Thursday 11 May 2017

Theories of Surplus Value, Part I, Chapter 4 - Part 66

Ricardo's definition of productive labour is the same as that of Adam Smith, i.e. labour that exchanges with capital rather than revenue. But, Ricardo is writing later than Smith, and the distinction between master and workman had become much more marked. Ricardo, therefore, does not view the labourer in the same romantic light that Smith did. For Ricardo, it is a misfortune to be a labourer.

The labourer is productive of surplus value, but only for someone else. For Ricardo, therefore, it was beneficial for society to diminish the number of people placed in this unfortunate position, so long as the society's net product did not fall, as a consequence of it. If 300 labourers produced a gross product of 300 and a net product of 100, it was beneficial if 200 labourers could produce a gross product of only 200, provided the net product remained 100. The 100 is wealth for another, not the productive labourer, so if only 200 labourers produce this 100 of surplus value, this is better than if 300 are placed in this unfortunate position.

This concept is in stark contrast with the argument put forward today by the Tories that it is better to have more workers employed on poverty wages producing lower rates of profit for cheapskate employers than to have fewer workers employed on higher wages, producing higher rates of profit.

Ricardo's argument is not the same as that of Ganilh. Ganilh believed that less spent by productive capitalists as wages would mean they would use what was variable capital instead as revenue, for consumption. He assumed the gross product remained the same, but out of it would be financed a greater proportion of unproductive labour, of a type that Ganilh believed reflected a more cultured society. But, as described above, Ricardo was not concerned that the gross product may fall, so long as the net product and net revenue did not decline.

So, Ricardo says,

“To an individual with a capital of 20,000 l., whose profits were 2,000 1. per annum, it would be a matter quite indifferent whether his capital would employ a hundred or a thousand men, whether the commodity produced sold for 10,000 l., or for 20,000 l., provided, in all cases, his profits were not diminished below 2,000 l. Is not the real interest of the nation similar?” (p 226) 

The productive labourer, Marx says, is just an instrument of production for producing surplus value. Ricardo's point simply means that it is the same if a larger number of workers produce with a lower rate of surplus value, than if a smaller number produce with a higher rate of surplus value, in terms of the quantity of surplus value produced.

“n × 1/2 is just as much as 2n × 1/4, where n represents the number [of labourers] and 1/2 and 1/4 the surplus-labour, The “productive labourer “ as such is a mere instrument of production for the production of surplus, and if the result is the same a larger number of these “productive labourers” would be a nuisance.” (p 226) 

The capitalist is interested in the amount of profit produced not the number of workers employed.

“For example, a wine-merchant, who makes use of £20,000 and has £12,000 lying in his cellar each year, but sells £8,000 for £10,000, employs few people and makes 10 per cent profit, etc.” (p 226)

However, there is another aspect which Marx does not consider, as he is concentrating on this aspect of the argument put by Ricardo, Smith, Say and others. It is that the amount of profit is important when measured relative to the number of workers. In other words, suppose 100 workers are employed with a wage cost of £100, and they produce £10 of profit. If all this profit were accumulated, and setting aside the cost of constant capital, it would employ an additional 10 workers, an expansion of 10%. If, however, this £10 of profit was produced by just 50 workers, with a wage cost of £50, the £10 profit would still employ an additional 10 workers, representing an increase now of 20%, and vice versa where more workers were required to produce the £10 profit. Given that it is the rate at which this expansion occurs, which also determines the future production of surplus value, that is significant.

For example, if 100 workers produce £10 of profit, the 110 workers would produce £11 of profit, but where the the 50 workers produced £10 of profit, 60 workers would produce £12 of profit, and likewise if 200 workers produced £10 of profit, 205 workers would produce only £10.50 of profit.

Marx deals with this later, however, because Ricardo assumes that only this variable capital is what is accumulated.  It is, of course impossible simply for additional workers to be employed without additional constant capital.  This is fundamental to understanding Ricardo's problems with the reason that prices do not coincide with exchange values.  That is each capital obtains a share of the total surplus value in accordance with its relative share of the advanced capital in total, not just the variable capital.

A country is the richer the smaller its productive population is relatively to the total product; just as for the individual capitalist: the fewer labourers he needs to produce the same surplus, so much the better for him. The country is the richer the smaller the productive population in relation to the unproductive, the quantity of products remaining the same. For the relative smallness of the productive population would be only another way of expressing the relative degree of the productivity of labour.” (p 227)

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