Sunday, 25 June 2017

Theories of Surplus Value, Part I, Chapter 4 - Part 110

“Other economists, like Malthus, admit the distinction between productive labourers and unproductive, but prove to the industrial capitalist that the latter are as necessary to him as the former, even for the production of material wealth.” (p 281)

The underlying assumption here is that the purpose of production is consumption rather than the production of surplus value. In other words, it assumes that the aim is the maximisation of production, so that every increase in consumption drives this additional production, rather than that the actual drive of the industrial capitalists is only the maximisation of the surplus value, a drive which itself stems from a need to expand their own productive potential, which in turn is the means to maximise their production of surplus value.

Marx's terminology has to be read carefully here, for later readers, where he talks about “overproduction”. He is not talking, in the following passage, about an overproduction of capital or commodities, in the sense of a crisis of overproduction, but of the overproduction of the worker, in terms of what is required for his own consumption. In other words, the creation of a surplus product and surplus value.

“The labourer’s consumption on the average is only equal to his costs of production, it is not equal to his output. He therefore produces the whole surplus for others, and so this whole part of his production is production for others. Moreover, the industrial capitalist who drives the labourer to this overproduction (that is, production over and above his own subsistence needs) and makes use of all expedients to increase it to the greatest extent possible—to increase this relative overproduction as distinct from the necessary production—directly appropriates the surplus-product for himself. But as personified capital he produces for the sake of production, he wants to accumulate wealth for the sake of the accumulation of wealth. In so far as he is a mere functionary of capital, that is, an agent of capitalist production, what matters to him is exchange-value and the increase of exchange-value, not use-value and its increase.” (p 282)

This is a further illustration of the earlier discussion, in relation to the difference between Smith and Ricardo. As Marx stated, Ricardo was correct to point out that Smith gave too much importance to the value of the gross output, and not enough to the net output, i.e. the surplus value. The same thing could be seen today with an over concentration on the growth of the GDP figure.

As Marx and Ricardo point out, it is better to have 200 workers producing enough to sustain a population of 300 than to have 300 workers producing enough to sustain 400 workers. In the first instance, the output (GDP) may be only £300, and therefore, less than the latter, where it would be £400, but the amount of surplus value in both case is £100, which represents 50% in the first case, and only 33.3% in the second case. The reason is a higher level of productivity in the first case. For this reason, as Marx and Ricardo state, it is not the size of the GDP that is important, but the size of the surplus product.

On this basis, a country could even see the value of its GDP fall, and yet its economic position may have strengthened. If productivity in the country rises sharply, the value of its gross output may fall, or more likely the extent of its rise will be less than it otherwise would have been, for the reasons Marx and Ricardo describe. But, this same rise in productivity, which reduces values, at the same time, increases the surplus product relative to the gross product.

For the individual capital, this increase in the size of the surplus product is manifest in a higher rate of profit, and the ability, therefore, to employ a greater quantity of labour-power so as to produce even more surplus value. The actual need for less labour-power, to produce a given quantity of output, therefore, leads to the actual employment of more labour-power, made possible by the higher rate of profit.

The same applies to a country. The higher its surplus product, relative to its gross product, the more rapidly it can accumulate capital. The fewer productive workers it needs to produce a given mass of output – and so the lower the value of that gross output – the more capital it can create, so as to set more workers to work.

Rather than the purpose of production being consumption, 

“If the labourer’s overproduction is production for others, the production of the normal capitalist, of the industrial capitalist as he ought to be, is production for the sake of production. It is true that the more his wealth grows, the more he falls behind this ideal, and becomes extravagant, even if only to show off his wealth. But he is always enjoying wealth with a guilty conscience, with frugality and thrift at the back of his mind. In spite of all his prodigality he remains, like the miser, essentially avaricious.” (p 282)

Saturday, 24 June 2017

Theories of Surplus Value, Part I, Chapter 4 - Part 109

[15. General Nature of the Polemics against Smith’s Distinction between Productive and Unproductive Labour. Apologetic Conception of Unproductive Consumption as a Necessary Spur to Production]

“Most of the writers who contested Smith’s view of productive and unproductive labour regard consumption as a necessary spur to production. For this reason they regard the wage-labourers who live on revenue—the unproductive labourers whose hire does not produce wealth, but is itself a new consumption of wealth—as equally productive even of material wealth as the productive labourers, since they widen the field of material consumption and therewith the field of production. This was therefore for the most part apologetics from the standpoint of bourgeois economy, partly for the rich idlers and the “unproductive labourers” whose services they consume, partly for “strong governments” whose expenditure is heavy, for the increase of the State debts, for holders of church and State benefices, holders of sinecures, etc.” (p 281)

These unproductive labourers create immaterial products, but consume material products. As Marx has described, earlier, however, it is not this difference between material and immaterial products or services that defines the labour as productive or unproductive. Immaterial products can be produced by productive labour too, and material products can be created by unproductive labour. It is the exchange with capital or revenue that is decisive, i.e. whether surplus value is produced.

There is a similarity, however, in this point about the production of immaterial products and consumption of material products with another aspect of Marx's analysis. That is with the question of the rate of turnover of capital. It is a point also discussed by Bukharin in his “Economics of the Transition Period”. Marx points out that workers employed in the production of commodities with an extended turnover period, put no value into the economy, in the shape of those commodities, but all the time are taking value out of the economy, both in the shape of commodities required for their own consumption, and required for their production process.

For example, take workers building a bridge that takes five years to complete. Once built, it will put value back into the economy. Workers will get to work faster, commodities will get to market faster, and so on. But, during the five years of its construction, the workers building it will need to eat, be sheltered and clothed etc. They will throw money into circulation to buy these things. Similarly, their employers will throw money into circulation to buy steel, machines, paint and other materials required for the construction. But, the recipients of this money, will have no equivalent commodities to buy, with this money, because the equivalent is in the form of the bridge, which is only available after five years. As Marx points out, either this money must be hoarded until that time, or else it will be spent to import commodities.

Northern Soul Classics - If You Ask Me - Jerry Williams

Friday, 23 June 2017

Friday Night Disco - Sweet Gypsy Jane - The Temptations

Theories of Surplus Value, Part I, Chapter 4 - Part 108

Destutt has only succeeded in showing that the industrial capitalists do not pay wages, rent or interest twice, once as money and secondly as commodities, because what is paid out first as money wages, rent or interest is “drawn back”, only in exchange for commodities of the same value. At best, the idea that this second exchange takes place on a basis favourable to the industrial capitalist explains the relative distribution of that profit. It does not, in any way, indicate the origin of the profit itself.

But, later, Destutt, echoing Adam Smith, actually alights, by accident, on the real source of the profit.

““Whence come their revenues to these idle men? Is it not from the rent which those who set their capitals to work pay to them out of their profits, that is to say, those who use their funds to pay labour which produces more than it costs, in a word, the men of industry? ”” (p 278) 

In other words, the profit arises not at all from these capitalists selling their commodities above their value, but from the workers creating more value than they are themselves paid as wages, in other words, creating a greater quantity of value than the value of their own labour-power.

“... a surplus-product which the industrial capitalist appropriates for himself, and of which he gives away only one part to those receiving rent from land and money. 

Monsieur Destutt concludes from this: not that we must go back to these productive labourers, but that we must go back to the capitalists who set them in motion.” (p 279)

If we take Smith's correct definition of productive labour being that which produces surplus value, then Destutt's argument leads to the conclusion that the only productive labourers are the industrial capitalists!

““They” (the industrial capitalists) “who live on profits maintain all the others and alone augment the public fortune and create all our means of enjoyment. That must be so, because labour is the source of all wealth and because they alone give a useful direction to current labour, by making a useful application of accumulated labour” (p. 242).” (p 279)

But, all this means is that the industrial capitalists set labour to work to produce use values. They do so by using accumulated labour to set this current labour to work. The value of the accumulated labour, in the form of wages, is less than the value produced by the labour it sets in motion.

“In the passage just cited Destutt naïvely epitomises the contradictions which make up the essence of capitalist production. Because labour is the source of all wealth, capital is the source of all wealth; the actual propagator of wealth is not he who labours, but he who makes a profit out of another’s labour. The productive powers of labour are the productive powers of capital.” (p 280)

Destutt writes,

““Our faculties are our only original wealth; our labour produces all other wealth, and all labour, properly directed, is productive” (p. 243).” (p 280)

On that basis, labour is not wealth. But, the act of labour thereby produces all other wealth. Only labour which produces profit for capital is properly directed, and thereby productive.

Destutt gives a good summary, Marx says, of Adam Smith's discussion of different types of consumption, and their effect. A firework and a diamond may have the same value, Destutt says, but the former once lit, is soon consumed and disappears, whereas the latter will still exist 100 years hence to still be enjoyed. This is a similar distinction as that between material and immaterial commodities. The same is true of services.

““The most ruinous consumption is the quickest, because it is that which destroys more labour in the same time, or an equal quantity of labour in less time; in comparison with it, consumption which is slower is a kind of treasuring up, since it leaves to times to come the enjoyment of part of the present sacrifices… Everyone knows that it is more economical to get, for the same price, a coat that will last three years than a similar one which will only last three months” (pp. 243-44).” (p 281).

Thursday, 22 June 2017

Theories of Surplus Value, Part I, Chapter 4 - Part 107

The third category of consumers that Destutt lists, who buy these overpriced commodities is the idle capitalists, and as the consumption of their workers also forms a part of their revenue, the two can be considered together.

“Here again there is the childish conception of the rent, etc., coming back, as there was above of the drawing back of the whole of the wages.” (p 275)

In other words, the industrial capitalist hands over £100 in rent or interest to the landowner or money-capitalist. These idle capitalists then buy £100 of commodities from the industrial capitalists, so that they “draw back” this £100. But, they achieve this “drawing back” only by handing over £100 of commodities to the idle capitalists instead! Even if they hand back only £80 in value, in exchange for this £100, they have only, in effect, reduced the amount they have handed to the idle capitalists to £80.

Destutt himself has said that rent and interest are only a deduction from the industrial profit, and so had this £100 not been deducted in the first place, it would not have needed to have been drawn back. Therefore, even had the industrial capitalist drawn back the entire £100, without giving any commodities to the idle capitalists in exchange, they would have only set this deduction from their profit to zero, rather than in any way added to it.

But, there is a further absurdity in Destutt's argument, yet one that is reflected in actual history. Suppose a landlord receives £100 in rent from an industrial capitalist. The landlord buys commodities from the capitalist with this £100. But, the capitalist sells commodities to him with a value of £80. The landlord, however, needs commodities with a value of £100. So, they sell a portion of their land to raise the additional £25 required to buy the additional commodities (they need to buy 25% more, which means £25 more than the £100 they have already paid.) 

The buyers of this land will be the productive-capitalists. Over time, therefore, all of the land will pass out of the hands of the idle landowners and into the hands of the productive-capitalists. But, at this point, the idle landowners will have no rent as revenue, and no means to buy commodities from the industrial capitalists. But, this process did, in fact, occur in history, as Marx describes.

“And Monsieur Destutt is quite right up to a certain point, although not at all in what he wants to explain. In the period of the declining Middle Ages and rising capitalist production the rapid enrichment of the industrial capitalists is in part to be explained by the direct fleecing of the landlords. As the value of money fell, as a result of the discoveries in America, the farmers paid them nominally, but not really, the old rent, while the manufacturers sold them commodities above their value —not only on the basis of the higher value of money.” (p 276-7)

Something similar has occurred more recently.  As the prices of financial assets, fictitious capital, (shares, bonds, property) bubbled to ever higher levels, so the yields on these assets fell lower and lower towards zero.  Instead of being concerned over the revenue these assets might produce, their owners became concerned only with the potential capital gains, arising from the ever higher prices.  Pension funds, depend upon the revenue from such assets to cover their future pension liabilities to pensioners, but as yields fell, they too saw the means of paying pensions being from out of these large capital gains, but which could only be realised by selling some of the underlying financial assets.  In other words, current liabilities were met by undermining the capital base of the pension fund, which then led to inadequate capital in the pension fund to cover future liabilities, particularly as yields on those assets fell to near zero.

Wednesday, 21 June 2017

A Tale of Two Cities

Numerous people have noted the contrast between Grenfell Tower, and its inhabitants, and the multi million pound properties within a short distance from it, and their inhabitants.  A tale of two cities in many ways.

One wonders just how much the decisions about cladding the outside of the tower, for example, were governed by a desire that those in the multi-million pound properties did not have to look out on the brutalist concrete architecture of the tower that previously existed.  Brutalist, and perhaps less aesthetic, but at least concrete is flammable (in the correct usage, meaning that you can apply a flame to it without it burning, as opposed to inflammable meaning you can't apply a flame to it without it burning), as one of the nearby residents noted having seen a fire in one of the apartments some years ago, which failed to spread.

In Dickens' A Tale of Two Cities the activity is spread between London and Paris, with characters moving between the two.  Some of the residents of Grenfell Tower are themselves migrants and refugees from other countries.  In contrast, many of those who own the multi-million pound properties nearby are far from refugees, many are foreign millionaires, who own the property in London, not as somewhere needed to live, but as merely somewhere to stash some of their money, in an asset that government and Bank of England policies over the years have deliberately inflated, and kept inflated so as to protect the private wealth of such individuals whilst simultaneously pricing millions of workers out of being able to buy a house, and at the same time thereby causing rents to rise, and private landlords to massively subsidised to the tune of around £11 billion a year in Housing Benefit payments.

When Jeremy Corbyn, quite rightly proposed, last week, that the immediate housing needs of Grenfell Tower residents should be addressed by sequestering some of those empty properties, it brought howls of anguish from the ranks of Tories and their supporters in the media.  Their empathy towards people made homeless by such an event obviously only goes so far, as far as pretty empty words, in the aftermath, but not as far as dipping into their pockets or seeing the rights of property infringed, even unused, empty property!

Sophy Ridge, on Sunday complained that the suggestion to sequester the empty property was ridiculous because of the cost for the government to compulsory purchase these multi-million pound properties.  Absolute nonsense.  If the property is empty, and earning no rent currently, the owners are losing nothing from allowing a homeless family to live in it, and they should be compensated by the payment of nothing for it, accordingly.  Indeed, a systematic programme of occupying and squatting empty properties across the country, would be a good immediate way of dealing with homelessness, and of encouraging property speculators to get their properties occupied or sell them, and thereby would act to bring property prices down, by getting some of the 1.5 million empty properties in the country on to the market.

The fire also showed the schizophrenic nature of the government in another way.  In the London Bridge terrorist attack, 8 people were killed and 48 injured.  Within 24 hours, the troops were on the streets, in support of the police and across the country, police were knocking down doors, and hauling dozens of people in for questioning or under arrest.  A similar response came with the Westminster Bridge attack, and the Manchester attack.

But, when Grenfell Tower burned, the response of the state seems to have been completely different.  The firefighters and paramedics did the best they could to save lives, and prevent injuries way beyond the call of duty.  But, already the official estimate of deaths runs to around 80, and the residents know the real figure is likely to be more like 150.  Yet, where were the troops to help with dealing with the fire?

When there are large forest fires, Hercules transport aircraft and helicopters are used to drop fire retardant or even just water from nearby sources on to the fire.  Yet, no such help was provided in this instance.  If the £100 billion being wasted on Trident were instead used on resources for real civil defence and security, then a more effective response would have been possible.  Indeed, the £100 billion wasted on Trident would have been much better used on providing adequate fire and other safety measures in these buildings.

But, also where have been the dawn raids by police, and the arrests of those responsible for the cladding on these buildings and so on.  It may turn out that many of the people who might be so arrested, or brought in for questioning are released without charge, but so have been many of those arrested and brought in for questioning following the terror attacks.  The point is that it shows a completely different approach when it comes to businesses when such events occur.  Its much the same with Health and Safety.  Never do you see police going into firms to investigate breaches of Health and Safety Law, even while they are being sent out to break up strikes against such bad employers.