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Peter Åström 1)
Capital is self-expanding value, dead labour that enslaves the living. It is therefore close at hand to make value and abstract labour the main target of social critique. If abstract labour is the root from which the categories of capital grow up – wage labour, profit, etc. – then it must be abolished for a classless state of things to be established. This could conceivably take place in a revolution where the means of existence are made available to all without restriction, since the compulsion to work for a wage then falls away. A social reorganisation that, on the contrary, relies on abstract labour would then constitute a dead-end or even a counter-revolutionary project. At least that was formerly the opinion of the undersigned.2)
Under the influence of the Arab Winter3), I came to abandon this perspective, which emphasises the radically anti-capitalist side of the revolution.4) I became convinced that the positive side must also be emphasised, not dismissed as mere speculation. Despite being completely unsustainable in the long term, the dynamic of the capitalist mode of production does in fact, in the normal case, satisfy basic human needs such as food, water and shelter. For communism to constitute a real alternative, it must therefore take seriously the question of how to secure material reproduction. Otherwise, one or the other reactionary perspective will surely be put forward instead, for example nationalism or religious fanaticism.
When, in the light of this revaluation, I returned to Capital and other writings, I made a discovery that should have been obvious from the very beginning: Marx does not take value as his point of departure but the commodity, which puts the question of the former in a very different light. This text, taking the commodity form as its point of departure, is an attempt to summarize important parts of Marx's analysis of capital so as to answer
Marx begins his critical exposition in Capital and A contribution to the critique of political economy with an analysis of the single commodity, more precisely “the commodity form of the product of labour”5). As pointed out by Ricardo, products of labour constitute by far the greatest share of all commodities, because “they may be multiplied […] almost without any assignable limit, if we are disposed to bestow the labour necessary to obtain them.”6) On a higher level, production, exchange and consumption of commodities is the specific way in which social reproduction takes place in the capitalist epoch.7)
A product of labour is, to begin with, the result of productive human activity which – together with a larger or smaller amount of natural substrates – turns it into something useful, a use value.8) Its character as a use value or its use-value form “is independent of the amount of labour required to appropriate its useful qualities”.9) On the other hand, a use value may be considered higher or lower depending on the degree to which other use values (and thus other labour processes) form a part of it as a precondition.10)
Products of labour that satisfy human wants can be found in all human societies; they are a necessary part of human existence.11) From this general point of view, the determination as use value “lies outside the sphere of investigation of political economy.”12) Marx therefore discusses the concept of use value primarily from the point of view of present social conditions where the means of production are dispersed “among many independent producers of commodities”,13) the division of labour “is brought about by the purchase and sale of the products of different branches of industry”14) and where the products are consumed not by the producers themselves but by “consumers”. In order to be saleable, i.e. to function as a commodity in exchange, the product of labour must thus be useful to some buyer.15) The product of labour is not use value for the producer; its use value only emerges when it meets a buyer on the market.16) Finally, the use value only exists as an object for consumption and “is realised only in the process of consumption.”17)
The seller's use of the product of labour comes from what it can fetch by being exchanged – its exchange value.18) In this function it presents itself in a value form that is separate from its bodily form.19)
What interests us in this section is not any actual exchange of commodities – especially not barter where commodity is exchanged directly for commodity – but commodity value. The latter is expressed in money through the price form. However, the form of money is complicated and requires its own explanation. We shall therefore begin by ignoring money and instead investigate commodity value by means of other commodities.
The value form of a product of labour is completely absent when you look at it in isolation. Then only its bodily form, which gives it its specific properties of utility, appears. The value form shows up, however, as soon as the product of labour is placed in a relation of exchange to some other commodity-body.
Below follows a summary and interpretation of Marx's value form investigation, from the simple form of value to the price form, without going into value as such. We assume, like Marx, that the commodity values are equal quantities, but what is important is that they are commensurable.
20 yards of linen = 1 coat, or
20 yards of linen are worth 1 coat.
Here we see on the one hand that 20 yards of linen is worth as much as 1 coat. On the other hand the value of 20 yards of linen is expressed in the use value of some other arbitrary product of labour, a coat. The latter is different from the point of view of use value but still interchangeable with the linen and therefore equal to it. The relation expresses the commodity of the seller, 20 yards of linen, as specific coat value; its value appears in the shape of a coat. This may sound mysterious, but if we are to ignore the price form for now, then we cannot say that they both cost the same amount of money. We have only these two commodities – two use values and a relation of exchange that expresses some kind of value. The linen does not need the coat in order to see that it is linen, but when the relation to the coat shows to the linen that it is something more than just linen, i.e. a useful thing, then this happens in the form of exchangeability for coats; it does not know anything else.
In the simple form of value, the value of linen was expressed but in an insufficient manner, for coat value is not an expression of value or interchangeability in general but only in relation to some arbitrary commodity separate from itself.20) By placing the linen in the same kind of exchange relation to all other use values this insufficiency is overcome and a new, developed form of value enters into it place.
20 yards of linen = 1 coat or 10 lbs of tea or 40 lbs coffee or 1 quarter wheat or 2 ounces gold or ½ ton iron, etc.
When the product of labour 20 yards of linen is valued in the bodily forms of all other commodities, it assumes, in addition to coat value, a tea-, coffee-, corn-value, etc. Here, the linen presents itself as interchangeable for every other commodity, but its expression is complicated and ungainly because the product of labour valued is placed next to “a many-coloured mosaic of disparate and independent expressions of value.”21) In addition, the expression of value grows longer over time as new types of commodities continue to arise.
If, at this point, the expression is reversed and we let the commodities individually be valued in linen, this new limitation is superseded.
1 coat = 20 yards of linen 10 lbs of tea = ″ 40 lbs coffee = ″ 1 quarter wheat = ″ 2 ounces gold = ″ ½ ton iron = ″ x commodity A = ″
Now the coats, tea, coffee, etc. each receive a simple as well as a common expression of value – in the shape of linen. This does not apply to the linen itself, but the body of the linen serves as a value mirror to all other commodities.22) Marx calls the specific role here assumed by the linen general equivalent in that the commodity presents itself as exchange value in general.23) This is also the final form of value if one disregards its specific expression (e.g. linen).
With the general form of value, the thing expressing commodity value may be chosen arbitrarily. In practice, however, the role as general equivalent is awarded a thing that, because of its specific properties, is well suited for it, for instance a precious metal that can be formed into arbitrarily large pieces and fused together again without being destroyed.24)
20 yards of linen = 2 ounces gold 1 coat = ″ 10 lbs of tea = ″ 40 lbs coffee = ″ 1 quarter wheat = ″ ½ ton iron = ″ x commodity A = ″ or if 2 pounds sterling is the coin name for 2 ounces of gold: 20 yards of linen = 2 pounds sterling.
By switching places between the 20 yards of linen and 2 ounces of gold, all commodities (except gold) can still be expressed in a simple and for all other commodities common form of value. Here, moreover, we are faced with a relationship that is somewhat more consistent with history.
Now the specific type of commodity with whose natural form the equivalent form coalesces (verwächst) socially becomes the money-commodity or functions as money. Its specific social function and hence its social monopoly becomes the playing of the role of general equivalent within the world of commodities.25)
The exchange value of commodities thus expressed in the form of universal equivalence and simultaneously as the degree of this equivalence in terms of a specific commodity, that is a single equation to which commodities are compared with a specific commodity, constitutes price.26)
In its role as equivalent, a money commodity cannot express its own value, but if cast into developed form (2.2.2), its value appears in relation to all other commodities in definite proportions (2 ounces of gold = 20 yards of linen or 1 coat, etc.) Thus, the expression appears if you read commodity prices backwards.27) Marx did not himself discuss the possibility of something other than a product of labour serving as measure of value and expressing commodity prices in a society. In the 1870s, the most important currencies were tied to the gold and it was thus natural to assume gold to function as money-commodity throughout Capital.28) Today, the gold standard is abolished, but states can generally still uphold stable commodity prices thanks to their power of taxation as well as through the ownership of natural resources.29)
There is an important point to be made by looking at exchange value from the simple form of value to the price form: The analysis shows that as soon as products of labour start to relate themselves to each other as commodities, the money form is a logical development. Commodity exchange without money is therefore an absurdity.30)
The value form has now been analysed for itself. The next step is to determine the substance and magnitude of value.
In the foregoing analysis of the value forms of the labour product, nothing was said about “what lies beneath these forms.”31) But what is the value content that is equal in two mutually interchangeable commodities that belongs to each of them independently of their relation to each other?
For Samuel Bailey, no such a thing could exist.32) According to him, Ricardo correctly spoke of relative value but then mistakenly came to treat value as something absolute – as the quantity of labour expended upon the production of two commodities, despite the fact that this labour quantity evidently may change for either one of them. If, for example, the value of commodity A increases, this only means that the value is estimated in exchange for B, C and so on in new proportions.33) But, Marx replies,
To estimate the value of A, a book for instance, in B, coals, and C, wine, A, B, C must be as value something different from their existences as books, coals or wine. To estimate a value of A in B, A must have a value independent of the estimation of that value in B, and both must be equal to a third thing, expressed in both of them.34)
The value of a commodity, Marx continues, is furthermore not something absolute but
is to such an extent relative that when the labour time required for its reproduction changes, its value changes, although the labour time really contained in the commodity has remained unaltered.35)
Marx thus subscribes, albeit critically, to the tradition which holds that the magnitude of value, or the proportions in which commodities are exchanged for one another, depends on the necessary quantity of labour.36) But how can A, a book, be equal to B, a certain quantity of coal, through their relation to labour which is the same, when we know that it is qualitatively different kinds of labour that produce the commodity-bodies book and coal, respectively.
We have seen (2.2) that commodities as useful objects are created by labour. From this aspect, the labour that is expressed or leaves its mark on the product is simply “useful”.37) Use value is however distinct from value and the body of the commodity as such cannot be considered equal to either money or any other type of commodity. The qualitative differences of the kinds of labour that created them are thus a condition of existence for commodity exchange as such.38)
In a community, the produce of which in general takes the form of commodities, i.e., in a community of commodity producers, this qualitative difference between the useful forms of labour that are carried on independently by individual producers, each on their own account, develops into a complex system, a social division of labour.39)
When production is based simultaneously on an advanced social division of labour and private property, it can be organised neither communally nor as islands of self-sufficiency. A bridge is needed between the social and individual spheres of the system. The various enterprises must, to be viable, find their niche in the social division of labour, so that the individual products of labour can be recognised as subsets of the total social product. They do that only by appearing as commodities and by being valued in money. Different kinds of products of labour can then be considered equally good from a social point of view. And when they have been realised in money (i.e. sold) the value equivalent in the seller's hand does not reveal if it was weaving, tailoring or some other kind of labour that had shown itself to be a valuable contribution to society. Therefore, leaving aside for now those commodities where the price is far removed from the labour expended upon their production, we can say that a sum of money is labour in object form where the definite useful character is disregarded, labour in general.
Here we seem to have discovered the common third thing, which, however, is not a thing in the ordinary sense, but that which remains of a commodity after one has abstracted
from all that which makes it to be really a thing. Any objectivity of human labour which is itself abstract (i.e., without any additional quality and content) is necessarily an abstract objectivity – a thing of thought.40)
One can think of “labour in general” in the physiological sense since the human brain, muscles and so on are to some extent always consumed in the labour process, and requires rest, food and so on to be recreated,41) but it is not the individually perceived effort that determines the proportions under which different commodities are exchanged.42) On the contrary, these are “established by a social process behind the back of the producers, and appear to them consequently as given by tradition.”43) And not simply any social process:
The equalisation of the most different kinds of labour can be the result only of an abstraction from their inequalities, or of reducing them to their common denominator, viz., expenditure of human labour power or human labour in the abstract, and only exchange produces this reduction, by bringing the products of the most diverse kinds of labour into relation with each other on an equal footing.44)
The commensurability between different kinds of commodities is the result of equating qualitatively different products of labour. The definite proportions are the expression of a quantitative dimension of the labour expended.
The value form, as we have seen, represents value in bodies of commodities, and in units that are suitable for these – numbers of coats, yards of linen, tons of iron, gold and so on. If one of the bodies, for example gold, occupies the position of general equivalent, then all commodity values can be expressed in definite physical quantities of one and the same material. Money value is objectified labour but not labour itself. How is the latter measured?
The quantity of labour itself is measured by its temporal duration and the labour-time in turn possesses a measuring rod for particular segments of time, like hour, day, etc.45)
In order to use time as a measure of abstract commodity-producing labour, all hours or days of labour must be equivalent, otherwise they cannot be given a common expression of value and price, and labour productivity (the concrete output per unit of time) cannot be compared.46) Marx himself mentioned as one of his unique contributions that he was the first to critically demonstrate the double character of labour, that what appears in commodities as a double form – use value and exchange-value – is represented on the one hand by a concrete useful labour and an abstract value-forming labour, i.e. two aspects of one and the same labour.47) However, such labour is itself an abstraction – simple average labour. It “varies in character in different countries and at different times, but in a particular society it is given.”48) Simple labour (and Marx explicitly refers to the English term unskilled labour) can be performed with only basic skills.49) Moreover, the labour is assumed to take place under average intensity. That which is performed under higher or lower intensity must be multiplied by a factor to be transformed into simple labour. An hour of labour of say 20 per cent higher-than-average intensity that produce 20 per cent more use values of the same quality is then multiplied by 1.2. If this higher level of intensity becomes the norm in all branches of industry, however, then the factor must be reduced to 1 and loses its significance, although it can still be regarded as more (or less) intensive “in an international application of the law of value”50), corresponding to greater (or smaller) amount of money.
Different kinds of labour also differ in complexity, which has an impact on the magnitude of value. If we take a tailor's shop as an example, we can assume that one part of the work is carried out by apprentices, another by journeymen and a third by the master tailor himself. Even if everyone works equally hard, the journeymen, who are fully trained in the trade, will on average get more done than the apprentices in the same period of time and the master probably even more. When differences in work performance is not due to labour-saving technology implemented in the objective conditions of labour but, as here, skill, i.e. a subjective factor, then the effect is the same as if the work were performed with different intensity. There are tasks, however, that neither the apprentice nor the journeyman but only the master tailor can perform. As long as these constitute necessary labour there will be a need for specially qualified labour.
Education or experience that contributes to a higher production output produces more labour per hour, so to speak, but only if the labour power is used efficiently.51) So the apprentice, the journeyman and the master tailor not only receive different amounts of remuneration, but they also create different amounts of value during the same time. So-called skilled labour capable of performing complex labour has a higher, refined use value, just as dead things can have it (stainless versus ordinary steel, for example), and if its particular properties are socially necessary, all the labour that is socially necessary for its reproduction must be included in its value.52) In the case of the price of labour power specifically, wages must be sufficient to purchase food, shelter, clothing and other articles necessary to perform labour of a particular kind, but it must also be sufficient for the production of the worker's substitute.53)
The real value of a commodity is […] not its individual value, but its social value; that is to say, the real value is not measured by the labour time that the article in each individual case costs the producer, but by the labour time socially required for its production.54)
The labour time socially necessary is that required to produce an article under the normal conditions of production, and with the average degree of skill and intensity prevalent at the time. The introduction of power-looms into England probably reduced by one-half the labour required to weave a given quantity of yarn into cloth. The hand-loom weavers, as a matter of fact, continued to require the same time as before; but for all that, the product of one hour of their labour represented after the change only half an hour's social labour, and consequently fell to one-half its former value.
We see then that that which determines the magnitude of the value of any article is the amount of labour socially necessary, or the labour time socially necessary for its production. Each individual commodity, in this connection, is to be considered as an average sample of its class.55)
Properly speaking, all products of the same kind form a single mass, and their price is determined in general and without regard to particular circumstances”56)
The general (social) determination cannot come from nothing, but is itself determined with regard to the particular (individual) circumstances. In fact, there is generally a long range of independent production processes, each of which requires different amounts of labour to produce commodities of one and the same kind, but when these goods exist on the market they have the same value if they can be regarded as identical from the point of view of use value. In order to calculate, in a particular case, the labour expended in the production of a commodity, we must take the whole quantity of labour consumed individually – both dead and living labour – and divide it by the volume of production.
The dead labour transferred to the product is determined by the consumption of its respective components during production, including the used up raw materials, waste, wear and tear as well as depreciation of fixed capital.57) None of this can be measured in labour time in a process of production where these products are expended as means of production, but we can assume a labour quantity corresponding to the purchase price. This is because the latter represents the number of simple hours of labour required by the producer to acquire the means of production, regardless of what may be socially necessary to reproduce them.58)
Let us take coat production as an example. We assume that all producers buy means of production at the same average market price but that there exist individual differences with regard to the relative efficiency of the processes of production. In this situation, the producer who has a particularly resource-efficient process can make do with relatively few yards of the raw material linen and thus transfer a relatively smaller amount of value to the product than the competitors. The per-unit price of the means of production is therefore given by advance, i.e. socially determined, but the quantity is determined by technical and organisational conditions at the level of the individual firm.
Also labour power is purchased at a socially determined price that can be assumed to represent the amount necessary to acquire the necessary means of subsistence. The size of the salary may differ depending on whether the labour capacity is of a simpler or more complicated kind, if for example it is that of a journeyman or master tailor. During the process of production, labour power is consumed, just like the raw materials, etc., but in contrast with the latter the labour power involved does not transfer its value to the product, but its labour create a new value.59) A part of the new value covers the salary of the worker and the reminder constitutes surplus value.60) This labour could theoretically be measured in hours, days, etc, but not without an estimation of both its intensity and complexity as well as a conversion into simple hours of labour. It has already been mentioned however that in practice “only exchange produces this reduction” and the value contribution of living labour is therefore expressed in the price of the product.
Let us now look at how, on the basis of the specific cases, we can arrive at a general determination, i.e. how a number of individually produced articles form a general, social value. In the example below we assume social production of identical coats and that the entire market consists of three producers that supply the same number of items each. This production has a number of “value contribution categories” where the sum represents a coat's total individual value. The mean value per category represents the socially necessary quantity of labour expressed in money and the sum consequently the social value.61) The latter is the real commodity value, since it represents the total quantity of labour divided by the total quantity of articles, i.e. the amount of labour it costs society to produce one specimen of the commodity in question.
| Table 1. Individual and social coat value (pounds sterling) | ||||
|---|---|---|---|---|
| Value contribution | I | II | III | Mean |
| Linen fabric | 0.89 | 0.82 | 0.81 | 0.84 |
| Fuel | 0.14 | 0.09 | 0.12 | 0.12 |
| Tool wear | 0.26 | 0.27 | 0.25 | 0.26 |
| Tailoring, journeyman | 0.50 | 0.49 | 0.46 | 0.48 |
| Tailoring, master | 0.29 | 0.31 | 0.30 | 0.30 |
| Total | 2.08 | 1.98 | 1.94 | 2.00 |
None of the processes of production in our example result in an individual value per unit which corresponds to the social value; one of them is above and two below the mean. Each individual coat forms material for the “congelations of undifferentiated human labour”62) that flows down and crystallises into the coat form that on the market is equivalent to 2 ounces of gold.63)
The coat value in money is thus 2 pounds sterling. What it corresponds to in hours we do not know, but under our assumption it is as many as required to produce, say, 20 yards of linen.64) If one would like to perform calculations in labour time, however, it is possible to assume a monetary value per hour, for example .1 pound sterling (2 shillings in Marx's days), which gives 20 simple labour hours for one coat, 20 yards of linen or 2 ounces of gold.65)
If we assume that the three producers represent the conditions of coat production within a society, then these are represented completely in the value of the commodity. Socially necessary labour time can then be derived from the technological level. But what if e.g. producer III – all else being equal – withdraws its coats from the local market and sends them off to some other region? Now the same quantity of “undifferentiated human labour” will, so to speak, flow down into two forms of coat instead of one – one in the region of production and another in some other geographic location. What will happen to the commodity value in the first case? The answer follows by taking the mean value of I and II: (2.08 + 1.98) / 2 = 2.03; it rises by 1.5 per cent.66) In the latter case, the commodity value is determined by the labour supplied by III together with all other coat producers that direct their output to the more distant market. If III happens to be alone here, then the value of the coat is determined entirely by its individual value, i.e. 1.94. It cannot therefore be the case that the value of a commodity is fully determined before or independently of the social context in which the articles are confronted with the consumers, i.e. at the moment of exchange. This does not mean, however, that the latter – as Murray puts it – actualises the value of a commodity which had until then only a potential existence67); it is rather the use value of the commodity that is not yet finished until it reaches the consumer. A difference in location between articles turn them into qualitatively different use values, and the cost of transportation is also to be added to the commodity's value.68) Murray has a point, though, if we consider the moment of exchange to be necessary not only for the realisation of value (its conversion into money) but for the validation of its individual labour content as socially useful, but again this really has to do with use value and not exchange itself. If one and the same enterprise produces coats and transports them to the end consumer, then the process of production is completed when it reaches the latter, but if it only manufactures the coats and sells them to a transport company, then the process of production gets finished earlier.69)
Having investigated individual and social value, we shall now look closer at the components of the single commodity with regard to the distinction between paid and unpaid labour, as well as the latter's redistribution based on different forms of property.
The life cycle of a single capital is best described from the point of view of the cycle of commodity capital, M – C – M′, that is from that a sum of money (M) is invested in the commodities means of production and labour power (C) until a value in money form (M′) is realised that is greater than the amount originally advanced. Should the value not be increased, it would be irrational to convert money into factors of production, since the product is made in order to be sold. Return on capital comes from surplus value, but is in this specific form called profit.70)
We continue to use the coat industry and the producers I–III for our examples. In the following, we borrow from table 1 (2.3.3) but create a new categorisation. The value of the product (individual and social) is denoted w. All dead labour is represented under the category of constant capital, c, and all living things under new value, n. The latter is then divided into a paid part – variable capital, v – and two categories that representing the unpaid part – produced surplus value, s, and realised profit, p. Here we also assume conditions in which the profit's share of both the value and the price of the individual commodity quantitatively coincides with that of surplus value.71) The sum of c and v in a commodity is called the cost price, k, and represents the amount that the individual article has cost the capitalist.72)
The rate of surplus value, s/v, is assumed to be 50 per cent and expresses that working conditions are the same across the three producers. The workers keep two-thirds of the new value produced individually. The profit, p, is determined by the selling price, which coincides with the commodity value of 2 pounds sterling, minus the cost price, k.
| Table 2. Components of the coat value (pounds sterling) | ||||
|---|---|---|---|---|
| Component | I | II | III | Mean |
| w | 2.08 | 1.98 | 1.94 | 2.00 |
| c | 1.29 | 1.18 | 1.18 | 1.22 |
| v | 0.53 | 0.53 | 0.51 | 0.52 |
| k | 1.82 | 1.71 | 1.69 | 1.74 |
| n | 0.79 | 0.80 | 0.76 | 0.78 |
| s | 0.26 | 0.27 | 0.25 | 0.26 |
| p | 0.18 | 0.29 | 0.31 | 0.26 |
Table 1 showed that producer I “takes out” a smaller value than what it “puts in” while the reverse is true for producer II and III. From Table 2 it becomes clear how producer I can nevertheless realise surplus value in the form of profit because k is less than the selling price. The rate of profit, p/. (c + v), for the three producers is 10, 17 and 19 per cent respectively (15 on average).
Under unchanged conditions of production and demand fully maintained this relationship could be reproduced year in and year out, but as the commodity category itself reveals, the producers who contribute a relatively small (large) amount of value-creating labour per article are favoured (disadvantaged) when they sell it at the higher (lower) social value. Those who are relatively wasteful of labour also risk a devaluation of their capital, because if the selling price were to fall below the cost price, there would be no funds to support either the capitalist's individual consumption or to to pay the entire cost of the means of production and wages. In the absence of a reserve fund, a temporary increase in the price of any input is sufficient to make the individual capital to shrink immediately, and, as already mentioned, the purpose of production is lost if there is no profit to be made. There is therefore a double interest of every commodity producer in reducing the necessary labour time. Such a reduction takes place, among other things, by that the more efficient producers' methods are adopted by the others and through research and development of entirely new ways of reducing the necessary labour. Normally, this leads to a levelling out of the differences in production conditions, but they can not be completely eliminated.
We will now look at an example where a new category of unpaid labour is expressed in the price of the individual commodity – land rent. It appears when the existence of natural monopolies preserves differences in the conditions of production over time. It takes both dead and living labour to grow wheat for for example, but some farmland gives a much higher yield at and equal labour input than others. The same is true of mining, oil extraction, etc.73)
If demand is sufficiently high, agricultural land of even very low fertility can be exploited commercially. The average commodity price then comes close to the individual value of the producer with the lowest yield per labour input (dead and living, i.e. capital advanced, C). As long as this land is needed to cover the market's entire demand for wheat – i.e. to supplement the supply from the others –, then the necessary labour of the producer who rents this particular piece of land will set the floor for how low the price can fall.74) This floor is then raised up a notch by the landowner who has no interest in letting the capitalist farmer make use of it gratis. The other landowners can then extract just as much land rent from their respective producers that the latter only make a normal (average) profit.
It was assumed above (2.2.4) that the value of 1 quarter of wheat is worth 2 pounds sterling and we shall keep this for our next example, but we now say that the price is at 3 pounds. We also assume the same relation between dead and living labour as for the coat but make the individual differences greater. The differences in individual profits are now no longer assumed to be due to the relative skills of the producers (economy of labour) but are fully determined by the general rate of profit. The latter category follows by dividing the surplus value by the capital invested in the whole economy, s / (c + v). Since we assume the same relationship between c and v as in the coat industry, and this happens to represent the average production conditions in society at large, we know that the general rate of profit is 15 per cent. The individual profits are the results of multiplying the individual capital advanced with the general rate of profit, i.e.
p = (c + v) • (s / (c + v)).
The price of production, P, is the price at which the commodity must be sold in order to replace both the means of production and the labour force and to generate the average profit, i.e. c + v + p. Ground rent, r, is then determined by the price of the commodity (3 pounds) minus P.
| Table 3. Components of the wheat price (pounds sterling) | ||||
|---|---|---|---|---|
| Component | I | II | III | Mean |
| w | 2.95 | 1.80 | 1.25 | 2.00 |
| c | 1.66 | 1.00 | 0.99 | 1.22 |
| v | 0.86 | 0.53 | 0.17 | 0.52 |
| k | 2.52 | 1.53 | 1.16 | 1.74 |
| n | 1.29 | 0.80 | 0.26 | 0.78 |
| s | 0.43 | 0.27 | 0.09 | 0.26 |
| p | 0.38 | 0.23 | 0.17 | 0.26 |
| P | 2.90 | 1.76 | 1.34 | 2.00 |
| r | 0.10 | 1.24 | 1.66 | 1.00 |
Agricultural producers I–III all make 15 per cent profit on their respective investments, which come from unpaid labour. Comparing the size of last component, ground rent, with the total capital advanced, r / (c + v), we see that the mere ownership of the three plots of lands itself yields about 4, 80 and 143 per cent return on the capital invested by other people (58 per cent on average).75) The value produced in the sector is just enough to provide wage-earners and capitalists with a normal income. Ground rent must therefore (in this example) come from other industries, which is possible because the price of the commodity wheat exceeds the price of production.76)
Should the price of wheat fall to 2.9 pounds, ground rent disappears completely for landowner I. It is then in his interest to demand rent at the expense of a part of the profit and otherwise terminate the lease. Should the price rise, then all lands become more profitable, but especially those of the poorest quality. If this situation persists for some time, it leads to poorer, unused agricultural land being brought into use. Should the price remain unchanged, it is consistently 50 per cent above the value, i.e. the amount that corresponds to the socially necessary labour of the industry. With new technical solutions labour productivity can increase also in industries where ground rent plays a major role, but they cannot eradicate differences in natural fertility and therefore not rent as an entirely passive source of income.
The identity of the market price for commodities of the same kind is the manner whereby the social character of value asserts itself on the basis of the capitalist mode of production and, in general, any production based on the exchange of commodities between individuals. What society overpays for agricultural products in its capacity of consumer, what is a minus in the realisation of its labour time in agricultural production, is now a plus for a portion of society, for the landlords.77)
It is the surplus labour in commodity production, not the land itself, that makes the land owner rich. The latter can therefore “spend his whole life in Constantinople, while his estates lie in Scotland.”78) The same thing could be said of those who sell the commodity money capital to industrialists at an interest,79) but also the owner of entrepreneurial capital can live a life without hardship when the ownership is spread out between different industries and management has been handed over to paid agents with a mandate to reinvest (capitalise) part of the profits.
A not insignificant part of the value of a commodity is thus made up of unpaid labour which falls to the owner of the means of production.80) A part of it is consumed unproductively as revenue, in the form of servants, vehicles, jewellery, real estate, etc., while another is converted into additional capital. Whether the rate of surplus value is low or high, for example 30 or 300 per cent, the real wealth of society depends on labour productivity, i.e. “how much use value […] [is] produced in a definite time, hence also in a definite surplus labour time.”81)
It is up to the owner of an enterprise whether he wants to consume all the profit as revenue, but in that case he will eventually cease to be a capitalist, because competition between firms encourages accumulation.82) Let us see why with another example.
It has already been mentioned (see 2.4) that it is in the interest of every commodity producer to adopt the most successful methods of production. So far the implicit assumption has been that this is possible on the basis of the existing scale of production.
There is room for many different kinds of improvement that reduce necessary labour without involving any additional costs, for example in the choice of input components or making the organisation of labour more efficient. However, it is often possible to quickly achieve productivity gains by investing in new instruments of production or founding entirely new factories.
In the following example, we start from Table 2 and our coat producers. Previously, we assumed that all three supplied the market with an equal number of commodities and therefore the total investment and production volume was not of interest to us. They will be now, when we shall assume that producer III increases his capital with new modern sewing machines and additional hands that operate them. Let's say that the original production volume was 100 coats per producer. III is now assumed to increase the output by 20 per cent but his constant and variable capital grows by only 10 and 5 per cent respectively. At the same time, producers I and II stay with the existing productive capital and production volume. In addition, we assume that the market can absorb the industry's much larger total product at the new slightly lower price of production.
In the table below, q represents the production volume (number of coats) and C the total capital advanced, c + v. The variables w, s, n, P and p represent, as before, commodity value, surplus value, new value, price of production and profit. We assume that the industry as a whole yields an average profit (15 per cent). This allows us to determine the total quantity of p and P in the same way as in Table 3. In Table 4, the individual price of production is determined by the producer's share of the total production volume of the industry multiplied by the total price of production. In other words, all commodities are sold at the same social price. The individual profit can then be determined by subtracting the capital invested from the individual price of production, i.e. p = P - C.
| Table 4. Components of the coat industry (q = production volume; the rest = pounds sterling) | ||||
|---|---|---|---|---|
| Component | I | II | III | Sum |
| q | 100.00 | 100.00 | 120.00 | 320.00 |
| c | 129.00 | 118.00 | 141.60 | 388.60 |
| v | 52.67 | 53.33 | 53.29 | 159.20 |
| s | 26.33 | 26.67 | 26.60 | 79.60 |
| n | 79.00 | 80.00 | 79.89 | 238.89 |
| C | 181.67 | 171.33 | 194.80 | 547.80 |
| w | 208.00 | 198.00 | 221.40 | 627.40 |
| P | 196.89 | 196.89 | 236.27 | 630.06 |
| p | 15.23 | 25.56 | 41.47 | 82.26 |
Now, dividing the components in Table 4 by the production volume, Table 5 representing of the price components of the individual coat can be compiled.
| Table 5. Components of the coat price at the sale price 1.97 (pounds sterling) | ||||
|---|---|---|---|---|
| Component | I | II | III | Mean |
| w | 2.08 | 1.98 | 1.85 | 1.96 |
| c | 1.29 | 1.18 | 0.18 | 1.21 |
| v | 0.53 | 0.53 | 0.44 | 0.50 |
| C | 1.82 | 1.71 | 1.62 | 1.71 |
| n | 0.79 | 0.80 | 0.67 | 0.75 |
| s | 0.26 | 0.27 | 0.22 | 0.25 |
| p | 0.15 | 0.26 | 0.35 | 0.26 |
The value represented in the individual commodity and the price of production have fallen from 2 to 1.96 and 1.97 pounds respectively (compared to Table 2). The investment by producer III in a relatively large amount of constant capital in relation to variable has the effect of bringing the value composition of the industry above the social average. This means that the profit and thus also the production price (which we assume here coincides with the selling price) is slightly greater than the surplus value and value. Unaltered conditions of production here causes the rate of profit for producer I to fall from 10 to 8 per cent and for producer II from 17 to 15 per cent. For producer III who increased his capital, it rises from 19 to 21 per cent. For the sector as a whole, the rate of profit remains unchanged.
If all 320 commodities (q) cannot be sold at the price of production but just below, III still has much to gain from his investment. He can, for example, sell at a price that gives him the same rate of profit as before but results in a larger mass of profit. It gives him both a stronger position on the market and a larger fund for individual consumption. Producers I and II will still be able to sell their coats at a profit but their rooms of investment and individual consumption will be substantially reduced. Producer III may also aim to drive I and II out of the market by temporarily dumping the commodity price to a level just above the individual cost price, which means that for producers I and II it falls below the same level. Since no producer can expect the others to refrain from accumulating, the safest bet is to reinvest at least part of the profits.83)
The single commodity has been examined from both a qualitative and quantitative aspect. The commodity form of the product of labour expresses a unity of opposites: use value and value. The former represents need satisfaction and the latter abstract human labour whose magnitude is determined by the total amount of necessary labour divided by the volume of production. As a consequence of differences in individual conditions of production but sameness in the social determination of value, commodity producers are led to reduce the necessary labour time and thus the magnitude of value in relation to the quantity of use values. We also saw how productive labour becomes a source of surplus value for the owners of the means of production and finally how competition forces producers to transform part of this surplus value into capital. The commodity form is thus the bearer of a historically specific social relationship.84)
In this concluding part capitalist production will be discussed in general terms, from the perspective of the reproduction and accumulation of the total product. Then follows a discussion on how a transformation of society could take place under conditions where the economic laws of capital have been abolished: communism, socialism or the “free association of producers”.
Since the interest in reducing necessary labour is built into the capitalist mode of production, it will affect the conditions of production in all industries. The result is a general increase in labour productivity in any society dominated by this mode of production. Still, the total amount of labour performed does not decrease accordingly. The working day in the developed countries is shorter now than it was two hundred years ago, but the requirement to work for a wage (or to get an education to become employable) continues to dominate the lives of the majority of people. In addition, the number of workers has constantly increased, partly in line with population growth, partly at the expense of other modes of production. At the same time, therefore, there is a tendency to conserve value-creating labour as the pillar of social production. Commodity producers, as we have seen (2.5), are driven to accumulate at least part of the realised surplus value and thus often to increase the scale of production. An increase in labour productivity in one sector may therefore coincide with a maintained or temporarily increased demand for both dead and living labour. Despite of this, in the slightly longer term, fewer workers will be required in relation to the population as a whole to meet the demand for a specific kind of commodity. This does not lead to chronic unemployment but to so so-called structural transformation where workers that have become redundant in one sector are absorbed and put to work under new circumstances. In broad terms, capitalist societies have moved from engaging labour in agriculture to shifting it increasingly to manufacturing and then services.
The re-employment of redundant workers is not an automatic process. A fundamental precondition of capitalist production is that the immediate producers (the workers) are propertyless, i.e. separated from the means of production so that they cannot survive without selling their labour power to the owners of capital; this is what it means to be a proletarian. The state stands as guarantor of the continued ownership of the means of production by the non-workers. Unemployment creates incentives to find employment, and as long as surplus value can be generated through putting proletarians to work, there will be a demand for their labour power.
The following table is an attempt to illustrate in a schematic way capitalist reproduction in terms of both value and use value. t represents time (in calendar years), c and v the total social capital, i.e. the amount of labour invested in the form of means of production and labour power in all branches of production; w and s the total value and surplus value respectively; q the volume of production and l the working population. The initial values are chosen arbitrarily. Both the population and the social capital are assumed to grow by 1 per cent per year, the volume of production by 2 per cent, and both the rate of surplus value, s/v, and the value composition, c/v, is kept at 100 per cent.
| Table 6. Accumulation (t = years; c, v, s, n, w = labour hours; q = production volume; l = number of working people in the population) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| t | c | v | s | n | w | q | l | q/l (%) | n/l (%) |
| 0 | 20.00 | 10.00 | 10.00 | 20.00 | 40.00 | 40.00 | 20.00 | 200.00 | 100.00 |
| 10 | 22.00 | 11.00 | 11.00 | 22.00 | 44.00 | 48.00 | 22.00 | 218.18 | 100.00 |
| 20 | 24.20 | 12.10 | 12.10 | 24.20 | 48.40 | 57.60 | 24.20 | 238.02 | 100.00 |
| 30 | 26.62 | 13.31 | 13.31 | 26.62 | 53.24 | 69.12 | 26.62 | 259.65 | 100.00 |
The choice of numbers and rate of change can be debated, but we here get a picture of a mode of production that constantly puts an equal proportion of the population into work despite the fact that a smaller one would have been enough to maintain the level of production, adjusted for population growth.
In commodity production, productive labour creates an abstract form of wealth – commodity value – the realisation of which provides an income for the various classes of society. At the same time, production is geared towards making this labour superfluous in each individual case. Technologies are continuously developed which are ever more efficient. They could be employed to reduce pollution and the extraction of resources, but the drive to constantly expand the total social product leads instead to catastrophic over-exploitation of the earth's ecosystems. This is how society evolves when the satisfaction of needs is merely a means to achieve the goal of constant expansion of value.
The commodity form carries the capitalist society within it, but also the seed of an entirely different kind. Capitalist expansion has swept away all previous modes of production and made humanity dependent on a world-wide network of production and communication. Production of commodities is now the obvious way to organise human labour and distribute its products, yet this takes place behind the backs of the producers. Taking conscious control of material production must entail that humanity establishes new social relations that abolish the logic of the commodity form. No one can say exactly what these will look like, but some general principles can be established on the basis that the profit motive and the compulsion to accumulate come to a halt. If this becomes a reality, the level of productivity achieved under capitalism and previous epochs could for the first time in history contribute to the liberation of humanity from the necessity of labour and at the same time put an end to the destructive exploitation of the natural environment. This requires, initially, that labour be reorganised on the basis of the existing technical conditions. Thus far, the productive powers have been used to keep humanity down in a contrived existence of necessity, but can now become a vehicle for emancipation.85) As soon as the means of production come under the control of the “associated producers” and the obligation to accumulate is lifted – not in one country but on a world scale – a fundamental rupture with the old society has taken place and communism is established, no matter how much or little labour is still required for production. And no matter how the fruits of labour are distributed, there will be, as Marx put it, inevitable defects “in the first phase of communist society as it is when it has just emerged after prolonged birth pangs from capitalist society.”86)
The existence of labour and surplus labour is not capitalism per se, any more than production of things is the same as production of commodities. However, many of the forms of labour developed within capitalism are harmful to both the individual and society; they could be carried out under much freer forms. The notion of a product is hardly harmful in itself; that, however, is the case for many of the actual products of modern society whose production better stop or be radically transformed. Production as a whole will have to be reorganised. Some things need to be made in greater quantities – especially in the poorest regions of the world –, but on the whole, a controlled “downsizing” of the economy is what needs to be put on the agenda. That is also what is required to stop global heating and the extinction of species. To illustrate this from the perspective of the total economy, we can continue the series above (Table 6), but assume that accumulation comes to a halt. Since the additional capital and luxury consumption of the former property owners fall away we can assume a much lower “rate of surplus labour”, say 1/3.87) The remaining surplus labour is what is needed to support the children, the elderly, administrative activities and so on.88) This means that the annual labour time, as well as the means of production measured in the same unit, can in our example be cut to two thirds in one stroke, as illustrated in Table 7 below.
| Table 7. Accumulation halted and surplus labour reduced (t = year; c, v, s, n, w = labour hours; q = volume of production; l = number of working people in the population) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| t | c | v | s | n | w | q | l | q/l (%) | n/l (%) |
| 40 | 17.75 | 13.31 | 4.44 | 17.75 | 44.37 | 48.38 | 26.62 | 181.76 | 66.67 |
A conscious and efficient management of labour will be crucial to accomplish such a reorganisation of production. It will undoubtedly be very different compared with that which takes place in a capitalist society. Without commodities and money, there is no obvious mechanism for reducing complex labour to simple. The future society can, however, estimate the amount of necessary labour in both concrete and abstract sense. It can see that particular forms of labour are needed in definite quantities to achieve particular results and draw certain conclusions about the amount of labour will then be expended in general, including the cost of education. It can also, conversely, start from the total amount of socially available labour time and evaluate the potential useful effects.89) Abstraction from the concrete side of labour therefore continues to take place, not just in thought but also practically in the planning of social production.
There is no reason to believe, however, that decision-making on the basis of relative labour time costs alone can replace all the functions of money prices. The former will be one very important factor, another will be the relative scarcity of various natural resources, for even if two means of producing an article may be equivalent in terms of labour expenditure, one may be more sustainable or otherwise preferable than another.90)
Freedom in this field [physical necessity] can only consist in socialised man, the associated producers, rationally regulating their interchange with Nature, bringing it under their common control, instead of being ruled by it as by the blind forces of Nature; and achieving this with the least expenditure of energy and under conditions most favourable to, and worthy of, their human nature. But it nonetheless still remains a realm of necessity. Beyond it begins that development of human energy which is an end in itself, the true realm of freedom, which, however, can blossom forth only with this realm of necessity as its basis. The shortening of the working day is its basic prerequisite.91)
With the means of production held in common and the livelihood of the human species secured, it should be possible to go forward with a plan of de-accumulation or disinvestment, as proposed by Amadeo Bordiga in the early 1950s.92)
Let's continue the series beyond the step illustrated in Table 7 but now assume a negative rate of accumulation, say -1 per cent. Continued technological advances will gradually reduce the workload further, although perhaps not as quickly as under capitalism. Let us assume that labour productivity increases by half a per cent per year. The result is shown in Table 8, where we use the same denominations as before.
| Table 8. De-accumulation (t = year; c, v, s, n, w = labour hours; q = volume of production; l = number of working people in the population) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| t | c | v | s | n | w | q | l | q/l (%) | n/l (%) |
| 50 | 15.97 | 11.98 | 3.99 | 15.97 | 31.94 | 45.72 | 26.62 | 171.76 | 60.00 |
| 60 | 14.37 | 10.78 | 3.59 | 14.37 | 28.75 | 43.21 | 26.62 | 162.31 | 54.00 |
| 70 | 12.94 | 9.70 | 3.23 | 12.94 | 25.87 | 40.83 | 26.62 | 153.39 | 48.60 |
| 80 | 11.64 | 8.74 | 2.92 | 11.64 | 23.29 | 38.59 | 26.62 | 144.95 | 43.74 |
| 90 | 10.48 | 7.86 | 2.62 | 10.48 | 20.96 | 36.46 | 26.62 | 136.98 | 39.37 |
With the development of communist production through the process of de-accumulation, the necessity of performing labour in the service of society, can be reduced considerably. It will completely revolutionise today's notions of work/leisure and production/consumption. As Marx put it:
In a higher phase of communist society, after the enslaving subordination of the individual to the division of labour, and thereby also the antithesis between mental and physical labour, has vanished; after labour has become not only a means of life but life's prime want; after the productive forces have also increased with the all-round development of the individual, and all the springs of common wealth flow more abundantly – only then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his abilities, to each according to his needs!93)
In terms of the end result, this perspective is no different from that championed by the communisation current. However, the path to this end is different. The communisers, because of their particular notion of value, seem to identify the perpetuation of socially organised labour with the perpetuation of capital. This poses extremely high demands on what a communist revolution must entail, since it implies an immediate leap to the higher phase of communism. Marx's analysis of the capitalist mode of production, however, does not impose such a requirement on future society. If his theory is incorrect, it should of course be corrected, but the arguments put forward in that direction are not very convincing in my opinion. For example, according to Endnotes, the second phase of communism is “more attractive” than the first.94) That may well be the case, but isn't it also somewhat “attractive” to secure food supplies, health care, etc. which are dependent on complex production and distribution networks? Henriksson warns of “a planned state in which socialist engineering, rationality and instrumentality, instead of capital, dominates the individuals, the immediate producers in particular.”95)
Such a risk is not non-existent but will hopefully be reduced as the number of concerns that must be dealt with by the community decreases.96) The individual is not free if his or her life is subordinated to society – whatever the degree of democracy – but life outside of society is humanly impossible. One way or another, therefore, a new social organisation is bound to step in when the old one has reached the end of its tether.
It has been debated in various contexts whether the categories of political economy could be observed in countries such as the Soviet Union. Some believe that an essentially different mode of production compared to that in the West was here prevailing, because of the extent of state ownership and the lack of competition between independent enterprises.97) The contrast with 19th century Western Europe was certainly substantial although the influence of the state on the economy has increased there too. However, the fundamental character of social production is not determined by who is in charge of production but by what is managed and how, the that is, by its dynamics and direction.
In the Soviet Union, the state, the classes and the wages system were not merely left intact; the modern proletariat was forcefully created out of an otherwise mostly agrarian population. Mass industrialisation began at the end of the 1920s, not because it responded to the inhabitants' self-defined need for modernisation, but because it was in the interest of the ruling class and compelled by (the military) competition with the outside world. Enterprises had to make a profit and the immediate producers work and shut up. The dynamic was therefore essentially the same as in Table 6, not Table 7.
If by value one means products of labour from independent enterprises which, by exchanging them for money on a reasonably free market, are given social recognition as abstract wealth – then this category probably did not exist in the Soviet Union, and consequently neither surplus value and its sub-categories of profit, interest and rent. If one instead considers value as the product of labour in general,98) one can argue that the means of production and the labour force in the Soviet Union were treated as a social capital subjected to a requirement for growth. From this point of view, the mode of production was oriented towards self-expansion of value and thus (state) capitalist.
The following statement by Engels at least does not contradict this description.
The modern State, no matter what its form, is essentially a capitalist machine, the state of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of productive forces, the more does it actually become the national capitalist, the more citizens does it exploit. The workers remain wage-workers – proletarians. The capitalist relation is not done away with.99)
Marx did not foresee the possibility of a state-capitalist development, but at one point he actually used the concept of value to describe a communist regulation of labour time.
[…] after the abolition of the capitalist mode of production, but still retaining social production, the determination of value continues to prevail in the sense that the regulation of labour time and the distribution of social labour among the various production groups, ultimately the bookkeeping encompassing all this, become more essential than ever.100)
Such a definition, however, can only be applied to the total social product,101) for
Within the collective society based on common ownership of the means of production, the producers do not exchange their products; just as little does the labour employed on the products appear here as the value of these products, as a material quality possessed by them, since now, in contrast to capitalist society, individual labour no longer exists in an indirect fashion but directly as a component part of the total labour.102)
However, as Marx stressed in one of his last writings, his analysis does not proceed from the concept of value but from the commodity.103) It is the internal contradiction in the commodity between use value and value which defines the law of movement of the capitalist mode of production and which I have tried to describe in this text. It may be true that for Marx the term “abstract labour” refers to something more specific than “labour in general” and actually presupposes commodities. From this does not follow, however, that the existence of “labour in general” in the broader sense implies commodity production, compulsory accumulation or wage slavery.