De-industrialisation and socialism

Last week I spoke on a panel that debated De-industrialisation and socialism.  The panel was organised by Spring, a Manchester-based group in England that has become a forum for the discussion of developments in capitalism and their implications for the prospects for socialism (http://www.manchesterspring.org.uk/).

The main theme for this panel discussion was the evident fact that the industrial sector (manufacturing, mining, energy etc) has declined sharply as share of the output and employment in the mature capitalist economies during the 20th century.  The question for debate  was: does this mean that the working class has also declined and is no longer the main force of change in capitalism; and also that a socialist or post-capitalist society will be a world without industry or employment of industrial workers?

The first point I made in the discussion was that the world is not de-industrialising.  Globally, there were 2.2bn people at work and producing value back in 1991.  Now there are 3.2bn.  The global workforce has risen by 1bn in the last 20 years.  But there has been no de-industrialisation globally.  De-industrialisation is a phenomenon of the mature capitalist economies.  It is not one of the ‘emerging’ less developed capitalist economies.

Using the figures provided by the International Labour Organisation (ILO) we can see what is happening globally, with the caveat that there is a serious underestimate of industrial workers in these figures and such transport, communication and many hi-tech workers are put in the services sector.

Globally, the industrial workforce has risen by 46% since 1991 from 490m to 715m in 2012 and will reach well over 800m before the end of the decade.  Indeed, the industrial workforce has grown by 1.8% a year since 1991 and since 2004 by 2.7% a year (up to 2012), which is now a faster rate of growth than the services sector (2.6% a year)!  Globally, the share of industrial workers in the total workforce has risen slightly from 22% to 23%.  It is in the so-called mature developed capitalist economies where there has been de-industrialisation.  The industrial workforce there has fallen from 130m in 1991 by 18% to 107m in 2012.

Global workforce

The big fall has not been in industrial workers globally but in agricultural workers.  The process of capitalism sucking up peasants and agro labourers from the rural areas and turning them into industrial workers in the cities is not over.  The share of agricultural labour force in the total global workforce has fallen from 44% to 32%.  So should we not really talk about de-ruralisation, as Marx did in the mid-1800s?  That is the great global phenemonon of the last 150 years.

Of course, most workers globally work in the services sector.  This sector is badly defined, as I say, and is really anybody not clearly an industrial or agricultural worker.  This sector was smaller than agriculture in 1991 (34% to 44%) but now it is biggest at 45% compared to 32% for agriculture.

As I was speaking in Manchester, the centre of the industrial revolution in Britain in the early 19th century, I was reminded of the work of Friedrich Engels, Marx’s partner in crime, who was managing his uncle’s German firm in the city at the time.  As a young man (24 years), Engels wrote The condition of the working-class in England (published in 1845)
(http://en.wikipedia.org/wiki/The_Condition_of_the_Working_Class_in_England)
and described the horrendous conditions of squalor, disease, sweat shop conditions, injury and poverty that rural men, women and children were subjected to as they came to work in the fast industrialising and urbanising cities of northern England.  It’s the same story now in the likes of India, China, south-east Asia and Latin America.  Engels concentrated on the conditions for labour, but in a preface to a new edition of his book in 1892, he commented that Britain was fast being replaced as the major industrial capitalist power by France, Germany and the US.  “Their manufactures are young as compared with those of England, but increasing at a far more rapid rate than the latter.  They have reached the same phase of development as English manufacture in 1844”.  And so it is now for the so-called emerging economies of Asia, Latin America and Africa compared to the mature capitalist economies of Europe, Japan and North America.

But it’s true that the share of industrial workers in the mature economies has fallen from 31% in 1991 to 22% now.  Indeed, according to McKinsey, manufacturing employment fell 24% in the advanced economies between 1995 and 2005.

US manuf emp

So does this mean that the future of capitalism without an industrial proletariat capable of being an agency for change and, for that matter, ‘post-capitalism’ will a society without industry, where people can expect to reduce their hours of work for a living and have increased periods of ‘leisure’?

This was the theme that my fellow panellist Nick Srnicek posed.  Nick is a Fellow in Globalisation and Geopolitics at UCL. He is the author with Alex Williams of Inventing the Future (Verso, 2015) and the editor with Levi Bryant and Graham Harman of The Speculative Turn (Re.press, 2010) – see
http://criticallegalthinking.com/2013/05/14/accelerate-manifesto-for-an-accelerationist-politics/).
Nick explained that, while new economies were being industrialised, their peak of industrialisation came earlier than for economies like Britain in the 19th century.  Indeed, no economy had achieved more than a 45% share for industrial employment.  So the future is not industry and an industrial working-class.  And it was no good advocating a return to manufacturing and industry as the way forward for a better society.

I am sure that Nick is right in these points. Where I differed was that he was not clear if a post-capitalist, non-industrial society would be achieved gradually as capitalism expanded globally and technology replaced heavy industrial work and people worked less hours and could use their time for themselves.  The idea of a steady move to a post-industrial, leisure society was the concept of Keynes back in the 1930s, arguing for capitalism as the way forward to his students at the height of the Great Depression in the 1930s, when many of his students had started to look to Marxism as the explanation for crises and the alternative of socialism (see my post, https://thenextrecession.wordpress.com/2013/05/04/keynes-being-gay-and-caring-for-the-future-of-our-grandchildren/ ).

Keynes reckoned the capitalist world would achieve huge per capita GDP growth and enter a ‘post-capitalist’ leisure economy without poverty.  Well, this blog has regularly revealed data that show poverty remains a terrible spectre over the globe, an inherent feature of capitalism, and that far from moving to a leisure society, working hours have hardly fallen much in the mature economies and remain very high in industrial sectors of the emerging economies.  We are all still ‘toiling’ for a living (apart from the 1%), in increasingly precarious jobs.

I don’t think we can get a ‘post-capitalist’ leisure society through gradual change.  It will require a revolutionary upsurge to change the mode of production and social relations globally, even if the potential productivity of labour through new technology and robots etc  is already there globally to deliver such a transition to freedom from toil.  Capitalism remains in the way as a fetter on production, with capitalists as a class force opposed to freedom.

The reason that the mature capitalist economies have lost their industrial base is that it was no longer profitable for capital to invest in British industry in the late 19th century or OECD industry in the late 20th century. So capital counteracted this falling profitability by ‘globalising’ and searching for more labour to exploit.

And profitability fell because capitalist accumulation is labour-shedding.  Capitalists compete against each other to get more profit.  Those capitalists with better technology can steal a march on others by boosting labour productivity and reducing labour costs by cutting the workforce.  So the drive is always for reducing the amount of labour power to boost profits.  The central contradiction here, as explained by Marx’s law of profitability, is that the reduction in labour power relative to mechanisation leads to an eventual fall in profitability.  This reduces the industrial workforce in the mature economies and leads to expansion of industry globally. Capitalism is a mode of production for mechanisation, but mechanisation will also lead to its demise as it is a mode of production for profit not social need and more mechanisation eventually means less profitability.  That shows that as we move towards a robot economy: profit for capital and meeting social needs will become more incompatible.  And the leisure society just an impossible dream.

Employment growth is falling in the advanced capitalist eocnomies. Employment growth is way less than 1% a year in the 21st century.

AD emp

Computer engineer and Silicon Valley software entrepreneur, Martin Ford puts it this way: “over time, as technology advances, industries become more capital intensive and less labour intensive.  And technology can create new industries and these are nearly always capital intensive”.  The struggle between capital and labour is thus intensified.

It does depend on the class struggle between labour and capital over the appropriation of the value created by the productivity of labour.  And clearly labour has been losing that battle, particularly in recent decades, under the pressure of anti-trade union laws, ending of employment protection and tenure, the reduction of benefits, a growing reserve army of unemployed and underemployed and through the globalisation of manufacturing.

According to the ILO report, in 16 developed economies, labour took a 75% share of national income in the mid-1970s, but this dropped to 65% in the years just before the economic crisis. It rose in 2008 and 2009 – but only because national income itself shrank in those years – before resuming its downward course. Even in China, where wages have tripled over the past decade, workers’ share of the national income has gone down. Indeed, this is exactly what Marx meant by the ‘immiseration of the working class’.

Will it be different with robots? Marxist economics would say no: for two key reasons.  First, Marxist economic theory starts from the undeniable fact that only when human beings do any work or perform labour is anything or service produced, apart from that provided by natural resources (and even then that has to be found and used).  So, crucially, only labour can create value under capitalism.  And value is specific to capitalism.  Sure, living labour can create things and do services (what Marx called use values).  But value is the substance of the capitalist mode of producing things.  Capital (the owners) controls the means of production created by labour and will only put them to use in order to appropriate value created by labour.  Capital does not create value itself.

Now if the whole world of technology, consumer products and services could reproduce itself without living labour going to work and could do so through robots, then things and services would be produced, but the creation of value (in particular, profit or surplus value) would not.  As Martin Ford puts it: the more machines begin to run themselves, the value that the average worker adds begins to decline.” So accumulation under capitalism would cease well before that robots took over fully, because profitability would disappear under the weight of ‘capital-bias’. This contradiction cannot be resolved under capitalism.

We would never get to a robotic society; we would never get to a workless leisure society – not under capitalism.  Crises and social explosions would intervene well before that.

58 Responses to “De-industrialisation and socialism”

  1. Mike Says:

    I seem to recall reading a prediction by a futurist 40 years ago that when production is eventually fully automated including agriculture with no labour needed then all such produced goods would become common goods like air and water. Since land production cannot be automated apart from development work and the supply of land is finite, the price of land would rise and be out of reach for all but a small number of wealthy individuals. Everybody else would rent and this would consume most of their disposable income. However, like the Eloi in H G Wells time Machine all manner of consumer goods would be provided. When you think about, there’s not much that can’t eventually be automated, including services. In my view the political consequences of automation are far more profound than economic impacts such as distribution of wealth. Modern democracies rose from the rise of the common man who bought the goods that he was employed to produce. The common man no longer engaged in the production process is no longer needed by the asset owners (Morlocks?). Comment?

  2. Choppa Morph Says:

    Back to basics. Thank you, Mike.

    Will be back later but for the time being I want to say that you have clarified a lot of things that the Marxists-without-Marx “the working class is dead” brigade have been muddying for decades.
    Also a slap in the face for those who cling to the view that imperialism stopped changing and developing in 1917 or 1945 or whenever. The US and Britain (and the rest of the old imperialist powers) are as viable and vigorous as leeches when it comes to strength of their own – ie they’re nothing without the blood of value except a slimy worm. If the blood gets pumped into rival leeches (aka the emerging giants, the BRIC countries) then these will swell and posture instead of the old ones, and the old ones will shrivel into wrinkly bits of skin.

    I must add that futurologists are on the whole pitiful opportunistic charlatans and obscurantists. Some of the worst hours of my past working life have been spent being force-fed their drivel on so-called professional development days.

    As for everything depending on the class struggle, that’s one of the things I’ll return to, because how we tackle this is fundamental to the future of humanity, as you imply.

    For a start we need to be a lot more specific about why the working class has been losing in the struggle over the past decades. How about we take 1933 as a starting point with the Nazi counter-revolution taking power in Germany and the consequent destruction of the world’s most powerful workers’ movement?

  3. Daniel Rocha Says:

    Michael,

    It would be a good thing if you put the ratio between number of people in working age vs. the number of working people in developed and emergent economies.

    Also, the saturation occurs still before thinking robots arise. Wages are rising in developed countries, so, sooner than later, the rate of profit will not be able to keep away from falling since not many places will be able to absorb the cheap workforce.

  4. Mike Ballard Says:

    I liked this essay until I got here: “Sure, living labour can create things and do services (what Marx called use values). But value is the substance of the capitalist mode of producing things.”

    Use-value has to be part of any exchange-value or commodity, just as socially necessary labour time does. Labour time around the house which isn’t exchanged for wages can still be a use-value but not an exchange-value. Employing productive labour for wages gets the capitalist surplus value to sell. Profit is made from this social relation.

    I also think that if workers could become conscious that the wage system is inherently a system of exploitation, no matter what the wage, then, some progress could be made toward organising to shorten the work day. I’m assuming here an understanding from workers that they are becoming more productive every year and that therefore, they deserve shorter work time with no cut in pay. I know those are big asks, especially since most of the left has political-economic amnesia about such matters.

  5. sartesian Says:

    Short version: If there is no necessary labor-time, then there can be no surplus labor-time. And no surplus value.

  6. Boffy Says:

    Michael,

    Those who are employed in the services industry are equally “industrial workers”. In fact, when Marx uses the term “Industrial Capital” what he means by it is that circuit of capital, which involves the production and realisation of value, (productive-capital, and merchant capital including money-dealing capital) in distinction from for example loanable money capital, or landed property.

    In Capital II, for example, he describes the circuit of industrial capital as the combination of the circuit of productive-capital, commodity-capital, and money-capital (in relation to the latter he makes clear that he is talking about money capital in its strict definition as capital value in its money form, again in distinction from loanable money-capital). On this basis, even in the developed economies the majority of workers are “industrial workers”.

    Again, I disagree with your comment that,

    “And value is specific to capitalism. Sure, living labour can create things and do services (what Marx called use values). But value is the substance of the capitalist mode of producing things.”

    It clearly isn’t, and there are no end of comments from Marx and Engels that demonstrate that they believed no such thing. Engels Appendix to Capital describing the way products evolved to become commodities, and how values similarly evolved into exchange values is perhaps the most obvious example. In fact, as Engels points out, as soon as capitalist production begins, commodities no longer do exchange at their values, and Marx in Capital III, explains why the capitalists themselves as a result see profit arising from all of their capital, not just from labour. Moreover, he points out that capital itself comes to be seen only as loanable money-capital, which itself has no value.

    But, also in Capital I, Chapter III, Marx sets out this evolution also in relation to his analysis of money as the “universal equivalent form of value”. How do you explain then Marx’s definition and analysis of money as such a universal equivalent form of value, given that he describes that development taking place thousands of years ago, long before capitalism???

    How do you explain all of Marx’s analysis of pre-capitalist commodity production and exchange, which he demonstrates takes place on the basis of an equal exchange of value? Surely for an exchange on the basis of equal values to occur, it is rather necessary for value itself to exist! In fact, as Engels sets out in the Appendix, Marx in his analysis of the development of a general rate of profit, and the development of prices of production, starts from that pre-capitalist situation of individual commodity producers producing and exchanging commodities at their values, which ceases precisely when capitalist production begins, because capitalists do not exchange at values, but at prices of production!

    Then there is Marx’s analysis in Capital III, of pre-capitalist forms of rent, in the form of labour rent, and rent in kind, and money-rent, which again Marx makes clear is the production of value, and a payment of rent as an amount of value.

    For example:

    “If we consider ground-rent in its simplest form, that of labour rent, where the direct producer, using instruments of labour (plough, cattle, etc.) which actually or legally belong to him, cultivates soil actually owned by him during part of the week, and works during the remaining days upon the estate of the feudal lord without any compensation from the feudal lord, the situation here is still quite clear, for in this case rent and surplus-value are identical.”

    or,

    “Ownership of the conditions of labour as distinct from land, such as agricultural implements and other goods and chattels, is transformed into the property of the direct producer even under the earlier forms of rent, first in fact, and then also legally, and even more so is this the precondition for the form of money-rent. The transformation of rent in kind into money-rent, taking place first sporadically and then on a more or less national scale, presupposes a considerable development of commerce, of urban industry, of commodity-production in general, and thereby of money circulation. It furthermore assumes a market-price for products, and that they be sold at prices roughly approximating their values, which need not at all be the case under earlier forms. In Eastern Europe we may still partly observe this transformation taking place under our very eyes. How unfeasible it can be without a certain development of social labour productivity is proved by various unsuccessful attempts to carry it through under the Roman Empire, and by relapses into rent in kind after seeking to convert at least the state tax portion of this rent into money-rent. The same transitional difficulties are evidenced, e.g., in pre-revolutionary France, when money-rent was combined with and adulterated by, survivals of its earlier forms.”

    Capital III Chapter 47.

    Once again it would be to turn Marx’s words here into an absurdity, because how can there be such a pre-capitalist commodity exchange where these commodities exchange “at prices roughly approximating their values”, if no such thing as value exists prior to Capitalism???

    Moreover, as Marx sets out, the previous form of rent – rent in kind – necessitates the concept of value, because with rent in kind it is only possible to determine the quantity of use values to be handed over to the landlord in place of a quantity of labour-time, if those use values have determined values, corresponding to such a quantity of labour-time.

  7. sartesian Says:

    As Marx makes perfectly clear in his Economic Manuscripts, while value exists, the organization, regulation, of production, of by and for the accumulation of value (distinct, or actually abstracted, from the physical objects) is the unique and propelling force of capitalism.

    Yes commodities exist; yes markets exist; but no, previous societies- feudal for one, communes for another, are not organized for the production of values, and are not regulated by the law of value– where commodities are exchanged in proportion to the time necessary for their social reproduction.

    And that law, as Marx makes perfectly clear, is the result of the relations between classes; where labor itself is organized as a commodity, having use for the laborer only as a means of exchange for the equivalent of the means of subsistence, and compensated at its costs of reproduction.

    And the proof for all this– uhh…..the necessary dispossession of the direct producers, the elimination of subsistence, or “subsistence plus” agriculture.

    All societies appropriate surplus LABOR; not all appropriation of surplus labor is its appropriation AS surplus VALUE…

    not to put too fine a point on it
    and Engels and Kautsky and Boffy to the contrary notwithstanding.

  8. sartesian Says:

    Continuing– says Marx in the same chapter Boffy sites:

    “The existence of domestic handicrafts and manufacture as an ancillary pursuit to agriculture, which forms the basis, is the condition for the mode of production on which this natural economy is based [NOTE: MARX DOES NOT REFER TO “SIMPLE COMMODITY PRODUCTION”– SIMPLE COMMODITY PRODUCING ECONOMY], in European antiquity and the Middle Ages, as still today in the Indian village communities where the traditional organization has not yet been destroyed. The capitalist mode of production completely abolishes this connection; a process can can be studied on a large scale particularly during the last third of the 18th century in England. People who had grown up in more or less semi-feudal societies, such as Herrenschwand, for example still consider this separation of agriculture and manufacture as a foolhardy social venture, an incomprehensibly risky mode of existence at the end of the 18th century. And even in those agricultural economies of ancient times which show most analogy with the capitalist rural economy, Carthage and Rome, the similarity is more with a plantation economy that with the form truly corresponding to the capitalist mode of production. A formal analogy, though one which proves to be completely deceptive in all essential point as soon as the capitalist mode of production is understood– even if not for Herr Mommsen, who discover the capitalist mode of production in every monetary economy– such a formal analogy is to be found nowhere in mainland Italy in ancient time, but only prehaps in Sicily, since this served as an agricultural tributary for Rome, its agriculture being essentially designed for export. Here one can find farmers in the modern sense.

    …We have already shown how, even though surplus-value is expressed in surplus product, it is not true conversely that any surplus-value in the the sense of a mere increase in quantity of the product represents a surplus-value…

    • Daniel Rocha Says:

      Sartesian, I think the law of value happens in any society. So, for example. What about trade between kingdoms or chiefdoms? For example, in the bronze age, not all places were rich in copper and tin. Lead was also used as household utensils. But, in general, mines with ores of these metals were actually far distant, considering that the usual mean of transportation was the bull, the donkey or by foot. So, I think it’s hard to believe that the law of value would not be applied in these cases, that is, the necessary socially necessary time taken by slaves to extract the metal and for merchants to travel, minus the time taken for the slave to be kept alive (in the case of the feud, it would apply only the time during the corvee). Also in these systems, there were serfs and slave revolts. Slaves even had conquered property rights in ancient Rome, even if only a small part of them.

      I think the point of capitalism concerning the law of value, it is to make clear why the squeeze of surplus of workers and decrease the constant capital is inherent to capitalism. On the other previous systems, the exploitation tended to be constant (except in the communal, which was null).

      • sartesian Says:

        Daniel,

        Do you think the law of value governed in feudal times? If so, what was the economic basis for the English revolution of 1644? The French revolution of 1789? Did the law of value apply to Egypt’s grain production before the Arab invasion? After? Before the mamelukes? After?

        Did the law of value govern the “exchanges” between the hacendado of Mexico and the indigenous people?

        Did it govern in Bolivia and determine the relations of the encomienda? Of the mita?

        Did the law of value, that is to say the law that determines commodities will exchange in proportion to the time necessary for their social reproduction apply to the Persian empire? That of the “Golden Horde”?

        The law of value, to govern, an economy needs a certain technical level– and a certain level of the social organization of labor– a specific class relation.

        I think Marx makes a pretty convincing case that the law of value did not, and could not, regulate pre-capitalist economy. And………it’s our job to make sure it does not regulate the “post-capitalist” economy?

      • Daniel Rocha Says:

        Sartesian, obviously, I cannot prove anything since there are no statistics from any of those times. So, what I meant is the existence of law of value, even if limited, and between distant territories, where barter was not an option. There was, of course, a value of exchange for things. After all, money existed. So, isn’t it reasonable to suppose that these values came from abstract labor time even at those times? Capitalism has only as an objective the increase in mass of profit, but it does not rule out the law of value otherwise.

      • sartesian Says:

        Yes, money has existed in differing modes of production, as have commodities, and value. But the LAW of value means NOT that peripheral exchanges on the “margins” or simply at the “contact points” are determined by values, but that the production of objects, use values is FOR EXCHANGE and IS what Marx calls the “condition of labor.”

        That– exchange, production for exchange, as the CONDITION of labor– that is to say condition for which labor is employed, utilized, organized etc.– does not occur prior to capitalism.

      • Daniel Rocha Says:

        Wait, I am talking about abstract labor in hours as a proportional to the value exchange. This is not the law of value then, right?

        Copper mines from 2500BC in the Anatolia, with a production way above of what was locally necessary, had its production not for exchange, then what for? I take it that ore is also an object, a commodity, right? Swords, knives, plates are also objects?

      • sartesian Says:

        As stated before, commodity production has preceded capitalist production; money precedes capitalist production– BUT where social labor is organized and distributed by, and for, value, dominating the economy does not precede capitalism; hence the necessity for the dispossession of the direct producers.

        You can find “precursors” of capitalism throughout history; you can find sectors operating on a capitalist like basis– what you cannot find is capitalism, the production of value, as the dominant condition of labor.

      • Daniel Rocha Says:

        Sartesian, in no way I am seeing a precursor to capitalism. You are right, and I agree with, that in capitalism, society is organized for the production of value, but it doesn’t mean non capitalist society was devoid of organized production for value. The difference is very clear, that in order to have a capitalist society, competition is needed, and competition is the result of the decreasing of rate of profit. Capitalists works to counterbalance this tendency all the time. Exploitation of workers is one way, another way is to shrink constant capital.

        And while it is possible to exploit workers in all stratified society, only in capitalism you can shrink constant capital. And to shrink constant capital (or better, to decrease the replacement costs) you need science. All great successful capitalists are aware of this. Also, this dehumanize labor, since people may learn a skill, which will later be outdated as a machine, and or, people needs to be in a constant pressure to learn new skills. For people in general, new skills require quite some investment either personal or by the government. The alienation it causes results in the imaginary creation of castes, say, capitalist cast, aristocratic workers, workers and lumpen-proletariat

      • Boffy Says:

        Daniel,

        You are correct about the Law of Value, and Marx says so, both in his letter to Kugelmann and in Capital 1, where he sets out the principle of the Law of Value in relation to Robinson Crusoe, a peasant family producing for its own needs etc.

        He also makes clear in Capital and in the Critique of the Gotha Programme that this same law of Value, applies to Communist Society too.

        As Marx points out, the Law of Value amounts to this, in order to live beyond the basic level, it is necessary to produce. Everything that is produced by society – any society – requires a given amount of abstract labour-time to produce determined by the level of productivity existing at that time. It, therefore requires a given proportion of the society’s available abstract labour-time, and so a quantity of one use value produced amounts to a given quantity of some other use value that could instead have been produced, foregone.

        “Every child knows that any nation that stopped working, not for a year, but let us say, just for a few weeks, would perish. And every child knows, too, that the amounts of products corresponding to the differing amounts of needs demand differing and quantitatively determined amounts of society’s aggregate labour. It is self-evident that this necessity of the distribution of social labour in specific proportions is certainly not abolished by the specific form of social production; it can only change its form of manifestation. Natural laws cannot be abolished at all. The only thing that can change, under historically differing conditions, is the form in which those laws assert themselves.”

        (Letter to Kugelmann)

        There is no need for social exchange to occur, for this to be true. As Marx points out, this is true also for Robinson Crusoe.

        “Necessity itself compels him to apportion his time accurately between his different kinds of work. Whether one kind occupies a greater space in his general activity than another, depends on the difficulties, greater or less as the case may be, to be overcome in attaining the useful effect aimed at. This our friend Robinson soon learns by experience, and having rescued a watch, ledger, and pen and ink from the wreck, commences, like a true-born Briton, to keep a set of books. His stock-book contains a list of the objects of utility that belong to him, of the operations necessary for their production; and lastly, of the labour time that definite quantities of those objects have, on an average, cost him. All the relations between Robinson and the objects that form this wealth of his own creation, are here so simple and clear as to be intelligible without exertion, even to Mr. Sedley Taylor. And yet those relations contain all that is essential to the determination of value.”

        (Capital Vol i, Chapter 1)

        And Marx goes on to demonstrate how this same Law of Value that determines how Robinson is forced to allocate his available labour-time so as to maximise his production of use value, applies also to the peasant family under all natural production.

        “We have one close at hand in the patriarchal industries of a peasant family, that produces corn, cattle, yarn, linen, and clothing for home use. These different articles are, as regards the family, so many products of its labour, but as between themselves, they are not commodities. The different kinds of labour, such as tillage, cattle tending, spinning, weaving and making clothes, which result in the various products, are in themselves, and such as they are, direct social functions, because functions of the family, which, just as much as a society based on the production of commodities, possesses a spontaneously developed system of division of labour. The distribution of the work within the family, and the regulation of the labour time of the several members, depend as well upon differences of age and sex as upon natural conditions varying with the seasons. The labour power of each individual, by its very nature, operates in this case merely as a definite portion of the whole labour power of the family, and therefore, the measure of the expenditure of individual labour power by its duration, appears here by its very nature as a social character of their labour.”

        (ibid)

        If such a family wishes to maximise the use value it can obtain, it cannot ignore the Law of Value, and simply decide to allocate all its available labour-time to one or two types of production, because that would mean that other necessities went unproduced! And, the same thing applies to a communist society, as Marx points out.

        “Secondly, 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 book-keeping encompassing all this, become more essential than ever.”

        (Capital III, Chapter 49)

        What changes with commodity production and exchange, under whatever mode of production, and capitalism only extends this principle, is that rather than production being determined on the basis of this immediate balancing of use value against value, it becomes mediated by the market, as alongside the transformation of a portion of output from being mere products into being commodities, individual values, first become transformed into social values, based on the average required social labour-time, and this social value becomes stamped on the face of the commodity in the form of exchange value, i.e. the value relation of one commodity measured against a quantity of some other use value – the value form, whether this is in its initial form arising thousands of years ago in the first trades as the relative form of value, or its more developed form as the equivalent form of value, or its most developed form as the universal equivalent form of value – money, as Marx sets out in Capital I, Chapter III.

        “And the form in which this proportional distribution of labour asserts itself in a state of society in which the interconnection of social labour expresses itself as the private exchange of the individual products of labour, is precisely the exchange value of these products.”

        (Letter to Kugelmann)

        In fact, it is precisely, because the direct producers, and particularly the better placed direct producers, begin to devote a greater proportion of their labour-time to commodity production, and do so by devoting labour-time to what can produce for them the greatest amount of exchange-value rather than use-value, that the market expands, and commodity production and exchange becomes generalised as a precondition for capitalist production, which can only arise when such large markets already exist, to justify its larger scale production.

        Its on this basis that the towns develop, that artisans develop, all of whose production is geared to the market, and the acquisition of exchange value, and particularly money. What money does in this role, as Marx sets out in Theories of Surplus Value, is it changes the situation of commodity production and exchange that existed under systems of barter.

        Under barter, the exchange of one commodity was specifically designed to acquire an equivalent amount of value, but in the form of some other use value that was more desired than that being given up. It means that Say’s law applies within such exchanges. But, Marx points out, as soon as money arises, that is no longer true. I can sell a commodity, and obtain money in return, but have no need to immediately use that money to buy some other commodity. I can save the money, and so it becomes the basis of the development of capital.

        These value relations, and the determination of commodity exchanges on the basis of equal values, of equal amounts of labour-time have been well documented going back thousands of years.

        I gave a summary of it some time ago in my blog post Historical Proofs and origins of Value Theory – http://boffyblog.blogspot.co.uk/2009/07/historical-proofs-and-origins-of-value.html.

      • sartesian Says:

        “where he sets out the principle of the Law of Value in relation to Robinson Crusoe, a peasant family producing for its own needs etc.”

        Marx does no such thing. Marx out the principle of the distribution of labor-time being the basis of all production, and thus the basis for value.

        Before we get too carried away with this Robinson Crusoe nonsense, let’s look at what Marx said about the use of Robinson Crusoe fantasies to explain the economy of capital.
        From his Introduction to the Critique of Political Economy:

        “Individuals producing in a society, and hence the socially determined production of individuals, is of course the point of departure. The solitary and isolated hunter or fisherman, who serves Adam Smith and Ricardo as a starting point, is one of the unimaginative fantasies of eighteenth-century romances a la Robinson Crusoe; and despite the assertions of social historians, these by no means signify simply a reaction against over-refinement and reversion to a misconceived natural life. No more is Rousseau’s contrat social, which by means of a contract establishes a relationship and connection between subjects that are by nature independent, based on this kind of naturalism. This is an illusion and nothing but the aesthetic illusion of the small and big Robinsonades. It is, on the contrary, the anticipation of “bourgeois society,” which began to evolve in the sixteenth century and in the eighteenth century made giant strides towards maturity. The individual in this society of free competition seems to be rid of natural ties, etc., which made him an appurtenance of a particular, limited aggregation of human beings in previous historical epochs. The prophets of the eighteenth century, on whose shoulders Adam Smith and Ricardo were still wholly standing, envisaged this 18th-century individual – a product of the dissolution of feudal society on the one hand and of the new productive forces evolved since the sixteenth century on the other – as an ideal whose existence belonged to the past. They saw this individual not as an historical result, but as the starting point of history; not as something evolving in the course of history, but posited by nature, because for them this individual was in conformity with nature, in keeping with their idea of human nature. This delusion has been characteristic of every new epoch hitherto.”

        OK? Probably not. So let’s emphasize this: Crusoe is producing NO VALUE. He is not exchanging anything. He is providing for his own subsistence. He is not engaging in social production. The “law of value” does not exist in “asocial” individual production. It does not determine the actions of peasant subsistence agriculture, individual or communal.

        What changes with capitalism is that subsistence production is demolished. The direct producers are expropriated. A CLASS appears whose labor only has USE to the extent it can be exchanged for the means of subsistence, or an equivalent to the means of subsistence necessary to its reproduction.

        Labor-time is not automatically VALUE, not even in capitalism where the embodied labor-time has to achieve a status of value in exchange with other commodities.

        “In fact, it is precisely, because the direct producers, and particularly the better placed direct producers, begin to devote a greater proportion of their labour-time to commodity production, and do so by devoting labour-time to what can produce for them the greatest amount of exchange-value rather than use-value, that the market expands, and commodity production and exchange becomes generalised as a precondition for capitalist production, which can only arise when such large markets already exist, to justify its larger scale production.”

        Total idealistic, bourgeois nonsense and gibberish. Capitalist markets did not expand because the “better placed” direct producers devote more time to producing for exchange. Capitalism, the development of CAPITALIST markets, requires the dispossession of direct producers– that is the way that production becomes of, by, and for exchange.

        Boffy regurgitates the idyllic nonsense bourgeois political economists spew to obscure the origins, and reproduction, of capital’s social relationship.. and he calls that regurgitation “Marxism.”

        It is on the basis of the separation of the direct producer from the means of his/her own subsistence that capitalist agriculture develops; that agricultural productivity is accelerated; that the population is forced off the land (ever heard of “Enclosure” Boffy) and that 1)an itinerant class is developed that works the land belonging to someone else as wage-laborers; 2) ALL production is directed towards exchange in order to realize the VALUE in the product– all product is brought to market to realize a surplus VALUE, as opposed to part of production, the SURPLUS PRODUCT, being brought to market in order to augment the lives of the direct producers 3) the “putting out” method of textile production displaces domestic handicraft production as direct producers need to devote more labor-time not to producing the means of their own subsistence, but rather exchanging their labor time for the medium of exchange for obtaining such subsistence 4) the population migrates to the cities as centers of production in order to exchange their labor-time for a wage.

        What Boffy doesn’t know about value, about the law of value, about the specificity of Marx’s analysis of value, about the origin of capitalism would fill volumes.

      • Boffy Says:

        Daniel,

        You talked about the law of value applying in all kinds of society. That is correct, and is the point that Marx makes in his letter to Kugelmann explaining precisely that aspect of the law of Value, as a law of nature.

        Marx also spells out why the Law of Value determines the limitations on production and the allocation of labour-time in Capital in examining the issue of rent in pre-capitalist societies. So talking about a situation of petty commodity production undertaken by direct producers, and how the Law of Value determines the allocation of available social labour-time, so as to ensure that proportionality is maintained, Marx writes.

        “The fertility of Nature establishes a limit here, a starting-point, a basis. On the other hand, the development of the social productive power of their labour forms the other limit. Examined more closely, since the production of means of subsistence is the very first condition of their existence and of all production in general, labour used in this production, that is, agricultural labour in the broadest economic sense, must be fruitful enough so as not to absorb the entire available labour-time in the production of means of subsistence for the direct producers, that is, agricultural surplus-labour and therefore agricultural surplus-product must be possible. Developed further, the total agricultural labour, both necessary and surplus labour, of a segment of society must suffice to produce the necessary subsistence for the whole of society, that is, for non-agricultural labourers too.” (p 634-5)

        Even in economies based on peasant production, some producers will tend to produce food, whilst others will produce raw materials. For the individual producer of food, their day is divided into necessary labour and surplus labour. The surplus food they produce may be exchanged for raw materials, say cotton. But, from the perspective of society, the totality of the labour-time of those producing food, and those producing raw materials is equally divisible into a portion of necessary labour and surplus labour.

        The total surplus product of the food producers is what enables the raw materials producers to produce raw material rather than food.

        “Although the labour of the direct producers of means of subsistence breaks up into necessary and surplus labour as far as they themselves are concerned, it represents from the social standpoint only the necessary labour required to produce the means of subsistence. Incidentally, the same is true for all division of labour within society as a whole, as distinct from the division of labour within individual workshops. It is the labour necessary for the production of particular articles, for the satisfaction of some particular need of society for these particular articles.” (p 635)

        So long as these different articles are produced in the correct proportions, so that, for example, only sufficient food supply is thrown on to the market, to meet the demand of the raw material suppliers, and vice versa, then these commodities will exchange at their values – and later under capitalism at their prices of production. If this proportion is not met, however, then the demand for some commodities will not coincide with the supply and so market prices will diverge from exchange values, and prices of production.

        “It is indeed the effect of the law of value, not with reference to individual commodities or articles, but to each total product of the particular social spheres of production made independent by the division of labour; so that not only is no more than the necessary labour-time used up for each specific commodity, but only the necessary proportional quantity of the total social labour-time is used up in the various groups. For the condition remains that the commodity represents use-value. But if the use-value of individual commodities depends on whether they satisfy a particular need then the use-value of the mass of the social product depends on whether it satisfies the quantitatively definite social need for each particular kind of product in an adequate manner, and whether the labour is therefore proportionately distributed among the different spheres in keeping with these social needs, which are quantitatively circumscribed. (This point is to be noted in the distribution of capital among the various spheres of production.) The social need, that is, the use-value on a social scale, appears here as a determining factor for the amount of total social labour-time which is expended in various specific spheres of production. But it is merely the same law which is already applied in the case of single commodities, namely, that the use-value of a commodity is the basis of its exchange-value and thus of its value.” (p 635-6)

        The importance of this is that unless this proportion is maintained, either at the level of the individual commodity, the industry or the total social labour-time, the value of the commodity cannot be fully realised, and so it will have been produced in excess of what at a social level represents the necessary labour-time, so its market price will fall beneath its exchange value. As Marx sets out in Theories of Surplus Value, it is this potential for overproduction that arises with commodity production and exchanged, and the separation of production and consumption, but which only manifests itself as a crisis of overproduction of capital under capitalist production.

        “For instance; let us assume that proportionally too much cotton goods have been produced, although only the labour-time necessary under the prevailing conditions is incorporated in this total cloth production. But in general too much social labour has been expended in this particular line; in other words, a portion of this product is useless. It is therefore sold solely as if it had been produced in the necessary proportion. This quantitative limit to the quota of social labour-time available for the various particular spheres of production is but a more developed expression of the law of value in general, although the necessary labour-time assumes a different meaning here. Only just so much of it is required for the satisfaction of social needs. The limitation occurring here is due to the use value. Society can use only so much of its total labour-time for this particular kind of product under prevailing conditions of production.” (p 636)

      • Boffy Says:

        Daniel,

        You write,

        “On the other previous systems, the exploitation tended to be constant (except in the communal, which was null).”

        Generally, as set out in the other quotes I have provided, Marx makes clear that this level of exploitation is a function of the Law of Value, and the way it determines how much social labour-time can be allocated to various functions. For example, as both Marx and Engels set out, slavery is only possible as an economic system, when productivity rises to a sufficient level that slaves can produce more in a working-day than is required for their own subsistence.

        A peasant can only work on the land of the lord of the manor for whatever proportion of their labour-time is surplus, to the necessary labour-time they must devote to producing their own means of subsistence, and reproducing their means of production.

        Marx sets out that, under these conditions individual peasants, and this depends partly also on their specific conditions, are able to produce a surplus over and above this – what under capitalism represents a surplus profit – and from this surplus they are able to accumulate means of production.

        The difference here with capitalism, and capitalist rent, is that in pre-capitalist relations, rent sets the limit of this profit, whereas under capitalism, it is the profit, which sets the limit for the rent appropriated by the landlord.

        Particularly, with the advent of money-rent in pre-capitalist systems this becomes important, because it forms a basis for the process of the differentiation of the peasantry as described by Marx, and detailed at length by Lenin in his “The Development of Capitalism in Russia.”

        Marx sets out that one reason for the development of money-rent, is that as merchants brought increasing numbers and ranges of commodities from overseas, the feudal aristocracy needed money to buy these commodities. But, Marx sets out that what starts out as a rent based upon the right of the Lord to a given quantity of value, of labour-time provided directly by the serf/peasant having been transformed first into rent in kind, when it becomes transformed into money-rent loses this historical connection, but at the same time, a money rent, becomes separated from the provision of that definite amount of labour-time.

        Its on this basis, at particular times when money is depreciated, so that commodity prices rise, that the peasant farmers gain and accumulate, and the landlords lose out. This enables some of these serfs to themselves then employ serfs themselves, and then to employ day labourers, so as to thereby develop into capitalist farmers.

        “With money-rent prevailing, the traditional and customary legal relationship between landlord and subjects who possess and cultivate a part of the land, is necessarily turned into a pure money relationship fixed contractually in accordance with the rules of positive law. The possessor engaged in cultivation thus becomes virtually a mere tenant. This transformation serves on the one hand, provided other general production relations permit, to expropriate more and more the old peasant possessors and to substitute capitalist tenants in their stead. On the other hand, it leads to the former possessor buying himself free from his rent obligation and to his transformation into an independent peasant with complete ownership of the land he tills. The transformation of rent in kind into money-rent is furthermore not only inevitably accompanied, but even anticipated, by the formation of a class of propertyless day-labourers, who hire themselves out for money. During their genesis, when this new class appears but sporadically, the custom necessarily develops among the more prosperous peasants subject to rent payments of exploiting agricultural wage-labourers for their own account, much as in feudal times, when the more well-to-do peasant serfs themselves also held serfs. In this way, they gradually acquire the possibility of accumulating a certain amount of wealth and themselves becoming transformed into future capitalists. The old self-employed possessors of land themselves thus give rise to a nursery school for capitalist tenants, whose development is conditioned by the general development of capitalist production beyond the bounds of the country-side. This class shoots up very rapidly when particularly favourable circumstances come to its aid, as in England in the 16th century, where the then progressive depreciation of money enriched them under the customary long leases at the expense of the landlords.”

        (Capital III, Chapter 47)

  9. Phil Gasper Says:

    The Condition of the Working Class in England was published in Germany in May 1845 when Engels was 24 (not 29). He began the research in December 1842, when he arrived in Manchester at the age of 22.

  10. Boffy Says:

    Michael,

    I should start by saying that I agree with you basic thesis that a simple transformation to a leisure society is not possible.

    You say,

    “The reason that the mature capitalist economies have lost their industrial base is that it was no longer profitable for capital to invest in British industry in the late 19th century or OECD industry in the late 20th century. So capital counteracted this falling profitability by ‘globalising’ and searching for more labour to exploit.”

    But, its not true that it was not profitable, although there were undoubtedly some “unprofitable businesses and even industries. What is true, and which is all that is required, is that it was MORE profitable to invest elsewhere. That is the basis for the development of an average rate of profit after all, as described by Marx.

    You also say,

    “Computer engineer and Silicon Valley software entrepreneur, Martin Ford puts it this way: “over time, as technology advances, industries become more capital intensive and less labour intensive. And technology can create new industries and these are nearly always capital intensive”. The struggle between capital and labour is thus intensified.”

    The first part of that statement is mostly true, but the second part is not. The first part is mostly true in that traditional industries that process raw material in some way, as Marx says, benefit from rising social productivity. The effectiveness of fixed capital increases exponentially, and the cost of that fixed capital falls so that more of it can be employed. That means that any given quantity of labour, thereby processes more raw material, whose value per unit may fall, but by a small proportion than the increase in the quantity processed. So, as he says the technical composition of capital, thereby always rises as more raw material is processed, by more than the organic composition.

    But, as Marx points out that depends on that relation holding. If the value of circulating constant capital falls by a greater percentage, then the organic composition will fall not rise. Moreover, it is dependent upon this rise in the circulating constant capital component, because as Marx sets out, the fixed constant capital component continually falls relative to the total value of output, because of that same rise in social productivity, and continual technological development, which introduces new far more efficient machines that replace several older machines, and which massively reduces the value of that fixed capital.

    Consequently, in all those industries where the processing of raw material forms a small element of the value of production, or those industries where revolutions in productions significantly reduces either the quantity or the value of the circulating capital, this does not apply. And, there are lots of industries, especially in that growing service sector where that is the case.

    Take something like computer processing. A large computer bureau might have employed fixed capital in the form of a £1 million pound mainframe computer, employing 5 or 6 people as programmers, operators, data input clerks and so on, in 1970. By 1985, that 1 million would buy instead fixed capital in the form of 2000 PC’s, each with the same processing power of the 1970, mainframe computer, and each employing one operator. With each worker providing the same amount of labour, and same amount of surplus value, the consequence is a huge rise in the quantity of surplus value produced by these 2000 workers, whilst the constant capital cost had remained the same.

    But, the second part of the statement is wrong, ebcause as Marx states,

    “On the other hand, new lines of production are opened up, especially for the production of luxuries, and it is these that take as their basis this relative over-population, often set free in other lines of production through the increase of their constant capital. These new lines start out predominantly with living labour, and by degrees pass through the same evolution as the other lines of production. In either case the variable capital makes up a considerable portion of the total capital and wages are below the average, so that both the rate and mass of surplus-value in these lines of production are unusually high. Since the general rate of profit is formed by levelling the rates of profit in the individual branches of production, however, the same factor which brings about the tendency in the rate of profit to fall, again produces a counterbalance to this tendency and more or less paralyses its effects.”

    And, Marx is correct. That is what we see as far as these new industries are concerned. One of the most important and fastest growing new industries, for example, is computer games production. It processes effectively no raw material, and the quantity and value of the fixed capital is low compared to the value provided by the highly skilled programmers required for the production. If we take another similar industry – media production – again virtually no material is processed, and the cost of the fixed capital employed in the industry has been slashed due to technological development, and rises in productivity.

    Or take another of the most important industries – pharmaceuticals and biotechnology. Again little in the way of raw material is processed, the value is almost entirely attributable to the complex labour employed in production.

  11. sartesian Says:

    “Or take another of the most important industries – pharmaceuticals and biotechnology. Again little in the way of raw material is processed, the value is almost entirely attributable to the complex labour employed in production.”

    Really?well, for the US Dept of Commerce Annual Survey of Manufacturing for the Pharmaceutical industry (NAICS code 32541)

    For 2010:

    Production workers: 110, 879
    Total payroll and fringe app 23.7 billion
    Production worker payroll: 6.35 billion
    Estimated production worker fringe (at 33%) 2.1 billion
    Total costs of material used in production: $54.13 billion
    Total value of shipments $160 billion
    Depreciation: app. $4.65 billion

    Unit costs decline but the mass of material costs increase and are significant in pharmaceutical production– and fixed assets even more so.

    I’ll just bet if we look at semiconductor fabrication, will find something similar.

    And if we look at the computer gaming industry, I’ll just bet we see a “top-heavy” portion of fixed assets vs. the variable, labor, portion of capital

    Boffy says “Marx is correct” only the better to ignore what Marx is actually saying– that the same inherent laws that impact “older” established capital also exert themselves on the new areas, and indeed, if we continue the analysis that Marx sets forth, we’ll find that the new sectors: 1) deploy a higher “organic composition” of capital 2) in none of the newer sectors does the value of the circulating capital fall except… except when such declines are generalized across capital..as in recessions.

    Declines in the value of the circulating capital are coincident, indeed are identical, to…. economic contraction.

    On the contrary in order for capital to accumulate, the circulating capital increases. After all, capitalism is all about transforming the expanded value of the means of production into an ever increasing value of the masses of commodities in circulation.

  12. Edgar Says:

    “One of the most important and fastest growing new industries, for example, is computer games production. It processes effectively no raw material, and the quantity and value of the fixed capital is low compared to the value provided by the highly skilled programmers required for the production.”

    This is interesting because what you say ignores, among lots of other things, all the computer hardware that is required to play the software. Marxists have talked about collective labour but have they talked about collective capital?

    • Boffy Says:

      Edgar,

      The cost of plates, and knives and forks has nothing to do with the price of the food they are used to eat! Nor do they determine the surplus value produced in food production. The cost of computer hardware require to play games likewise has nothing to do with the value of computer games, or the surplus value produced in computer games production.

    • Boffy Says:

      Edgar,

      I should have also have pointed out that these new industries prove Marx’s point about “low wages” in a different way. That is that, in fact, although in many of these new industries such as computer games production or pharmaceuticals, actual wages for the complex labour are relatively high, they are relatively low compared to the value produced by that labour. In other words, as Marx points out in relation to such workers the extension of general education means that the value of the labour-power of these complex workers falls, whilst the value of the product of this labour rises, causing the rate of surplus value for this type of labour to rise.

      So, if you look at the accounts of these companies you will see that the costs for labour-power, as well as for constant capital, both fixed and circulating are low compared, whilst the value of the product of labour is high, leading to high levels of profit. What distinguishes these companies from those old industries that processed increased quantities of raw material is that for the latter the value of this raw material forms the vast majority and rising proportion of the total value of the output, which is the basis of falling profit margins.

      But, for say a pharmaceutical company the raw material may account for around just a third of the total value of the product, whilst as with all commodities as described by Marx, the fixed capital value as wear and tear forms an ever smaller part of the value of the value of the commodity. In other words, the value of the product of labour accounts for perhaps as much as two-thirds of the value of the commodity.

      In reality, therefore, the organic composition of capital, should be measured not just by the ratio of c/v but of c/v+s, the ratio of the constant capital to the new value created by labour.

      As Marx points out, the tendency of capital is to increase this value, as more complex labour is used, whilst the value of that complex labour is reduced, by the same processes, which thereby causes both the rate of surplus value and of profit to rise.

      • sartesian Says:

        First Boffy quotes Marx: “On the other hand, new lines of production are opened up, especially for the production of luxuries, and it is these that take as their basis this relative over-population, often set free in other lines of production through the increase of their constant capital. These new lines start out predominantly with living labour, and by degrees pass through the same evolution as the other lines of production. In either case the variable capital makes up a considerable portion of the total capital and wages are below the average, so that both the rate and mass of surplus-value in these lines of production are unusually high. Since the general rate of profit is formed by levelling the rates of profit in the individual branches of production, however, the same factor which brings about the tendency in the rate of profit to fall, again produces a counterbalance to this tendency and more or less paralyses its effects.”

        –arguing that this quote somehow supports his argument that constant capital costs decline, and fixed asset costs with them, as capital accumulates, and……..we are supposed to conclude from that the rate of profit does not decline.

        Of course, that’s not what Marx is talking about here… or anywhere ever in his critique of capital. Here Marx is discussing the opening up of “luxury production” employing greater quantities of labor at a lower wage, with this “new production” not sufficiently advanced, developed, widespread to require or employ or even accumulate the masses of “dead labor” of capital.

        Boffy thinks the pharmaceutical industry represents Marx’s model– arguing that pharmaceuticals employ little in their constant capital portions, and the value is predominantly the result of complex labor.

        There’s a problem of course in that the value of the labor employed in the pharmaceutical industry is dramatically less in its compensated value, and in proportion to the value of product shipments, than the materials used in production and the fixed assets animated by that labor power (net property plant and equipment in the US industry is, if I recall correctly, $75 billion).

        So Boffy comes up with this:

        “I should have also have pointed out that these new industries prove Marx’s point about “low wages” in a different way. That is that, in fact, although in many of these new industries such as computer games production or pharmaceuticals, actual wages for the complex labour are relatively high, they are relatively low compared to the value produced by that labour. In other words, as Marx points out in relation to such workers the extension of general education means that the value of the labour-power of these complex workers falls, whilst the value of the product of this labour rises, causing the rate of surplus value for this type of labour to rise.”

        When Boffy says the wages are relatively high but relatively low to the value they produce… all he is saying is that the rate of surplus value is very high.

        Now rates of surplus value can be increased by lengthening the working day– “absolute surplus value;” or by reducing the time necessary for the reproduction of the wage– the “relative surplus value.”

        There is another way– which is to drive the wage below the cost of the reproduction of the labor power, but those are circumstances that, by their very existence, cannot be sustained.

        Marx’s example refers to new lines where wages are low not in relation to the capital employed, but in relation to wages in the long established lines and sectors of production. Marx is explicitly not talking about lines of production where wages are low in relation to the capital employed.

        So….how does Boffy get out of this contradiction he has created through his “Gumby” reading of Marx, where everything can be twisted in any direction to provide for his self-entertainment?

        He gives us this: “In reality, therefore, the organic composition of capital, should be measured not just by the ratio of c/v but of c/v+s, the ratio of the constant capital to the new value created by labour.”

        Priceless. Really. Marx’s analysis which is the basis for his apprehension of the limits to capital reproduction is to be rejected in favor of a formulation which is literally non-sensical.

        If Boffy’s formula is used, wherever capital accumulates, the organic composition of capital goes down. The organic composition of capital, in the Boffy formula, in the oil industry, in the chemical industry, where surplus value rates are quite high, would be less than the organic composition of….say handicraft industries.

        And of course the rate of profit would be, and would always be, much higher in the industries where the greatest accumulation of big “C” and little “c” vs “v.”

        But we know, if we examine industries with the highest organic compositions, like petroleum, like chemicals they suffer from lower rates of profit, which are offset through price mechanisms, prices of production, to achieve the average rate of profit.

        I just wonder if the law of gravity is upside down on Planet Boffy. Everything else seems to be.

  13. Lev Davidovich Bronstein Says:

    First, Boffy is correct about two things:

    a) the concept of “service sector” is useless, as Guglielmo Carchedi showed in the 1980s (and even keynesians of CEPAL like Jurgen Weller detect this flaw in the concept);

    b) The category of “industrial working class” and the likes is not well defined, and doesnt helps us much in: a) determining classes; b) differentiating between productive and unproductive labour. Also, the distinction industry/agriculture isnt of much help either: a) the first “industrial” working class emerged in the english country side; b) the “agroindustrial sector” has always been a key factor in the history of capitalism (as charles Post shows for the US); c) the first brushes of capitalism (based on the law of value) are in a sector that united the fields with the towns, as John Merrington showed in 1979
    Moreover, as Boffy says, marx doesnt use the category industrial to mean something exclusively urban or developed (e.g. relative surplus value and real subsumption). Some quotes (in spanish)

    “Por una parte, deriva de la ambigüedad del término industrialización. Término más literario que científico, el mismo destaca por su bajo grado de especificidad y su reluctancia a mostrar un contenido positivo claro. Esto puede verse en la infinidad de significados otorgados a este término a lo largo de la historia. Algunos historiadores (incluso historiadores marxistas) hablan de la” industria medieval agraria”; otros más conciben la existencia de “protoindustrialización” en la edad media tardía (e.g. Peter Kriedte); los de más allá hablan de la sociedad industrial; los de más acá de capitalismo industrial; también es moneda corriente de cambio el “proletariado industrial”; se menciona la “industrialización”; etc (y podríamos seguir). En estricto rigor, en términos marxistas existe el “capital industrial”, aquél que completa el ciclo global “producción-circulación-producción” respetando forma y función según la fase del ciclo que se trate92. Y esto para Marx significa que, una vez el modo de producción capitalista es dominante, éste sólo puede estar determinado por el capital industrial93: ergo, mientras dure el capitalismo, éste será capitalismo industrial. No obstante esto, todo el mundo habla de “industrialización”, como si fuera una cuestión separada del capitalismo y no el capitalismo mismo. ¿A qué se debe esto? Creemos que esto se debe, en lo fundamental, a una confusión: tiende a igualarse “capitalismo” con sólo una de sus formas de existir (la que aquí denominamos “clásica”), aquella que presenta subsunción real, plusvalor relativo, trabajo asalariado “libre”, etc. Y, en esta igualación, se omiten las otras formas de existir de este modo de producción (acumulación originaria recurrente, subsunción formal, plusvalor absoluto, modos de explotación, deproletarización, etc). Así, todo capitalismo “no clásico” aparece aquí como uno “deformado”, subdesarrollado”, “atrasado”, “dependiente”, etc. Superar esta deformación sería igual a “industrializarse”. Desde nuestra perspectiva, esto no sería sino que la “adopción” de la forma capitalista “clásica”

    “Las dos formas que reviste el valor del capital dentro de sus fases de circulación son la del capital-dinero y la del capital-mercancía; la forma propia de la fase de producción es la del capital-productivo. El capital que, a lo largo de su ciclo global, reviste y abandona de nuevo estas formas, cumpliendo en cada una de ellas la función correspondiente, es el capital-industrial; industrial, en el sentido de que abarca todas las ramas de producción explotadas sobre bases capitalistas” (Karl Marx, El Capital)

    93 “El capital industrial es la única forma de existencia del capital en que es función de éste no sólo la apropiación de la plusvalía o del producto excedente, sino también su creación. Este capital condiciona, por tanto, el carácter capitalista de la producción; su existencia lleva implícita la contradicción de clase entre capitalistas y obreros asalariados. A medida que se va apoderando de la producción social, revoluciona la técnica y la organización social del proceso de trabajo, y con ellas el tipo histórico-económico de sociedad. Las otras modalidades de capital que aparecieron antes de ésta en el seno de los estados sociales de producción pretéritos o condenados a morir, no sólo se subordinan a él y se modifican con arreglo a él en el mecanismo de sus funciones, sino que ya sólo se mueven sobre la base de aquél, y por tanto viven y mueren, se mantienen y desaparecen con este sistema que les sirve de base” (Karl Marx, El Capital)

  14. Lev Davidovich Bronstein Says:

    Third, the ex swp member S Artesian, is correct about the law of value. Boffys quotes amounts to what is an extremely historic reading of Capital, which just isnt correct, as Chris Arhtur and Tony Smith showed. The simple commodtty mode of production, based on equal exchange of direct values, did not exist on history, as most of well informed marxist historians have showned.

    Eventhough, Boffys and Rochas reading is not alien to some marxists (see, for example Jairus Banaji, James Blaut, etc). Also, there are two other authors that tried to give materialists answers to the question of value regarding precapitalists modes of production: a) “Use values, the law of value and the analysis of non-capitalist production” (Fahy Brycesson, 1983); b)Commodity production and price formation before capitalism: A value theoretic approach (Dimitris Milonakis, 1995)

    Fourth, in 1906 Trotsky refuted “the machine society thesis” without any doubt (which was, by the way, Tugan-Baranovskys myth -legal marxist myth).

    Fifth, the post-capitalist society, for us communists and marxists, isnt a leisure society. We do not fetishize labour, but we do mantain the Marx premise: “a rational and free society of equal producers”

    saludos comunistas,
    manuel salgado

    • sartesian Says:

      I am not now, nor have I ever been, a member of the SWP(s), British or US or in any other form.

    • Boffy Says:

      Manuel,

      “Boffys quotes amounts to what is an extremely historic reading of Capital, which just isnt correct, as Chris Arhtur and Tony Smith showed. The simple commodtty mode of production, based on equal exchange of direct values, did not exist on history, as most of well informed marxist historians have showned.”

      I disagree. It is based on a reading of Marx in plenty of places, and on what he says in Capital, on the basis of what he himself says should be the way to read it – i.e. as to be read by workers, and therefore, to be read on the basis of what the words actually say, and not as being some kind of hidden code that can only be understood, by professional academic Marxologists who make a living, and develop their own cults around their particular interpretation of it.

      It is also based on the fact that in the Preface of Capital I, Marx himself talks about the fact that Philosophers have tried to understand the concept of value for more than 2,000 years! Why would he say that if he believed that “Value” as a category only arises under capitalism???

      More importantly, if Marx was then wrong about value existing as such a category back then, and before, how is it possible that philosophers themselves could have been agonising over such a non-existent category? How is it then that Plato discusses the category of value in “The republic”, how is it that Aristotle started out with a Labour Theory of Value, and then tried unsuccessfully to develop a subjective theory of value based on use value?

      Nor was it just European philosophers that attempted at that time to develop such a labour theory of value. At more or less exactly the same time that Aristotle was struggling with the concept in Europe, Chinese philosophers were doing exactly the same thing, and there are detailed records from the Tang dynasty setting out the determination of the value of commodities based on the average labour-time required for their production.

      Is it the case that there is a period when all commodities produced are produced solely by petty commodity producers, and that those commodities exchange at their values? No, history does not work that way. Marx makes clear that the first exchanges of products, arising out of rituals did not exchange on the basis of values. Such a basis of exchange can only arise, when exchange reaches a certain level of development. Moreover, as Marx sets out in his historical analysis, even where trade does increase, its often the case that commodity PRODUCERS do not exchange at values, because they lack knowledge of such values on a wider scale than their immediate environment. However, he points out that its precisely on this basis that merchants arise as a specialist group, who DO have knowledge, and thereby use it to make profits via arbitrage, as well as reducing the circulation costs of the petty producers. It, is then, however, competition between the merchants that leads to the development of exchange more or less on the basis of values.

      There seems to me to be a plethora of historical evidence that the basis of all commodity exchange was based on an exchange of equal values, even if at various points in history the achievement of such an exchange may have been frustrated. There is no doubt, as Marx sets out, and as many anthropologists have set out, going back to Morgan, as Engels states in a note to Marx’s analysis of the development of the general rate of profit, that commodity exchange on this basis of an equal exchange of value was at the heart of commodity exchange, and that for thousands of years, in a range of different modes of production, the majority of production was undertaken by independent producers, and that part of their production that was exchanged as commodities, was exchanged on the basis of such values.

      It is no more necessary to point to a mode of production, where such petty commodity production is the only form of production, or that exchange takes place exclusively or perfectly on the basis of an exchange of value, for that to be true than it is to prove that under Capitalism, there are no other forms of production and exchange, or that all commodities exchange perfectly at their price of production!

      They clearly don’t. As Marx sets out, even under developed Capitalism commodities only exchange approximately at prices of production, there is only a tendency to do so. There is the question of market conditions of demand and supply, of natural and other monopolies, there is the question of industries that have specific costs that have to be met, and which provide “grounds for compensating”, and so on. In the period between petty commodity production and capitalism, some commodities exchange at prices that are based neither on value nor price of production, as Marx sets out in Capital III, Chapter 12. A petty commodity producer might sell their commodity on the basis of material costs, plus their added labour value, for example, but in an economy that now has capitalist production, with some commodities selling at prices of production, the input costs of materials for the petty producer, are themselves no longer based solely on the labour-time expended on their production, and so the prices of the petty commodity producer are then also changed.

      Under developed capitalism, there are also vestiges of other modes of production, including slave production. A considerable amount of value is produced in the economy outside capitalist production, and even outside commodity production, for example the amount of value produced by workers in their home via assorted forms of domestic labour, which replaces the creation of that value via the market. The value created by mostly women workers in providing things such as child care, and social care in the home, for example, is considerable.

      To deny that this production of use values by the expenditure of labour, is an exception to Marx’s definition that value is labour expended for the production of use values, simply on the basis that it is performed outside market relations is pretty indefensible.

      That doesn’t invalidate Marx’s analysis of Capitalism, because there is no pure historical period when only capitalist production and exchange occurs, or when commodities only exchange on the basis of prices of production.

      • sartesian Says:

        Nobody, at least in this discussion, has ever claimed “value” as a category does not exist prior to capitalism. What has been asserted, and been asserted by Marx, is that VALUE as the regulator of social production, VALUE as the distributor of social labor time, VALUE as the purpose of production, VALUE as the LAW of production does not predate capitalism.

      • Boffy Says:

        Correction. I noticed that I’d garbled the penultimate paragraph above. It should read,

        “To claim that this production of use values by the expenditure of labour, is an exception to Marx’s definition that value is labour expended for the production of use values, simply on the basis that it is performed outside market relations is pretty indefensible.”

  15. Admin Says:

    Back 40 years ago, or maybe a bit more, one of the big ideas of capitalist ideology was ‘the leisure society’. Marx was pooh-poohed and people were told the big problem would be what on earth we would do with all the leisure time capitalist development was increasingly providing us with. The economists, sociologists, politicians were, of course, projecting the postwar boom into the indefinite future.

    This nincompoops hadn’t reckoned on capitalism having any serious problems any more.

    Indeed, even Keynes in the 1930s thought we be working no more than 20 hours a week by the end of the 1900s.

    Of course, what has actually happened is that work has both lengthened and intensified, and done so at the same time that significant levels of unemployment have become the acceptable norm. The capitalists are working on more absolute surplus-value as well as more relative surplus-value, in other words.

    I tried to look at this subject in ‘Whatever happened to the leisure society?’: http://rdln.wordpress.com/2012/04/03/whatever-happened-to-the-leisure-society/

    One of the ways in which they are lengthening working hours is by lengthening working life, through raising the retirement age. I tried to look at this – in particular why capitalism, not an aging population is the problem – here: http://rdln.wordpress.com/2012/06/29/pensions-and-the-retirement-age-the-problem-is-capitalism-not-an-aging-population/

    Of course, the biggest problem is that workers are still accepting this shite. Here in New Zealand, where the 40-hour week was achieved relatively early on, workers are now working amongst the most hours in the OECD; pay has stagnated; there’s nothing much better on the horizon – this is it! – and yet even the crudest indication of workers’ displeasure (days lost in industrial disputes) is at its lowest ever. Some quarters, the details of number of disputes, number of workers involved, working hours lost etc isn’t even recorded because they’re all so low!

    It seems to me that capitalism is really, really clapped out, but so is the working class. So capitalism survives not because of any dynamism in the system, but because at the very historical point it is all shagged out, so is the working class. It survives because of lack of resistance, let alone proactive movement by workers.

    Phil

  16. Phil F Says:

    oops, because I am an admin on another site, and was still logged into that, my comment appeared as if it was by the admin of this site (Mike). Hopefully it was clear it was me, as it had my name at the end.

    Philip Ferguson
    http://rdln.wordpress.com/

  17. Edgar Says:

    Boffy – I didn’t really make my point well did I. I am thinking at a macro level, if society moves production to software programming this has to be related to increased computer manufacture, internet capacity etc (A Google search is equivalent of boiling 18 kettles apparently). So if you look at software in isolation it can appear that less material is used but taken across industries the picture is maybe different? I have no idea if this is relevant but seems to me like it should be.

    “In other words, as Marx points out in relation to such workers the extension of general education means that the value of the labour-power of these complex workers falls”

    Assuming in the division of labour more people are trained in computer science? So, not so much the extension of general education but in fact more students studying computing with less studying another subject?

    “whilst the value of the product of this labour rises, causing the rate of surplus value for this type of labour to rise.”

    Why the rise? Is this because of barriers to entry and the like?

    • Daniel Rocha Says:

      If society moves to software programming, it will be like society moving to a new activity, like moving to plantation or mining. If you do programming for a large company, it is like working a plantation field. When the software, it is like the harvest. The soil is the hardware the physical structure of the corporation, like the building, installation, and the electricity is addition to improve the soil (electricity is the raw matter).

      The difference is that once the software is ready, it can be copied and sold indefinitely. Once the mass of sales surpasses the required social time to make the software, it will drain profits from other sectors of economy and it will cause the profits of this company to lower, since there is a tendency of the profits of all sectors to equalize, specially those closer to the one the company occupies. So, eventually, a new version has to be released, a new hardware has to be released, so that more abstract labor can be transformed into exchange values. Also, older software and hardware will be morally depreciated (it will be cheaper and obsolete).

      This is like capitalism works in the case of software companies, in my opinion.

    • Boffy Says:

      Edgar,

      The point is that the rate of profit for computer games production is higher, and that is what raises the general rate of profit. It is higher because in this industry, the major component of the value of the commodity is the new value created by labour, not the dead labour incorporated in the product, resulting from previous labour. Moreover, unlike older industries that pass through a process whereby this labour component shrinks, and the material component processed rises, there is no reason for the dead labour (materials etc) component to rise.

      On the contrary, the competition to produce ever more sophisticated and advanced games, creates a competition for games producing firms to try to employ the most skilled, the most creative, innovate etc. programmers, because it is those skills and so on, which will create the major component of value in the component, as well as giving the particular firm the competitive edge over its rivals. Its for the same reason that pharmaceutical companies try to recruit the best brains for the development of new drugs, and why the same thing applies to bio-technology etc.

      As I set out recently, a look at the decoding of the human genome, demonstrates that point.

      Maito and The rate of Turnover.

      When the first genome was decoded the cost was $100 million per genome, and the reason for the high cost, was the cost of constant capital, the cost of the computing power required to perform the analysis. Now, computing power has increased inexorably, and along with it, the cost per genome has tumbled to such an extent that DNA sequencing is now a commodity in itself, offered to consumers not at $100 million per genome, but at a mere $1,000 per genome. That reduction in cost as the links from the post show is exclusively down to the reduction in the constant capital value.

      “Why the rise? Is this because of barriers to entry and the like?”

      You seem to be suffering the same confusion that others have in relation to the basis of the Labour Theory of Value. As Marx makes clear the value of a commodity is NOT a summation of the values of the means of production and labour-power used in its production, with an amount added for surplus value determined by the rate of surplus value. That is the cost of production theory of value, sometimes advanced by Adam Smith. It is NOT the value of Labour-Power, or of the Variable Capital advanced to production that is determinant of the new value added by labour.

      As Marx states in Capital III, Chapter 18, the value produced (or in the case of commercial workers realised) by workers has nothing to do with the value of their labour-power. That is why, for example, a worker might work for 8 hours, producing grain, and thereby produces 8 hours of positive new value, and yet, why if due to a crop failure etc. the value of grain rises, so that they need the equivalent of 12 hours value of grain to reproduce their labour, the capital that employs them will not extract surplus value, but will suffer a loss equal to 4 hours of labour-time!

      A worker whose labour is highly complex, might receive the value of their labour-power, amounting to just 4 hours of abstract labour, but because the labour is highly complex, that worker might produce in an 8 hour day, a value equivalent to 100 hours of abstract labour. In part, that will be a consequence of the skill of the worker, which might have some indirect relation to the value of their labour-power, for example because of a requirement for additional education or training, but does not necessarily have any such relation.

      As Marx points out, ultimately the determination of complex labour, and what multiple of simple labour, any particular complex labour represents comes down to what the market determines, i.e. how much consumers are prepared to pay for the product of that labour compared to the product of simple labour. Education and training, to the extent that it improves skill and so on enhances the product of those workers who use that skill, and education to produce commodities with greater use value, and so those commodities are in more demand from consumers than commodities produced by less skilled workers etc. which have less use value. Consequently, consumers are likely to place a higher value on the product of the complex labour, and to pay more for it.

      But, ultimately, as Marx sets out demand is based on use value, and use value is subjective – what is a use value for one consumer is not for some other. Similarly, one commodity may have more use value for one consumer than it has for another irrespective of how much skill the labour that produced it, or how educated the worker might have been.

      The point here then is that as public education is provided on a more general basis, as a commodity bought collectively by workers, via compulsory deduction of its price from workers wages in taxes, at least in a welfare state, so capital provides itself with a means to create more complex labour, whose products are thereby more highly valued than those of less skilled, less educated workers. It obtains that for free, because in a welfare state, the workers themselves are paying for that “free education” from their taxes.

      But, as Marx sets out, by the state selling this education to the workers on a wide scale basis it achieves a number of other benefits. Firstly, it turns this education into just another Fordist, mass produced commodity, and thereby massively reduces its cost of production, which reduces the value of labour-power. Secondly, it obtains direct state control over the nature of that education so that it can be used to produce exactly the kind of workers capital requires, in the right proportions, and to do so in an environment, whereby that labour can also be socialised for the needs of capital, and indoctrinated with bourgeois ideas. Schools and universities achieve this function in modern welfare states far more effectively than did the Church and family in previous times. Finally, as Marx sets out in Chapter 18, it thereby also makes available these more advanced skills on a much greater basis, and thereby as a result of competition, reduces the wages of workers of this more skilled variety.

      • sartesian Says:

        “When the first genome was decoded the cost was $100 million per genome, and the reason for the high cost, was the cost of constant capital, the cost of the computing power required to perform the analysis. Now, computing power has increased inexorably, and along with it, the cost per genome has tumbled to such an extent that DNA sequencing is now a commodity in itself, offered to consumers not at $100 million per genome, but at a mere $1,000 per genome. That reduction in cost as the links from the post show is exclusively down to the reduction in the constant capital value.”

        The reduction in the cost of sequencing, the decline in the UNIT cost, is the result of the tremendous increase in the constant capital, and in particular, the fixed portion, that has been applied, in particular, to semiconductor fabrication.

        The article on genome sequencing clearly attributes the decline in unit costs to the results of “Moore’s law”– the doubling of processing power every 6 months or so.

        The fixed assets applied to semiconductor fabrication themselves have not “become cheaper.” They have become cheaper per unit of production, and the chip itself reflect this in the mips (millions of instructions per second) that are processed per cost.

        The point is, as Marx points out, while fixed assets participate in their entirety in the labor process, they “participate” only incrementally in the valuation process- with labor power transferring, fractionally, potions of the “sunk value” of the fixed assets to each unit. The decline in the unit cost is the product, in the main, of the increased accumulation of value in the fixed capital of production. This increased accumulation reduces the proportion of human labor power, increasing the rate of surplus value, and allowing, momentarily the distribution of the total surplus value to the industries or sectors employing the more “capital intensive” processes, thus offsetting the tendency of the rate of profit to decline.

        The advantage disappears as the new mode becomes the new standard for the socially necessary time of reproduction. And…….it also increases the turnover time for the total capital invested in production.

        Then the decline in the rate of profit reasserts itself, and with a vengeance, with the vengeance expressed as…..overproduction.

        The US Bureau of Economic Analysis estimated the ratio of dollar cost per kilobit for DRAM chips produced in 1975 at $1.8125. In 1995, the ratio was calculated at $.0030 or 1/600th of the 1975 ratio. For the total basket of products, the index of prices in 1996 were less than half the index of prices in 1992. The rate of growth of semiconductor prices for the period 1975-1985 is a negative 36.9 percent per annum. For the 1985-1996 period, the annual rate of decline was approximately 20 percent.

        Capital intensity in the production process, the increased value of the instruments and products used in fabrication, had recorded a compound annual growth rate of 13 percent between 1987 and 1995. Between 1995 and 1999 that growth accelerated to reach 19 percent.

        The value invested, the cost, for semiconductor fabrication plants doubled when 300mm wafer processing was introduced, to about $2.5 billion per plant in 1999– the advantage of course was the reduced costs of production .

        Capital reproduces process, as a fractal, in all sectors where it seizes control of the material elements of production. And rather than this being a “refutation” of the inherent tendency in capitalist production for the rate of profit to decline, it is perfect expression.

        The PORTION of constant capital making up the value of new production does not decline even as unit costs do. That’s the point. It increases.

  18. Philip Ferguson Says:

    On robots.

    I recall a fascinating piece in the Economist in 1994, I recall the year because I returned to NZ from having lived in Ireland for some years. It was about robot workers in Japan. Some factories were discarding them and going back to human workers.

    They couldn’t figure out why, but they noticed a drop in profitability!!!!

    There are serious limits on how far capitalism can use robots.

    Phil

    • Boffy Says:

      Phil,

      Marx sets out why in Capital III. A condition for introducing a new machine is that its production must require less labour-time than the amount of paid labour-time it replaces. In other words, a new machine must cost the capitalist less than the wages of the workers it replaces. But, its obvious why this condition becomes ever harder to achieve.

      As labour productivity rises due to the introduction of such new technology, two things happen. First, each worker’s productivity, i.e. the quantity of use values they produce per hour rises. Secondly, the value of labour-power falls, because rising productivity means that, even with a rising real standard of living, the worker’s consumption fund requires a steadily falling share of total social labour-time to produce.

      So, on the one hand any new machine must be far more efficient than any previous machines it has replaced, on the other, the price of those machines must be increasingly cheaper, and the fall in price itself must itself occur at an increasing rate, because as the value of labour-power falls, so the amount of paid labour required to produce a given quantity of use values falls. The rise in social productivity means that this is magnified by the fact that less workers are themselves employed relatively.

      Only if machines are increasingly more efficient, and increasingly cheap, and become so on an increasing basis, will they justify introduction on a capitalist basis.

      For example, if a machine is introduced that costs £200, and replaces two workers, whose paid labour is £200, and who also produce £200 of surplus value, producing 400 units of use value, the consequence may now be, for example, that 2 workers can produce 800 units of use value in the same time. Productivity is doubled, and the value of labour-power – if this is the same across the economy – is halved.

      In that case wages fall to half their previous level to £100. That in itself means that any new machine introduced, simply of the same level of efficiency has to be half the price of the first machine. But, secondly, the productivity of these workers has risen, which is the basis of their lower wages. The machine must now be able to produce not 400 units of output, but 800 units. In other words, its price must halve, whilst its efficiency must double, and to the extent a new machine meets these requirements, it makes the conditions for the introduction of any new machine to repalce it, that much more difficult.

      This is why, Marx outlines that worker owned co-operatives can always introduce new machines ahead of private capitalist enterprises, because for such a firm the machine only has to be cheaper than the total new value produced by the workers it replaces, i.e. both the paid and unpaid labour. As James Connolly set out, it was on this basis that the workers at the Ralahine co-op were able to be the first to introduce new equipment, whilst private capitalists were still agonising over the decision. As Marx says, worker co-ops always use constant capital more efficiently, and on this basis make higher rates of profit than private capitalist businesses.

  19. sartesian Says:

    “Even in economies based on peasant production, some producers will tend to produce food, whilst others will produce raw materials. For the individual producer of food, their day is divided into necessary labour and surplus labour. The surplus food they produce may be exchanged for raw materials, say cotton. But, from the perspective of society, the totality of the labour-time of those producing food, and those producing raw materials is equally divisible into a portion of necessary labour and surplus labour.

    The total surplus product of the food producers is what enables the raw materials producers to produce raw material rather than food.”

    Surplus product is not surplus value. Surplus labor is not not surplus value. Boffy collapses the distinction between surplus labor embodied as a product and surplus value to prove that one is automatically, and eternally, the other.

    For Marx the transformation of surplus product into surplus value requires…a revolutionizing of the mode of production. A new relationship of new classes.

  20. David Says:

    Ernest Mandel published almost exactly the same article thirty years ago. https://www.marxists.org/archive/mandel/1985/xx/future.html

  21. Edgar Says:

    Boffy:

    “A condition for introducing a new machine is that its production must require less labour-time than the amount of paid labour-time it replaces.”

    Then why would any society want to introduce a machine that actually requires more labour time than not having the machine? Surely this is more inefficient? If it requires 10 workers to make a machine but that machine only replaces the work of 2 workers why would a cooperative firm want to introduce the new machine?

    Sartesian:

    “Surplus labor is not not surplus value.”

    Without going into technicalities, have I misread Marx somewhere along the line? I thought that the capitalist class lived off the backs of the unpaid work of others? I.e. the capitalist class lived off the surplus product produced by the worker.
    So in a day the workers would produce more stuff than the capitalist had actually paid them for? Is that wrong in some way? So ultimately surplus value is created by the worker during those hours that are not necessary labour time, and during those hours the workers produce stuff for the capitalist for free.

    • sartesian Says:

      Edgar,

      The bourgeoisie live off the unpaid LABOR TIME of the workers, not the surplus product.

      First for there to be a “surplus product,” even one, or especially one, appropriated by another class, the DIRECT PRODUCERS must OWN that surplus product. That means they own the means of producing the product necessary for their own subsistence, their own reproduction.

      That ownership is the condition of the labor of the direct producers that is the platform for surplus product, and the bringing to market of the surplus product.

      Capitalism destroys that condition of labor; it expropriates the direct producers’ ownership of the means of their own subsistence, creating the class that has only their labor-time to exchange, in its entirety for the wage, or equivalent, that is equal to a portion of that total labor time necessary for their own subsistence.

      That is the distinction in the condition of labor under capitalism.

      What surplus product does a steel-worker, autoworker, electronics assembler, textile worker create? All the product of the labor is “surplus” to the workers– in that they have no ownership of it; in that they have no use for the product save as a value in their own process of exchange for the means of subsistence.

      Now certainly conversions can be made between the number of automobiles produced and the number need to equate to the necessary labor-time of the workers, but the critical factor is that such a conversion assumes the transformation of direct, individual labor, into collective, social labor; assumes that EXCHANGE is the purpose of production and the condition of labor.

      Hope that helps. I am a strong advocate of Marx’s Economic Manuscripts 1857-1864, published in (if my memory is correct) portions of volumes 28, 30, 31, 33 of the collected works, where Marx explores this, and in his usual fashion, from many different angles.

  22. Edgar Says:

    It does help. However I still think surplus value is impossible without surplus labour.

    • Boffy Says:

      Edgar,

      It depends upon your definition of surplus value, and the context in which you are using the term. Given that value is produced in all societies, and all societies have a division of their total social labour-time between necessary labour and surplus labour, it is quite clear that the surplus labour-time here is necessarily also “surplus value”.

      That is why Marx describes the rent in precapitalist societies – be it labour rent, rent in kind or money-rent – as the form of surplus value.

      But, the surplus value here is not a surplus value in the sense that it exists under capitalism. Surplus value under capitalism, is surplus exchange value, and only arises as a consequence of the relation between capital and wage labour, within which the wage labour produces a surplus exchange value, by producing a greater quantity of new value than is required to reproduce the value of their labour-power.

      But, this is only the same as the fact that capital itself is the accumulated form of this surplus value, yet in various places, Marx in describing pre-capitalist societies talks about merchant capital or money-capital, and their development in societies going back thousands of years. Yet, neither merchant capital nor money-capital exists on the basis of an accumulation of surplus value in this latter, capitalist sense. Neither merchant capital nor money capital makes profits or extracts surplus value via a relation with wage labour.

      Both merchant capital and money-capital in all of these pre-capitalist societies, as Marx describes, make profits (i.e. expand their capital) and accumulate additional capital by appropriating a portion of the particular society’s surplus product, and converting it into the physical form of exchange value – money.

      It is necessary to understand Marx’s dialectical framework, and his historical-materialist method to understand that categories such as capital and surplus value are not fixed in stone definitions, whereby overnight they arise from nowhere, to replace previous categories, but that these categories themselves are themselves continually in the process of becoming, that they have their own genesis within more primitive forms and develop from them.

    • Boffy Says:

      Edgar,

      Just to expand on the above. Marx writes,

      “The specific economic form, in which unpaid surplus-labour is pumped out of direct producers, determines the relationship of rulers and ruled, as it grows directly out of production itself and, in turn, reacts upon it as a determining element….

      So much is evident with respect to labour rent, the simplest and most primitive form of rent: Rent is here the primeval form of surplus-labour and coincides with it. But this identity of surplus-value with unpaid labour of others need not be analysed here because it still exists in its visible, palpable form, since the labour of the direct producer for himself is still separated in space and time from his labour for the landlord and the latter appears directly in the brutal form of enforced labour for a third person.”

      So, Marx is setting out here that in this form of pre-capitalist society, where the peasant/serf is required to perform unpaid labour on the land of the lord of the manner, this rent paid in the form of a quantity of labour-time, is at the same time, thereby a surplus value. because it is a quantity of labour, and labour expended necessarily to produce use values, is value,

      As Marx puts it,

      “All ground-rent is surplus-value, the product of surplus-labour. In its undeveloped form as rent in kind it is still directly the surplus-product itself.”

    • sartesian Says:

      Of course surplus value is impossible without surplus labor; but that labor exists as labor-time. All societies appropriate surplus labor; all economy is economy of time. But not all appropriation of surplus labor is the appropriation of that labor time as value. Not all economies of time are economies of value.

      Value, the organization material production by and for the purpose of exchange is not, pace Boffy, inherent in all societies; is not the immutable eternal truth of the condition of labor.

      Indeed, the “specific economic form in which unpaid surplus labour is pumped out of the direct producers determines the relationship of domination and servituade–” which is exactly what Marx shows in the paragraphs of vol 3 directly preceding this paragraph, which Boffy in his pick and choose Gumby Marxism ignores:

      Marx is showing how the different conditions of labor, the different relations dictate the specific form in which the surplus labor is appropriated. Surplus value is one of those forms, a historically specific form based on the dispossession of the direct producers and a breaking of the bonds of personal service.

      “It is clear, too that in all forms where the actual worker remains the ‘possessor’ of the means of production and the conditions of labour needed for the production of his own means of subsistence, the property relationship must appear at the same time as a direct relationship of domination and servitude, and the direct producer therefore as an unfree person– an unfreedom which may undergo a progressive attenuation from serfdom with statute labour down to a mere tribute obligation. The direct producer in this case is by our assumption in possession of his own means of production, the objective conditions of labour needed for the realization of his labour and the production of his means of subsistence; he pursues his agriculture independently, as well as the rural-domestic industry associated with it. This independence is not abolished when, as in India, for example, these small peasants form a more or less natural community, since what is at issue here is independence vis-a-vis the nominal landlord. Under these conditions, the surplus labour for the nominal landowner can only be extorted from them by extra-economic compulsion, whatever this form might assume. This differs from the slave or plantation economy inthat the slave works with conditions of production that do not belong to him, and does not work independently. Relations of personal dependence are therefore necessary….and being chained to the land as its accessory– bondage in the true sense. If there are no private landowners but it is the state as in Asia….rent and tax coincide, or rather there does not exist any tax distinct from this form of ground-rent….”

      Now the peasant communities in both India and China had commercial networks, powerful merchants, and merchant families, and surplus production. They were not producing under the dictates of the law of value. And as a matter of fact in China it was the tenacity of the peasantry’s “natural economy”– producing handicrafts providing for consumption by the direct producers, and what Phillip CC Huang calls “agricultural involution”– where subsistence could be maintained through an actual decline in productivity– by applying more labor, greater numbers of family members to the land, that proved so resistant to penetration by capital and capitalists, both indigenous and foreign.

      There is no doubt that the products of the Indian ryot, or the Chinese peasant villages were, when pumped into the world markets, acting as commodities, and were part of capital’s reproduction. In Volume 2 (p 125 in the Charles H. Kerr edition) Marx says:

      “No matter whether a commodity is the product of slavery, of peasants {Chinese, Indian ryots], of communes [Dutch East Indies], or of state enterprise [such as existed in the former epochs of Russian history on the basis of serfdom, or of half-savage hunting tribes, etc., commodities and money of such modes of production when coming in contact with commodities and money representing industrial capital, enter as much into its rotation as into that of surplus value embodied in the commodity-capital. The character of the process of production from which the emanate is immaterial. They perform the function of commodities on the market, and enter into the cycles of industrial capital as well as into those of the surplus-value carried by it. It is the universal character of the commodities, the world character of the market, which distinguishes the process of rotation of industrial capital.”

      It’s immaterial to the already existing industrial capital. However it is excruciatingly material to the reproduction of the social labor originally embodied in these commodities in their original mode of production.

  23. Boffy Says:

    Edgar,

    “Then why would any society want to introduce a machine that actually requires more labour time than not having the machine? Surely this is more inefficient? If it requires 10 workers to make a machine but that machine only replaces the work of 2 workers why would a cooperative firm want to introduce the new machine?”

    I didn’t say that co-operatives introduce machines that require more labour-time than they replace. I said that capitalists will only introduce machines that require less labour-time for their production than the PAID labour they replace. But, the paid labour constitutes only a portion of the labour-time provided by the worker. In other words, the paid labour-time provided by the workers might amount to 100 hours, but the total new value produced by the worker, i.e. the total amount of labour they perform may amount to 400 hours.

    The capitalist will only introduce the machine if it costs less than 100 hours, whereas a co-operative could introduce the machine so long as it costs less than 400 hours of labour-time. Because on this basis it represents a net saving in labour-time for the co-operative.

  24. Edgar Says:

    Very illuminating, thank you.

    From my fragmented readings of Marx coupled with my own perception i tend to lean toward Boffy in believing the law of value existed prior to capitalism. though I regard Marx’s work as more theoretical, in other words, I believe Marx is saying – if we assume exchange value then this is how the law must operate. If we assume capitalism in a pure form, this is how it would operate etc. I think Marx gets factual when trying to argue that capitalism in its pure form was encroaching more and more on human society.

    But this begs the question, how will all this look under socialism, and here is where the problems begin – if we assume a law of value existing under socialism?

  25. David Harvey Says:

    The way I look at this is that value is best defined as the social labour we do for others. It is, therefore, a universal category. But this universal category takes different historical-geographical forms. The distinctive capitalist form of value is the social labour we do for others that is mediated through market exchange and subsumed under the class domination of capital over labour. The objective of socialism is to displace this mode of valuation and create an alternative value structure. The mission (if that is the right word) of capital is to impose and extend its form of valuation to all forms of human action. But even within capitalism there are alternative forms of valuation, most obviously the social labour we do for others in the household or via kinship and friendship and professional (e.g. peer-to-peer) relations. The struggle on the part of capital to incorporate these alternative forms and subsume them within the capitalist logic has been on-going and not helped by some left concerns to, e.g. pay wages for housework. The substitutions of market based services for household activities have been extensive. Clearly the alternative value forms are in contradiction to each other but also interrelated. The task of analysis is to unravel these relations and to seek ways to define and gradually build the alternative structures of valuation into the creation of an anti-capitalist alternative economy.

    • sartesian Says:

      There are two questions here:
      1. Did Marx ever claim that the law of value, that commodities exchange according to the labor time necessary for their social reproduction, governs, dominates, regulates all economies throughout history?

      2. Regardless of what Marx says, is such a law an eternal feature of human social organization past, present, and future?

      The answer is clearly the same to both: No.

      Value is the result of a specific social organization of human labor as value producing value itself.

  26. Tornike Says:

    https://www.marxists.org/archive/harman/2003/01/debate-hardt.html i think this is relevant debate.

  27. ian Says:

    data source?

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