Monday 15 May 2017

Theories of Surplus Value, Part I, Chapter 4 - Part 70

If, as we have done, we exclude capital accumulation, all of the new value created is consumed, either as wages, profit, interest or rent. So, when Marx talks about an exchange of revenue for revenue here, he is talking about an exchange of one part of this total social product destined for consumption with another part of this total social product destined for consumption – here linen for corn.

“There is absolutely no difficulty in this. If consumable products are produced in proportions corresponding to needs, which means also that the proportionate amounts of social labour required for their production are proportionately distributed , then revenue, for example in the form of linen, exists in the exact quantity in which it is required as an article of consumption, therefore in which it is replaced by the articles of consumption of other producers. What the producer of linen consumes in corn, etc., the farmers and others consume in linen.” (p 231)

This is very important in understanding one of Marx's theories of crisis. The point Marx is making here can best be considered by looking at the position starting from Robinson Crusoe. He only has to consider exchanging with himself. In other words, he has a given amount of labour-time to expend, and must allocate it so as to maximise his utility. He could, for example, spend all of his 10 hours in a day catching fish. But, if he can catch 10 fish during the day, whilst only having the stomach for 1, 9 fish, and therefore, 9 hours would have been wasted. It would not have been socially necessary labour-time, and the 9 fish would have no value.

Instead, therefore, he might spend 1 hour catching the fish he can eat, and another 5 hours creating clothes, and another 4 hours cultivating crops, or whatever other arrangement of his labour-time best meets his requirements, in line with The Law of Value. In short, within these constraints, imposed upon him, he will exchange a quantity of fish for other products. He will not produce 2 fish and less clothing, unless his demand for fish rises relative to his demand for clothing. Because he is the only person in this economy, he can make all of these decisions about production and consumption confidently.

If Robinson is joined on the island by Friday, they benefit from a division of labour, and yet the same Law of Value applies, and the same requirement to produce only what is required in given proportions applies. Suppose Crusoe specialises in catching fish. If Friday has a demand for 2 fish per day, then this requires Crusoe to spend 3 hours catching fish. If he spends 4 hours and catches 4 fish, there will be 1 fish surplus to requirements. One hour will have been wasted. Friday will not be prepared to hand over a portion of his production, in exchange for this fish that he does not want, even though, in value terms, it has required one hour of labour-time for its production, the same as one hour of Friday's production.

A requirement for a commodity to have value is that it is a use value, which means that there is a demand for it. But, Friday has no demand for this fish.

Likewise, there is no point in Friday specialising in growing crops, producing more potatoes than he and Crusoe wish to consume between them. Each must now allocate their joint labour-time so that the total production of different use values meets their requirements for those use values, no more no less.

All that has really occurred here is that, in place of the 10 hours of labour-time available to Crusoe, in which he allocated his time to produce those things which best met his needs, they now have 20 hours of labour-time, and together they divide this up to best meet their joint needs. It is simply a matter with this division of labour that one stops production of a given use value, because the other now produces it, and they in turn now obtain their requirements from the others production.

Provided Robinson and Friday continue in this way to produce in such proportions that the needs of both are met, they can maximise their consumption. But, suppose due to various conditions, the supply of fish rises, so that Robinson can catch 3 fish in an hour. If he continues to spend 3 hours catching fish, he will catch 9! These 9 fish only have the same value as previously did 3, i.e. 3 hours. But, if both still have a total demand for 3 fish, this is irrelevant. Their demand is based upon use value, not value. As Marx puts it in Theories of Surplus Value Part 3,

“The same value can be embodied in very different quantities [of commodities]. But the use-value—consumption—depends not on value, but on the quantity. It is quite unintelligible why I should buy six knives because I can get them for the same price that I previously paid for one.” (TOSV3 p 118-9)

The fact that the value of fish has fallen may or may not cause Crusoe and Friday to believe they could consume more fish, rather than use the free time for some other production. Its unlikely to cause them to want to consume 9. This is the basis of the price elasticity of demand. As Marx sets out, under pre-capitalist forms of commodity exchange, these proportions can be easily maintained, because production is mostly for direct consumption, and producers produce more or less in amounts they know will be sold, or exchanged in barter.

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