Friday 25 November 2016

Capital III, Chapter 50 - Part 18

Once that idea is established that wages are merely an equivalent of the value contributed by labour, then the same is seen in respect of profit and rent. New value is no longer the product of labour, but equally of land and capital, completely separated from labour.

A third reason why this illusion arises, that the value of commodities is determined by the value of capital, land and labour, used in their production, is because of the way this appears to be the case from the perspective of each individual capital.

Assume, Marx says, that market prices and prices of production are always the same; productivity remains constant; the new value created by labour divides into constant portions of wages, profit and rent, so wages equals the value of labour-power, realised profit is equal to the average rate of profit, and rent is thereby limited within the bounds previously determined.

“In a word, let us assume that the division of the socially produced values and the regulation of the prices of production takes place on a capitalist basis, but that competition is eliminated.” (p 870)

Even then, Marx says, things would appear in a distorted form. The individual capitalist sees their commodity in terms of its cost price, and this cost price is made up of the historic prices that the capitalist pays for the components of this cost-price, i.e. the means of production and wages.

For the capitalist, however, it does not appear that the wages he has to pay for the labour he buys, is determined by the value of labour-power, which in turn is determined by the value of the commodities required to reproduce that labour-power. Rather, it appears to the capitalist that the value of the labour he buys is equal to the value it contributes to the commodity, and thereby is fully reimbursed in the wages paid for it.

As Marx puts it,

“The average price of labour is a given magnitude, because the value of labour-power, like that of any other commodity, is determined by the necessary labour-time required for its reproduction. But as concerns that portion of the value of commodities which is embodied in wages, it does not arise from the fact that it assumes this form of wages, that the capitalist advances to the labourer his share of his own product in the form of wages, but from the fact that the labourer produces an equivalent for his wages, i.e., that a portion of his daily or annual labour produces the value contained in the price of his labour-power.” (p 870)

The fact of historic prices, i.e. prices of wages determined and paid ahead of the determination of the commodity value reinforce this illusion.

“But wages are stipulated by contract, before their corresponding value equivalent has been produced. As an element of price, whose magnitude is given before the commodity and its value have been produced, as a constituent part of the cost-price, wages thereby do not appear as a portion which detaches itself in independent form from the total value of the commodity, but rather, conversely, as a given magnitude, which predetermines this value, i.e., as a creator of price and value.” (p 870-1)

Something similar, in fact, exists, in relation to the profit, Marx says. As soon as an average rate of profit is established, each capitalist has this figure in mind when they come to set prices. In the 1970's, when I worked for a large pottery manufacturer, prices were determined in exactly this way, of the cost-price plus a percentage profit margin. In fact, the firm, like most others, controlled also the retail selling price, by establishing recommended retail prices, based again on the price to retailers plus a set profit margin.

“But so far as it figures in this manner, it is a pre-existent magnitude, which is in fact independent of the value and surplus-value produced in any particular sphere of production, and thus even more so in the case of any individual investment of capital in any sphere of production. Rather than appearing as a result of a splitting of value, it manifests itself much more as a magnitude independent of the value of the produced commodities, as pre-existing in the process of production of commodities and itself determining the average price of the commodities, i.e., as a creator of value.” (p 871)

The same is true for the other elements into which the surplus value is divided. The rent appears equally as a cost or production, directly related to the land used for production, and which, therefore, adds to the value of the commodity. Interest paid on borrowed money-capital equally appears as a cost of production, even where that money-capital is provided by the functioning capitalist themselves, because its use in one function has an opportunity cost in relation to the alternative uses to which it could have been put.

“These portions into which surplus-value is split, being given as elements of cost-price for the individual capitalist, appear conversely therefore as creators of surplus-value; creators of a portion of the price of commodities, just as wages create the other. The secret wherefore these products of the splitting of commodity-value constantly appear as prerequisites for the formation of value itself is simply this, that the capitalist mode of production, like any other, does not merely constantly reproduce the material product, but also the social and economic relations, the characteristic economic forms of its creation. Its result, therefore, appears just as constantly presupposed by it, as its presuppositions appear as its results. And it is this continual reproduction of the same relations which the individual capitalist anticipates as self-evident, as an indubitable fact.” (p 871-2)

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