23 August 2010

Force Decides

Course on Marx's Capital: Week 12


Force Decides

Capital, Volume 1 has 33 chapters. After Chapters 1, 2 and 3, on Commodities, Exchange and Money, and after Chapters 4 and 5, on the general form of Capital, the remainder of the book is a continuous development of the concept of Surplus-Value. There are two interruptions to this steady tempo. One is the long Chapter 10, called The Working Day. We will deal with this big chapter in two parts.

Please download Parts 1 to 4 of Chapter 10 via the link given below.

Marx ends the first section of the Chapter on The Working Day thus: “Between equal rights force decides.” In present-day “human rights” parlance, the opposite is held to be the case, but Marx is certainly correct. Capitalism is brutal. Equal “human” rights are a fiction in class-divided society.

“Between equal rights force decides. Hence is it that in the history of capitalist production, the determination of what is a working-day, presents itself as the result of a struggle, a struggle between collective capital, i.e., the class of capitalists, and collective labour, i.e., the working-class.”

In the second section, Marx generalises the concept of Surplus Labour to all class-divided societies, thus:

“Capital has not invented surplus-labour. Wherever a part of society possesses the monopoly of the means of production, the labourer, free or not free, must add to the working-time necessary for his own maintenance an extra working-time in order to produce the means of subsistence for the owners of the means of production, [7] whether this proprietor be the Athenian calos cagaqos [well-to-do man], Etruscan theocrat, civis Romanus, Norman baron, American slave-owner, Wallachian Boyard, modern landlord or capitalist.”

Section 3 turns back to the most capitalist country that Marx knew, England, and tells stories of terrible horror having to do with people being worked to death, including the well-know story of Mary-Anne Walkley, 20 years of age when she died.

Section 4, called Day and Night Work, deals with the “relay system”, summed up as follows:

“The prolongation of the working-day beyond the limits of the natural day, into the night, only acts as a palliative. It quenches only in a slight degree the vampire thirst for the living blood of labour. To appropriate labour during all the 24 hours of the day is, therefore, the inherent tendency of capitalist production,” says Marx.

The vampire thirst of capital for the living blood of labour is still in evidence.

Illustration: The “Wobbly” (IWW) version of the poster originally called “The Czar’s Wedding Cake”.

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18 August 2010

The Rate of Surplus Value

Course on Marx's Capital: Week 11


The Rate of Surplus Value

Karl Marx’s “Capital” is not a hasty book. It proceeds at a measured pace, with a degree of repetition. Some parts appear difficult, only to yield up their secrets at a second reading, with ease.

The chapter on the Rate of Surplus Value is a good example of all this. At first reading it appears dense. It appears to contain new things unconnected to what has gone before, or what comes afterwards. Yet nothing could be further from the truth: In this chapter are re-stated some of the simplest, basic relationships, derived from the earlier chapters, and explicitly anticipating Volume 3 of the great work.

Let us pick out some of the easier passages. Marx begins with a “tautology” – a truism, or statement of the obvious, but one that has to do with “the expansion of capital”, the secret of which is the key to the entire work. Marx writes:

“Since the value of the constituent elements of the product is equal to the value of the advanced capital, it is mere tautology to say, that the excess of the value of the product over the value of its constituent elements, is equal to the expansion of the capital advanced or to the surplus-value produced. Nevertheless, we must examine this tautology a little more closely.”

Soon he puts down an important working definition, “constant capital”. Important because similar formulations, but with different meanings, are used in bourgeois accounting. Marx says:

“Throughout this Book therefore, by constant capital advanced for the production of value, we always mean, unless the context is repugnant thereto, the value of the means of production actually consumed in the process, and that value alone.”

“Constant” is the companion of “variable” capital, which is the capital advanced for labour. Says Marx:

“From what has gone before, we know that surplus-value is purely the result of a variation in the value of v, of that portion of the capital which is transformed into labour-power; consequently, v + s = v + v, or v plus an increment of v. But the fact that it is v alone that varies, and the conditions of that variation, are obscured by the circumstance that in consequence of the increase in the variable component of the capital, there is also an increase in. the sum total of the advanced capital.”

Returning to constant capital, Marx says that for the sake of particular calculations, it may be taken out of the equation. Marx did not live to see something called Value Added Tax (VAT) but if he had, he would have recognised the same move. In the calculation of VAT, that portion of money advanced that does not increase, is removed out of the calculation. Marx put it thus:

“At first sight it appears a strange proceeding, to equate the constant capital to zero. Yet it is what we do every day. If, for example, we wish to calculate the amount of England's profits from the cotton industry, we first of all deduct the sums paid for cotton to the United States, India, Egypt and other countries; in other words, the value of the capital that merely re-appears in the value of the product, is put = 0.”

Then at once Marx reminds us of the importance of the constant and apparently inert part of the capital. This is where he refers to “the third book” (Volume 3), which was not actually published until after he died, and which deals among other things with the “tendency of the rate of profit to fall”, the discovery of which depends upon these simple preliminaries:

“Of course the ratio of surplus-value not only to that portion of the capital from which it immediately springs, and whose change of value it represents, but also to the sum total of the capital advanced is economically of very great importance. We shall, therefore, in the third book, treat of this ratio exhaustively. In order to enable one portion of a capital to expand its value by being converted into labour-power, it is necessary that another portion be converted into means of production.”

There are more definitions in this chapter. Here is what Marx means by “necessary” labour-time, and incidentally, the reason why capitalists pay their labourers:

“That portion of the working-day, then, during which this reproduction takes place, I call "necessary" labour-time, and the labour expended during that time I call "necessary" labour [5] Necessary, as regards the labourer, because independent of the particular social form of his labour; necessary, as regards capital, and the world of capitalists, because on the continued existence of the labourer depends their existence also.

Here we return to the key of the book: Surplus Value, the secret of the self-increase of capital, which Marx says “has all the charms of a creation out of nothing”. It’s what the capitalist loves and constantly seeks:

“During the second period of the labour-process, that in which his labour is no longer necessary labour, the workman, it is true, labours, expends labour-power; but his labour, being no longer necessary labour, he creates no value for himself. He creates surplus-value which, for the capitalist, has all the charms of a creation out of nothing. This portion of the working-day, I name surplus labour-time, and to the labour expended during that time, I give the name of surplus-labour.”

Marx gives a simple procedure:

“The method of calculating the rate of surplus-value is therefore, shortly, as follows. We take the total value of the product and put the constant capital which merely re-appears in it, equal to zero. What remains, is the only value that has, in the process of producing the commodity, been actually created. If the amount of surplus-value be given, we have only to deduct it from this remainder, to find the variable capital. And vice versa, if the latter be given, and we require to find the surplus-value. If both be given, we have only to perform the concluding operation, viz., to calculate s/v, the ratio of the surplus-value to the v variable capital.”

The second part of this chapter consists of examples. The third, containing Nassau W. Senior’s theory of the “last hour” is easier.

This gentleman Mr Senior also appears in “Theories of Surplus Value”, sometimes called “Capital Volume 4”, which is Marx’s distilled notes from his exhaustive study of all the preceding writers about political economy, the study that allowed him to arrive at a confident position of scholarly authority.

The arguments that Senior proposes are very far-fetched, yet one would not be surprised to hear such things from employers of today, and we still rely on Marx to refute them.

The last section is a transitional paragraph leading into the next great chapter, almost a book by itself: “The Working Day”.

Illustration: The Peterloo Massacre, Manchester, England, 1819. A crowd of 60,000-80,000 gathered for a protest rally against unemployment and poverty. They were then charged by soldiers on horseback (cavalry) and cut down with sabres, killing 15 and injuring up to 700.

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10 August 2010

Constant and Variable Capital

Course on Marx's Capital: Week 10


"Constant" and "Variable" Capital

This is a short chapter, easy to read, but very interesting, bearing on the reasons why fixed capital (machinery, et cetera) does not yield any surplus value during production.

This is in turn the reason for the tendency of the rate of profit to fall in “capital-intensive” as opposed to “labour-intensive” industries.

You can be confident that the capitalists can never do away with workers. They are compelled, unless they are to perish as capitalists, to employ people.

Capitalists are compelled to continue to extract Surplus-Value from human workers because it is the only way that their Capital can be sustained. Without the constant extraction of Surplus-Value from people, Capital must shrivel away.

It is useful to read this chapter together with the previous one. There, it was shown that value comes from human labour. Here, it is shown how the labour contained in the makings of a product, such as machinery and raw materials, is transferred from the original products into the new ones without being increased.

The graph, above, is a standard type of illustration in capitalist accounting theory, to show how the cost of a fixed asset, such as a piece of machinery, can be “written off” over, say, five years, for example. Such an asset is said to “depreciate”. It is used up, at a constant rate.

The concept of Surplus Value is the same as the concept of Value Added, which is the basis of Value Added Tax, or VAT. For VAT, the inputs are deducted and only the increase in their value gained through the application of labour to the inputs, is taxed.

These things (Value Added and Depreciation), which are commonplace in capitalist accounting, show that at the practical level, the basic facts of business life have to be recognised, even while the ideologues and theorists of capitalism deny them.

The source of increase of capital is labour (that is labour expended, minus labour power paid for, creating Surplus Value). Machines do not, and cannot, produce Surplus Value. As businesses employ relatively more machinery and relatively less labour, so their rate of profit must fall.

Says Marx:

“That part of capital then, which is represented by the means of production, by the raw material, auxiliary material and the instruments of labour does not, in the process of production, undergo any quantitative alteration of value. I therefore call it the constant part of capital, or, more shortly, constant capital.

“On the other hand, that part of capital, represented by labour-power, does, in the process of production, undergo an alteration of value. It both reproduces the equivalent of its own value, and also produces an excess, a surplus-value, which may itself vary, may be more or less according to circumstances. This part of capital is continually being transformed from a constant into a variable magnitude. I therefore call it the variable part of capital, or, shortly, variable capital.”

Please Download and read this short, 8-page chapter:








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03 August 2010

Surplus Value

Course on Marx's Capital: Week 9


Surplus Value

In Chapter 6 we discovered the mechanism of Surplus-Value in the buying and selling of Labour Power, by which the overall increase in wealth that takes place under capitalism is achieved.
Chapter 7 (click to download it, below) begins with a short summary of the book thus far, as follows:

“The capitalist buys labour-power in order to use it; and labour-power in use is labour itself. The purchaser of labour-power consumes it by setting the seller of it to work. By working, the latter becomes actually, what before he only was potentially, labour-power in action, a labourer.”

The production of surplus value in the dynamic relationship between the capitalist and the working proletarian provides the answer to the question that the book is intended to answer, before any other:

Where does the wealth generated by capital come from?

Or:

How, precisely, and exactly where, is the surplus taken?

For, early on in his deliberations, Marx had determined that the observed general increase could not be coming from overcharging, because in a market of pure trading, one person’s loss is another’s gain, and all such losses and gains cancel out.

The answer is that the surplus arises in the workplace, and not in the market place, and the only source of surplus is this: that a worker can give more in the fruits of his labour than it costs to develop and maintain his labour-power. This applies equally to women as to men.

One of the conclusions of this is that capitalists make their money from employing people. It is the people that they employ, and not the machinery that the workers use, that makes the money. Therefore the bosses’ threats to sack all the people and to substitute them with machinery are always hollow threats.

Marx explains all this patiently and with good humour in this chapter. Please download this 12-page chapter and read as much of it as you possibly can.

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