coup, but they had arms, and the ability to have utilised divisions in the forces of the KMT. Instead, they did nothing, and the main reason was not wanting to alienate Chiang Kai Shek, whose representative still sat inside the Comintern! The coup presaged a period of White terror, by the KMT, rather like the White Terror, in Russia, unleashed by the forces of Kolchak and his supporters from the imperialist armies of Britain, France and the United States.

During the White Terror of the KMT, their reactionary politics was shown by the fact that they targeted women with short hair, who had opposed the barbaric process of foot-binding. They would cut off their breasts and shave their heads, before displaying their corpses as a means of terrorising the populace. These were the reactionary forces that British imperialism was supporting in China. The White Terror saw 10,000 communists murdered within 20 days, in Changsha, and in the next three years, 300,000 people were killed in Hunan, with whole families murdered, and young women sold into prostitution by the KMT.

The Stalinists, of course, could not acknowledge that their popular front strategy had been responsible for allowing this to happen, just as they could not acknowledge that the same approach of cosying up to the leaders of the TUC, via the ARC, had derailed the 1926 General Strike, in Britain, by creating illusions in those leaders, rather than preparing the workers for their inevitable betrayal, and need to build rank and file, revolutionary organisations, defence squads, leading up to the creation of soviets, the basis of which already existed, in Britain, in the form of the Labour and Trades Councils.

In Ukraine, of course, there is no actual popular front government, just the corrupt, right-wing government of Zelensky, against which even Kerensky's Provisional Government, in 1917, would look left-wing. It is not a matter of warning Ukrainian workers to prepare for some future coup or betrayal by that government, as the Bolsheviks had to do in 1917, in Russia, and in China, in 1927, or of the betrayal by the TUC, in 1926, though a more serious attack on Ukrainian workers, by Zelensky is not out of the question. Rather, in Ukraine, it is already the case that Zelensky's government is attacking Ukrainian workers, and yet Ukrainian reformists and centrists are still supporting it, on the basis of a subordination to it, in the name of a bloc for the purpose of national independence, in a war with Russia, i.e. the position of social-patriots in WWI and II, of the Stalinists in China, in 1925-7, in Spain in 1936, Chile in 1973, and so on. And they are supported in that by the USC.

Now, its quite true that, in 1914, revolutionaries opposed the war, voted against war credits, and so on, and yet, as workers were conscripted into armies, revolutionaries were amongst them. We are not pacifists, and the class struggle, to win workers conscripted into those armies goes on, as we try to get them to turn their guns on their own ruling class. Until such time that we overthrow that ruling-class they will have their wars, just as, until we overthrow capitalism, their will be capitalist production, and workers will be drafted into it, because they must live. We are not hippy drop-outs, trying to opt out of that reality, and so, just as we too work alongside other workers, so until such time as we are strong enough to establish our own, independent, workers militia, it is necessary to stand alongside workers in those armies.

But, there is a difference, as Lenin sets out in Left-Wing Communism, between voluntarily making compromises, and making compromises forced on you by current weakness. The support given by the USC, and those amongst the Ukrainian “Left” is not a compromise forced upon them by weakness, but a voluntary choice to support their own ruling-class, as did the social-patriots in WWI and II.

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Chapter 1 – A Scientific Discovery, 2. Constituted Value or Synthetic Value - Part 16 of 20

The value of products/commodities is not determined by the labour-time used in their production, i.e. their historic cost, but by the labour-time currently required to produce them, i.e. their current reproduction cost.

“Every new invention that enables the production in one hour of that which has hitherto been produced in two hours depreciates all similar products on the market. Competition forces the producer to sell the product of two hours as cheaply as the product of one hour. Competition carries into effect the law according to which the relative value of a product is determined by the labour time needed to produce it. Labour time serving as the measure of marketable value becomes in this way the law of the continual depreciation of labour. We will say more. There will be depreciation not only of the commodities brought into the market, but also of the instruments of production and of whole plants.” (p 62)

This is the basis of moral depreciation of fixed capital, as set out by Marx in Capital III, Chapter 6, and also in Theories of Surplus Value, Chapter 23. It is a fundamental basis of raising the rate of profit, as a means of ending a crisis of overproduction of capital, as also discussed in Capital III, Chapter 15. Marx cites Ricardo's comment,

“By constantly increasing the facility of production, we constantly diminish the value of some of the commodities before produced.” (p 63)

Sismondi saw in this, also, the basis of a generalised overproduction of commodities, leading to crises – a result that Ricardo, Say and Mill rejected. As Marx says in Theories of Surplus Value, Chapter 9,

“Sismondi is only right as against the economists who conceal or deny this contradiction.)”

Marx quotes Sismondi's account of the ever rising productivity on reducing the current value of commodities, and causing overproduction.

“Mercantile value,” he says, “is always determined in the long run by the quantity of labour needed to obtain the thing evaluated: it is not what it has actually cost, but what it would cost in the future with, perhaps, perfected means; and this quantity, although difficult to evaluate, is always faithfully established by competition....

“It is on this basis that the demand of the seller as well as the supply of the buyer is reckoned. The former will perhaps declare that the thing has cost him 10 days' labour; but if the latter realizes that it can henceforth be produced with eight days' labour, in the event of competition proving this to the two contracting parties, the value will be reduced, and the market price fixed at eight days only. Of course, each of the parties believes that the thing is useful, that it is desired, that without desire there would be no sale; but the fixing of the price has nothing to do with utility." (p 63)

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The Chinese Revolution and The Theses of Comrade Stalin - Part 14 of 47

Trotsky quotes an article by the Russian Menshevik, Dan, who praised the “Bolshevik” position of Stalin, in maintaining the bloc with the Chinese bourgeoisie, until the completion of the task of national liberation. The same arguments are used, today, by the social imperialists to refuse to adopt a position of revolutionary defeatism, in Ukraine.

“Everyone who knows the history of the struggle of Bolshevism against Menshevism, particularly in the question of relations to the liberal bourgeoisie, must acknowledge that Dan’s approval of the “rational principles” of the Martynov school is not accidental, but follows with perfect legitimacy. It is only unnatural that this school should raise its voice with impunity in the ranks of the Comintern.” (p 28)

And, today, we could say that anyone considering themselves a Marxist, and still more a Trotskyist, would find it unnatural that the same Menshevist position is being pursued in relation to Ukraine, by people who, themselves, claim to be Trotskyists!!!

“The merchandise has not even been renovated. The arguments are the same, letter for letter, as they were twenty years ago. Only, where formerly the word autocracy stood, the word imperialism has been substituted for it in the text. Naturally, British imperialism is different from autocracy. But the Menshevik reference to it does not differ in the slightest from its reference to autocracy. The struggle against foreign imperialism is as much a class struggle as the struggle against autocracy. That it cannot be exorcized by the idea of the national united front, is far too eloquently proved by the bloody April events, a direct consequence of the policy of the bloc of four classes.” (p 28-9)

Replace British imperialism with Russian imperialism, here, and the same holds for the arguments of the USC.

In April 1927, even as the KMT was still sitting in the Comintern, Chiang Kai Shek, organised a coup in Shanghai, that resulted in the slaughter of thousands of Chinese worker communists. Stalin should have been aware that it was coming, because Chiang Kai Shek had showed his hand the previous year, in organising a coup in Canton. In response to that, Stalin had, instead, appeased and compromised further with him. Even a week before the coup in Shanghai, Stalin and the Comintern were praising him, and the KMT, and attacking the Opposition, for issuing their warnings against him. Yet, even during this period, Stalin was being warned that the coup was in preparation.

The Communists and mostly “left” KMT members (supporters of Wang Chin Wei) had seized power in Shanghai, on March 22nd. 1927, defeating the forces of the warlord forces of the Zhili clique. In fact, as Trotsky relates later, Chiang Kai Shek kept his forces out of the fighting, so as to exhaust the communist forces in their fight against the Zhili clique. One of Chiang's officers Say-O, had even gone to the Chinese Stalinists, to warn them of what was happening.

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Northern Soul Classics - Do What You Feel - The Rimshots

 

Friday Night Disco - Miss Grace - The Tymes

 

Chapter 1 – A Scientific Discovery, 2. Constituted Value or Synthetic Value - Part 15 of 20

In terms of exchange-values, then, as against values, there is no constituted “proportional relation”, only a constituting movement, because, not only are the values of commodities constantly changing, so that the proportional relations of the values to each other change, but the demand and supply for each commodity also constantly changes, bringing about changes in market prices, which drive movements of capital into and out of different spheres of production, which, in turn, drives changes in market values.

The way that arises has been previously described, and can be summarised as follows, some of which is also discussed in Marx's analysis of rent, and the concept of differential value, in Theories of Surplus Value, Chapter 12.

1) Where demand exceeds supply, market price rises. Profit rises above the average. Additional capital is applied, which may be existing capital expanding or new firms entering the sphere. In the long-run, as set out in Theories of Surplus Value, Chapter 9, marginal costs fall, as output expands, but this may not be true for short-run marginal costs. So, a number of possibilities exist.

(a) Existing firms cannot expand further without higher costs, so market values would rise. 

 

(i) They may increase supply so that market prices fall, but not to their previous level

(ii) New firms, with existing costs enter the sphere, supply rises, and market price falls to previous level

(iii) New firms enter, but also with higher costs, so market price falls, but not to previous level

(iv) New firms enter with, new, more efficient production, so with lower costs, thereby reducing market value. Supply rises, market price falls, now, to lower than previous levels.

(b) Some existing, larger firms, or more efficient production, may be able to expand to meet demand. They gain from economies of scale, and so reduce their costs further. The market value falls, and some existing smaller, or less efficient, firms can't make sufficient profit. They leave, enabling the more efficient firms to expand further still, rationalising the sphere, bringing lower market values, and lower market prices, as supply expands.

(2) Supply exceeds demand, and market price falls, so capital leaves the sphere.

(a) Usually, the smaller, less efficient firms close, reducing supply, so market price rises.

(b) As less efficient firms are removed, market value falls, so, whilst market price rises, it does not rise to its previous level.

(c) As market value and market price is below its former level, demand is higher. As firms respond to the higher demand, the larger/more efficient gain economies of scale, and market value falls further, stimulating further increase in demand and concentration and centralisation of capital.

(3) In the longer run, higher levels of output produce lower marginal costs, and market values, via the development of new technologies, and so on, as as the development of new, large-scale developments, as described in Theories of Surplus Value, Chapter 9.

As Marx notes, therefore,

“If M. Proudhon admits that the value of products is determined by labour time, he should equally admit that it is the fluctuating movement alone that in society founded on individual exchanges make labour the measure of value. There is no ready-made constituted “proportional relation,” but only a constituting movement.” (p 62)

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