This is the ninth set of notes for a reading group on Marx’s Capital, and includes a Volume I refresher for further reading of Volume II. There are links to earlier posts and texts that may be useful. At the end are diagram which may help show some of the structural commonalities.
Outline of Marx’s Analysis
– in capitalism, social labor produces surplus-value
– early on: formal subsumption of labor produces absolute surplus-value by extending the working day
– later: real subsumption of labor produces relative surplus-value by reducing necessary labor
– but the means for reducing necessary labor also can increase absolute surplus-value – amount of potential surplus labor – Ricardo: saw labor productivity as source of profit
– Mill: affirms source of profits in productivity of labor against mercantilist focus on exchange
– by making the working day longer
– determined by natural conditions of labor – determined by requirements of life
- – need to master nature leads to development of social division of labor
- – where needs are few, a great deal of surplus labor can be imposed
Commentary
In this, the first of the three chapters that take us from analyses in terms of value, to those of the monetary form of the value of labor-power, Marx reminds us of the distinction between absolute and relative surplus-value, of how they are produced and of the relationship between the two. Absolute surplus-value emerges early when capitalists only command or subsume the labor of others formally, that is to say, without taking over and transforming tools and how they are used. Under those circumstances, their only available strategy for increasing the extraction of surplus-value involves getting people to work longer. Because workers control their tools and the rhythm of their work, capitalists have little leverage to extract more surplus-value via the intensification of labor. Relative surplus-value emerges as capitalists do obtain that leverage, by gaining control over tools and organizing them in factories that facilitate oversight and control. Protected by new property laws, they reshape both tools and their use to raise productivity and increase surplus-value—both by reducing the labor time necessary to produce each unit and by increasing the intensity of labor.
Given the increasing centrality of productivity, he also reminds us of how the conditions and meaning of productive labor depends upon the context. At the level of the individual, a productive worker is simply one who produces some product directly, using mind, hands and tools to transform raw materials. That was the generic concept he set out in the first section of Chapter 7. But as human society developed most labor became social, such that individuals came to collaborate in the production of ever more things and in so doing formed a collective worker with a division of labor—that he analyzed in some detail in Chapter 14. With the rise of various kinds of class society, including capitalism, antagonistic relationships develop as some are able to impose surplus work on others and appropriate the resulting surplus product. Within capitalism that surplus product takes the form of surplus-value, so that from the point of view of the appropriating capitalists the only productive workers, i.e., the only workers whose labor makes it possible to impose more work, are those who produce surplus-value, i.e., surplus labor whose products can be used to impose more work in the future. As a result, there is a clear distinction between the vernacular, everyday sense of being productive, i.e., being able to produce something, and the only kind of productivity that matters to capitalists. This is consistent with the emphasis we saw in Chapter 1 between use-value and exchange-value/value. Use-values and the ease with which we can obtain them preoccupy those of us who work; the exchange-value of the surplus production preoccupies those who put us to work.
In illustrating the capitalist case, Marx draws a parallel between those industries that produce things and those that produce services.
. . . a schoolmaster is a productive worker when, in addition to belaboring the heads of his pupils, he works himself into the ground to enrich the owner of the school. That the latter has laid out his capital in a teaching factory, instead of a sausage factory, makes no difference to the relation.
Given that such “productivity” involves exploitation, he adds that, “To be a productive worker is therefore not a piece of luck, but a misfortune.” (1)
Marx then goes on to remind us of the connections that he demonstrated in Chapter 15 between absolute and relative surplus-value. Namely, how the methods used to produce relative surplus-value, i.e., introducing new machines and new technology, also made possible the prolongation of the working day and the intensification of work, both of which added surplus-alue by extracting more work from those subject to the new methods. What he does not remind us of here, is how the shift to relative surplus-value strategies was the result of the success of workers’ struggles to shorten the working day and by so doing undermine absolute surplus-value. (2) Nor does he reiterate his previous analysis of how new machines are designed and new technologies are chosen with the objective of undermining those struggles through the reorganization of the labor process. (3)
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Outline of Marx’s Analysis
Relative magnitudes of surplus value, S, and price of labor-power, LP, are a function of:1. When only the productivity of labor varies:2. When only intensity of labor varies:3. When only the length of the working day varies:4. With simultaneous variations:
- – length of the working day
– intensity of labor
– the productivity of labor
- – total value remains the same
– value of LP and S vary inversely
– although their variation is inverse, the proportionate changes may differ
– variation in magnitude of S always a consequence of change in value of LP
– amount of reduction in price of LP depends on struggle over fruits of the increase in productivity
– increasing productivity can result in both workers and capitalists getting more
– so, both constant and falling prices of LP can be accompanied by rise in real standard of living
- – greater intensity means more output, but also more value, no change in value per unit
– increased intensity of labor means workers get tired faster, increasing cost of maintaining the same quality of LP
– so, rise in price of labor-power may not fully compensate for deterioration
- – if shortened and value of LP remains the same, S is reduced– if lengthened and value of LP remains the same, S is increased, both absolutely and relatively
– but both price of LP and S can increase, the proportion depends on struggle
– lengthening depletes workers’ LP, so value of labor-power rises; wage increases may compensate but as in the case of increased intensity, not completely
- – shortening may follow or precede an increase in productivity
- Two important cases:
- (a) decline in productivity, increase in working day(b) shortening of working day but increasing intensity and productivity
- – increase in working day can compensate for negative impact on S of a decline in productivity
– 1799–1815 fall in real wages (standard of living)
– West and Ricardo were wrong that declining productivity lowered S
– S rose because of increased hours of work and increased intensity of labor
- – the more a working day is intensified, and productivity increased, the greater the shortening possible
– capitalism limits shortening because of its need for S
– capitalism squanders LP and MP on socially superfluous functions
– as necessary labor declines, potential free time expands
– end of capitalism will make possible:
- – end of leisure for some at the expense of work by others
– universality of labor, but more leisure for all
Commentary
The title of this chapter announces a transition from value analysis to money by making clear that the value of labor-power will be discussed in terms of its price. Price, as we saw in Chapter 1, is the money expression of the value of a commodity, in this case of the value of labor-power. In this chapter, Marx reiterates his analysis of past chapters in terms of changes in both the value and the price of labor-power and notes how changes in price may differ from changes in value. In passing from analysis in terms of value to one in terms of money, Marx must, and does, take into account changes in the real value of money wages, e.g., caused by a change in the price of consumer goods. Therefore, the price of labor-power may not equal its value.
Throughout this analysis, the price of labor-power can be assumed to be wages, in as much as money wages were predominant over other expressions of the value of labor-power in the period in which Marx was writing. (As opposed to wages in kind, salaries, commissions or government payments to the unemployed or the poor.)
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A full online copy of Marx's Capital Volume 1 can be found here: https://www.marxists.org/archive/marx…
Reading Marx’s Capital Volume 1 with David Harvey – 2019 Edition
Marx ends Cahpter 20 in Volume II of Capital:
* ' It will be remarked, I trust, how this manner of considering the consumption of our wealth is in harmony with everything that we have said on the subject of its production and distribution, and at the same time what a clear light it casts on the whole course of society. Where does this harmony and this lucidity come from?
From the fact that we have encountered the truth. This recalls the effect of those mirrors in which objects are reflected accurately and in their true proportions when we place ourselves at their correct focal point, but where everything appears confused and disjointed when one is too close or too far away' (pp. 242-3).
Here you have bourgeois cretinism in its ultimate state of bliss! (Vol II chapter 20 p564)
The society's total product, and thus its total production process, breaks down into two great departments:
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DEPARTMENT I. Means of production: commodities that possess a form in which they either have to enter productive consumption, or at least can enter this.
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DEPARTMENT II. Means of consumption: commodities that possess a form in which they enter the individual consumption of the capitalist and working classes.
This chapter, along with the one which follows, follows logically from the preceding analyses of this volume and of volume 1.
The object of analysis of volume 1 was the immediate process of production, the P in M–C ... P ... C′–M′: ‘[t]he immediate production process of capital is its process of labour and valorisation, the result of this process being the commodity product’,1 i.e., volume 1 considered capitalist production abstracted from its total process or reproduction, specifically from its process of circulation. This has been the subject of volume 2: precisely the process of circulation of capital, or, more exactly, the place of this circulation in its reproduction. We began, in part 1, by tracing the cyclical movement of capital at the scale of the individual capital and its individual cyclical movement. Then, in part 2, we considered this cycle as a periodic one, and the implications of this periodicity. Now, since ‘the circuits [cycles] of individual capitals [...] presuppose one another’,2 we are going to consider the movement of the total social capital: ‘[t]he movement of the social capital is made up of the totality of movements of these autonomous fractions, the turnovers of the individual capitals.’3 Given the length of the chapter, and the fact that it was compiled from different manuscripts written over a period of some years,4 I have broken it down into three more easily digestible parts.
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This first part deals with the question of simple reproduction as such, and introduces the notion of the two departments of production and that of the mechanisms and conditions of exchange between them;
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in the second part, Marx explicitly directs his critical attention to the concepts of classical political economy in general and Adam Smith in particular; and
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in the third, Marx addresses the specific question of the reproduction of fixed capital (and consequently both changes the abstracting assumptions adopted during the rest of the chapter and more directly anticipates the subject matter of the following one, i.e. expanded reproduction).
This first part incorporates the first six sections of the chapter;5 Part 1: Simple Reproduction and the Exchange between the Two Departments of Production
the second deals with sections seven, eight, nine, ten, twelve and thirteen;
the third, dealing with the question of fixed capital, summarises section eleven.6
(Remembering that the same quantity of money can mediate more than one exchange, according to the formula: quantity of money functioning as the circulating medium = the sum of prices of commodities number of times coins of the same denomination are turned over . Cf. C1, pp. 217-20)
Part 1: Simple Reproduction and the Exchange between the Two Departments of Production
1: Formulation of the problem
The question to be investigated is ‘how the reproduction of the social capital proceeds’,7 in other words, ‘[h]ow [...]the capital consumed in production [is] replaced in its value out of the annual product, and how [...] the movement of this replacement [is] intertwined with the consumption of surplus-value by the capitalists and of wages by theworkers.’8
Given that ‘the overall process of reproduction [...] includes the consumption process mediated by circulation’,9 we therefore need to consider the process of reproduction by analysing the circuit of commodity capital,10 viz.:
With regard to the other cycles of industrial capital we considered at the beginning of the volume, the cycles of money and of productive capital, respectively M–C ... P ... C′ –M′ and P ... C′–M′–C ... P, consumption, the sale of the commodity, is assumed, but once so is immaterial for the movement of the individual capital. C′– C′, on the other hand, necessarily includes what becomes of each portion of the product C′. In addition to the value analysis of the product of capital, our account of the problem also needs to take account of the material replacement of the components of C′, i.e. we cannot just simply assume that the capitalist converts her commodity product into money and thence back into commodity product, nor that the worker and the capitalist consume a part of the social commodity product in spending, respectively, wages and surplus-value. In contrast to the (formal) consideration of the immediate process of production, the reproduction of the total social capital is a movement which is ‘not only a replacement of values, but a replacement of materials, and is therefore conditioned not just by the mutual relations of the value components of the social product but equally by their use-values [...].’11We shall be making the following assumptions in the following.
- First, we shall for the moment only be considering simple reproduction.12
- Second, we shall be assuming exchange at value,13 and an absence of revolution in values with regards to the components of the productive capital.14
- Third, we also assume a (constant) rate of surplus-value of 100 % in both departments.15
2: The Two Departments of Social Production
Society’s total product may be broken down into two ‘departments’: means of production (I) and means of subsistence(consumption) (II).
There are two points we should take note of here.
First, that while the distinction between means of production (i.e. articles of productive consumption) and means of subsistence (i.e. articles of unproductive consumption) is a distinction in terms of use-value, Marx’s treatment in this chapter and the next of the exchanges that occur both within the departments and between them is couched entirely in value terms.
The second is this. The distinction between means of production and means of subsistence is not an arbitrary abstraction.
In each department, capital is composed of two components: variable capital (v) and constant capital (c). The value of the total product of each department breaks down into a part composed of constant value c consumed18 in production, and that part added by labour, which in turn is composed of the replacement of variable capital v and the excess surplus-value s
3: Exchange Between the Two Departments: I(v + s) against IIc
4: Exchange within Department II. Necessary Means of Subsistence and Luxury Items
- V Reproduction and crises
- Marx now emphasises that the proportions in spending on the part of the capitalist class on necessary and luxury means of consumption are arbitrary, and to be interpreted as social averages (on an individual level, being determined by individual tastes, the proportions will vary accordingly). What matters here is the qualitative relation: changes in the quantitative relation, the conditions of reproduction change accordingly. If consumption of luxury means of consumption declines (as it does in a crisis), the retransformation of IIbv into money is slowed down; this lack of variable capital in this sector leads to a decline in the production of luxury goods, which in turn, because of IIbv ↔ IIas , leads to restrictions in the production and sale of necessary means of consumption. In this respect, Marx now makes a rather important remark about the nature of crises, an argument against those ‘underconsumptionist’ theories that have subsequently become rather popular:
- It is a pure tautology to say that crises are provoked by a lack of effective demand or effective consumption. [...].The fact that commodities are unsalable means no more than that no effective buyers have been found for them, i.e. no consumers (no matter whether the commodities are ultimately sold to meet the needs of productive or individual consumption). If the attempt is made to give this tautology the semblance of greater profundity, by the statement that the working class receives too small a portion of its own product, and that the evil would be remedied if it received a bigger share, i.e. if its wages rose, we need only note that crises are always prepared by a period in which wages generally rise, and the working class actually does receive a greater share in the part of the annual product destined for consumption. From the standpoint of these advocates of sound and simple common sense, such periods should rather avert the crisis. It thus appears that capitalist production involves certain conditions independent of people’s good or bad intentions, which permit the relative prosperity of the working class only temporarily, and moreover always as a harbinger of crisis.44
44 (C2, pp. 486-7. ‘Exploitation is not a cause of crisis, but a necessity for capitalist reproduction.’ Anthony Brewer, A Guide toMarx’s Capital , p. 117.)
5: The Mediation of the Exchanges by Monetary Circulation
- III The movement of money and the realisation of commodity circulation
Part 2: On Political Economy:
7 Variable Capital and Surplus-value in the Two Departments
Evidently, under conditions of simple reproduction the total means of consumption produced in a single production period is equal in value to the variable capital reproduced and the surplus-value newly produced in the same period in both departments: the total value product (new value) is equal to the total value of means of consumption produced. On the assumptions here – II(c +v +s) = 3,000 and = 100 % – the ‘total social working day’
The total social product of departments I and II appears as the product of the current production period but only insofar as this labour is considered as useful, concrete labour, not as the expenditure of labour-power, as value forming labour. The failure to see the distinction between the total value existing in the production periods breaks down into necessary labour = 1,500v and surplus labour = 1,500s . The total value of means of consumption therefore = the total value the whole social working day produces during the production period = the value of total social variable capital plus total social surplus-value = total annual new product. These equalities exist not because the total value of means of consumption has been produced in department II but because the constant value that reappears in department II is equal to the new value (variable capital plus surplus value) produced in department I, i.e. because I(v + s) = IIc .
Consequence: the product of department I, which breaks down into c + v + s, also breaks down into v + s when considered from the social point of view. But this ‘resolution’ of commodity value (Adam Smith’s ‘dogma’) only applies to that part of the total product consisting of means of consumption, and only applies in the sense that: II(c + v + s) = II(v + s) + I(v + s) because, in other words, IIc = I(v + s)
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Part 3: Fixed Capital in the Reproduction Process
11: The Replacement of the Fixed Capital2
We now have to consider a new difficulty. One part of the constant capital value, that which consists of instruments of labour, is transferred to the commodity product while these instruments continue to function as part of productive capital. We shall not be considering here those components of fixed capital whose life is shorter than a single (here, annual) production period, for if they need to be replaced during the production period, they can be treated in the same way as circulating capital. The problem under consideration here is this:
- [T]he part of the money received from the sale of commodities that represents the realised value component of the commodities, which is equal to the wear and tear of the fixed capital, is not transformed back again into the component of productive capital whose loss of value it replaces. It settles down alongside the productive capital and persists in its money form. This precipitation of money is repeated until the reproduction period during which the fixed element of the constant capital continues to function in the production process in its old natural form, and which consists of a greater or lesser number of years, has elapsed.
This disruption in the circulation of money supposes a disruption in reproduction itself.
We now need to investigate the various ways in which this disruption might be resolved.
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I Purpose
Despite the title of the chapter, its contents almost exclusively refer to what Marx called ‘[Adam] Smith’s dogma’,2 that is, the widely held classical political economic view that that the price of commodities, and hence that of the total social product, is entirely ‘resolved’ into ‘revenue’, i.e. into wages, profit and rent (a resolution which excludes constant capital).3
As Marx wrote to Engels in 1863 (when he was working on a draft of material that was to form apart of volume 2): You know that according to Adam Smith, the ‘natural price’ or ‘necessary price’ is composed of wages, profit(interest), rent – and is thus entirely resolved into revenue. [...]. Nearly all economists have accepted this from Smith [...]. According to this, society would have to start afresh, without capital, every year.4
Marx’s famous reproduction schemes, which appear in the following two chapters, are based in good part on his refutation of this ‘dogma’. 5
II Quesnay’s Conception of Reproduction
Marx begins by complimenting Quesnay for showing, in his Tableau économique, how ‘[t]he numberless individual acts of circulation [...] are grouped together [...] as a mass circulation between major economic classes of society that are defined by their functions.’6 In his demonstration of simple reproduction ‘one part of the total product [...] is [...] a bearer of old capital value reappearing in the same natural form’, i.e. ‘he comes to grips with the main question’, that reproduction includes the reproduction of constant capital.7
III Smith’s Conception of Fixed and Circulating Capital
It is with respect to this that Smith represents a ‘regression:’8 ‘[t]he narrowness of Smith’s conception lies in his failure to see what Quesnay had already seen, namely the reappearance of the value of the constant capital in a renewed form.’9
[...]
Marx now outlines the steps Smith should have made at this point in his analysis.
1 Total social product can be divided into two parts: means of production, and means of consumption.
2 The total value of the former can be divided into that of the means of production consumed in the creation of means of consumption, thus reappearing in new form; that equivalent to the sum of wages laid out by the capitalists; and that which forms the source of profits. For Smith, this first element forms no part of the net revenue, for neither the individual capitalist nor society. The other two elements, however, form revenue for the productive agents (wages for workers, profits and rents for capitalists), but not for society, for which they form capital; but the revenue-forming value components of the means of production department function as capital not in the hands of their producers, but in those of:
3 The capitalists of the means of consumption department, for whom they replace the capital used up in production of means of consumption (less that representing the sum of wages), capital now existing in the hands of the capitalists producing as means of production and thus the consumption fund for the capitalists and workers in the means of production department.
Two conclusions now stand out:
1 Even though: total social capital is the sum of individual capitals, and (therefore) total commodity product/capital is the sum of that of the individual capitals, and (therefore) that the decomposition of commodity value into its component parts holds (‘in the final analysis’16) for the total product as it does for the individual commodities, ‘the form of appearance which these components assume in the overall process of social production is [...] different.’17
2 Even under simple reproduction, the labour spent in reproducing means or production – whose value decomposes into wages (necessary labour) and surplus-value (surplus labour) – is realised in new means of production which replace the constant capital component expended in the production of means of production
[...]
VIII Labour-power as the Source of ‘Revenue’
Marx now summarises his case against Smith. The notion that wages, profit and rent, as ‘revenues’, form three components of commodity value, Marx labels as ‘absurd’. This notion in turn is based on that which says that the commodity value resolves itself into these three component parts, a notion which Marx sees as ‘more plausible’, but which is also false, and on two counts. First, as we have seen, because the ‘component’ of constant capital is missing from this scheme. But, argues Marx, even allowing for this, there is a deeper error. Insofar as a commodity has value, it does so because labour has been expended – directly and indirectly – in its production. ‘The magnitude of this value is measured by the amount of labour expended; the commodity value cannot be resolved into anything further, and consists of nothing more.’30 Under capitalist production, both the product of labour and its value belong to the capitalist. As use-value, it is entirely the product of the labour process; the same is not true of its value, for one part is the value of the means of production used up, value which has not been newly produced but which is passed on from the means of production to the product; another part is the value of the labour-power the worker sells to the capitalist, also determined in magnitude independently of the production process; a third part, that value created in production beyond the value of the labour-power sold; surplus-value. In an addendum to the chapter (taken from a different – earlier – manuscript), Marx notes that Smith’s dogma is incorporated in fundamental respects in the conceptions of, amongst others, Ricardo, Say, Proudhon, Sismondi and John Stuart Mill. ‘The result is that Smith’s confusion persists to this day, and his dogma forms an article of orthodox belief in political economy.
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