The Relativity of Surplus Value

S. Artesian

1. In Chapter XX of his Theories of Surplus Value,  Marx writes:

The question moreover must be reduced to the following: How can a change in the value of constant capital retrospectively affect the surplus-value?  For once surplus-value is assumed as given, the ratio of surplus to necessary labour is given, and therefore also the value of wages, i.e., their production cost.  In these circumstances, no change in the value of constant capital can have any effect on the value of wages, any more than on the ratio of surplus labour to necessary labour, although it must always affect the rate of profit, the cost of production of the surplus-value for the capitalist, and in certain circumstances, namely, when the product enters into the consumption of the worker, it affects the quantity of use-values into which wages are resolved, although it does not affect the exchange-value of wages.

Later, in the same chapter, Marx expands on the theme:

Consequently, a rise in the rate of profit resulting from a fall in the value of constant capital, has no direct connection whatever with any kind of variation in the real value of wages (that is, in the labour-time contained in the wages).

If we assume, as in the above case, that cotton falls in value by 50 per cent, then nothing could be more incorrect than to say either that the production costs of wages have fallen or that, if the worker is paid in cotton goods and receives the same value as he did previously, that is, if he receives a greater amount of cotton goods than he did previously (since although 10 hours, for example, still equals 10sh., I can buy more cotton goods for 10sh. than I could before, because the value of raw cotton has fallen), the rate of profit would remain the same.  The rate of surplus-value remains the same, but the  rate of profit rises.  The production costs of the product fall, because an element of the product—its raw material—now costs less labour-time than previously.  The production costs of wages remain the same as before, since the worker works the same amount of labour-time for himself and the same for the capitalist as he did before.  (The production costs of wages do not depend however on the labour-time which the means of production used by the worker cost, but on the time he works in order to reproduce his wages.  According to Mr. Mill, the production costs of a worker’s wages would be greater if, for example, he worked up copper instead of iron, or flax instead of cotton; and they would be greater if be sowed flax seed rather than cotton seed, or if he worked with an expensive machine rather than with no machine at all, but simply with tools.)  The production costs of profit would fall because the aggregate value, the total amount of the capital advanced in order to produce the surplus-value would fall.  The cost of surplus-value is never greater than the cost of the part of capital spent on wages.  On the other hand, the cost of profit is equal to the total cost of the capital advanced in order to create this surplus-value.  It is therefore determined not only by the value of the portion of capital which is spent on wages and which creates the surplus-value, but also by the value of the elements of capital necessary to bring into action the one part of capital which is exchanged against living labour.  Mr. Mill confuses the production costs of profit with the production costs of surplus-value, that is, he confuses profit and surplus-value.  This analysis shows the importance of the cheapness or dearness of raw materials for the industry which works them up (not to speak of the relative cheapening of machinery*), even assuming that the market price is equal to the value of the commodity, that is, that the market price of the commodity falls in exactly the same ratio as do the raw materials embodied in it.

Note that Marx is carefully distinguishing that the value of the constant capital does not change the value of the variable capital, of the workers’ wages.

Marx then continues:

Fifthly.  Now comes the real question: How far can a change in the value of constant capital affect the surplus-value?

If we say that the value of the average daily wage is equal to 10 hours or, what amounts to the same thing, that from the working-day of, let us say, 12 hours which the worker labours, 10 hours are required in order to produce and replace his wages, and that only the time he works over and above this is unpaid labour-time in which he produces values which the capitalist receives without having paid for them; this means nothing more than that 10 hours of labour are embodied in the total quantity of means of subsistence which the worker consumes.  These 10 hours of labour are expressed in a certain sum of money with which he buys the food.

The value of commodities however is determined by the labour-time embodied in them, irrespective of whether this labour-time is embodied in the raw material, the machinery used up, or the labour newly added by the worker to the raw material by means of the machinery.  Thus, if there were to be a constant (not temporary) change in the value of the raw material or of the machinery which enter into this commodity—a change brought about by a change in the productivity of labour which produces this raw material and this machinery, in short, the constant capital embodied in this commodity—and if, as a result, more or less labour-time were required in order to produce this part of the commodity, the commodity itself would consequently be dearer or cheaper (provided both the productivity of the labour which transforms the raw material into the commodity and the length of the working-day remained unchanged).  This would lead either to a rise or to a fall in the production costs, i.e., the value, of labour-power; in other words, if previously out of the 12 hours the worker worked 10 hours for himself, he must now work 11 hours, or, in the opposite case, only 9 hours for himself.  In the first case, his labour for the capitalist, i.e., the surplus-value, would have declined by half, from two hours to one; in the second case it would have risen by half, from two hours to three.  In this latter case, the rate of profit and the total profit of the capitalist would rise, the former because the value of constant capital would have fallen, and both because the rate of surplus-value (and its amount in absolute figures) would have increased.

This is the only way in which a change in the value of constant capital can affect the value of labour, the production cost of wages, or the division of the working-day between capitalist and worker, hence also the surplus-value.

“This is the only way”– that way being the reduction or increase in the value of the commodities equivalent to the value of the variable capital, the wage.  Marx here has set the terms so to speak of what the productivity of labor can do, and while it can do a lot for profit, for reducing the costs of production, it cannot do that much for augmenting the rate of surplus value unless it contributes to a devaluation of the wage.  And… that devaluation has to be something other than a proportional reduction equivalent to the reduction in the aggregate labor power employed.  For example, if there are 20 workers  working  8 hours daily producing X number of use-values, with a surplus value rate of 100 percent or 4 hours, reducing the number of workers to 10 workers working 8 hours requiring the same 4 hours to produce the value of daily wages, then producing the X number, or even X+Y number of use-values, does nothing to alter the rate of surplus value.   Only if the value of the commodities required for the reproduction of the labor power declines, and therefore the wage declines, does relative surplus-value increase.

The law of value tells us that no matter how much less time is dedicated to the production of any single commodity, the aggregate value cannot be changed at the end of the working day.   Increasing the production of rubber bands from 500 per hour to 500,000 per hour adds no greater increment of value to the total new value. Whatever the increase in value is marginal and marginalized, representing pre-existing value of the constant capital passed through to the product. The 500,000 have the same value added in the hour, or at the end of 8 hours, as the 500 had.  No matter how fast a production unit may operate, an hour is an hour is an hour.

The decline or devaluation of the wage is not one relative to the value of the constant capital deployed, but as the portion of the increment of the value added in the aggregate of production, the total working period.  Value, after all, is proportional to, and dependent upon, the labor employed in production, not that expelled from production.

2.  Marx’s analysis maintains a persistent ambiguity regarding the impact of the productivity of labor on the rate of surplus value.  Marx holds that the rate of surplus value, the amplification of relative surplus value, is almost intractable in its individual, isolated, fragmented expression.  This makes sense too. We are, after all, dealing with a social relation of production, and organization of social labor, and the need for the commodity to straddle, transfer, and pass from private property to the socially necessary. The productivity that augments the rate of surplus value is  the social productivity that reduces the socially necessary labor time required for the reproduction of the wage.  It is made, in the main,  of  the productivity in agriculture; and supplemented by the productivity in transportation.  The determinant for the increase in the rate of surplus value has to be the decline in the wage.

Marx easily and repeatedly “travels” or oscillates between these senses of productivity;  identifying the disproportionate growth of constant capital, and in particular the fixed assets, in the production process with the increase rates of surplus value without questioning his own identification.  Further on in Chapter XX, he writes:

Secondly, the production costs of machinery, raw materials, in short of constant capital, remain the same, but larger amounts of them may be required; their value therefore grows in proportion to the growing amount used as a result of the changed conditions of production in the processes in which those elements enter as means of production.  In this case, as in the previous example, the increase in the value of constant capital results of course in a fall in the rate of profit.  On the other hand however, these variations in the conditions of production themselves indicate that labour has become more productive and thus that the rate of surplus-value has risen.  For more raw material is now being consumed by the same amount of living labour only because it can now work up the same amount in less time, and more machinery is now being used only because the cost of machinery is smaller than the cost of the labour it replaces.  Thus it is a question here of making up to a certain extent the fall in the rate of profit by increasing the rate of surplus-value and therefore also the total amount of surplus-value.

Now this is certainly not of “this is the only way in which a change in the value of constant capital can affect the value of labour, the production cost of wages, or the division of the working-day between capitalist and worker, hence also the surplus-value. ”  Productivity as productivity, as the increased output in use-values per unit of labor-time, or as the total output in the aggregate time, cannot increase the rate of surplus value.  Only if productivity is valorized, that is to say, if the workers’ wages decline as a portion of the value extracted in the working period can surplus value be amplified.

Indeed,  when in Theories of Surplus Value (Chapter IV),  Marx writes: “With a given length of labour-time, this surplus-value can only be increased by an increase of productivity, or at a given level of productivity, by a lengthening of the labour-time” we can only make sense of that first condition if and when the increase in productivity is “across the board,” when the value of the wage has declined without any proportional decline in the aggregate social time of production.   It’s not that individual, unit, or “atomized” capitalist exists only as an abstraction.  Individual capitalists exist, and act as individuals, but only as they act as agents of capital.  Their individual actions are compelled by and from a common source, and a source of no great mystery, a law governing their own reproduction.

A theoretical particle can explain, and demonstrate a law of motion, but the law itself is an expression of dominant forces.  No atomized individual capitalist, no individual sector of capitalists alone can drive down the value of the commodities necessary for the reproduction of the labor power, even in agriculture, even in transportation.  But all capitalists, acting as capitalists, driven by the need to reduce the costs of production, by the compulsion of accumulation that gets manifested in and through competition, can and do exactly that.

The need, the determinants of  profitability, the requirements of the law, generate a specific, and universal (but not uniform) social development of  the forces of production.  No individual capitalist, and no individual worker, reproduces capital in isolation, as the capital relation to actually function, must become dominant, must determine the mode of production as an actual mode, not as an isolated moment.  The mode is what is reproduced in and by the activity of entire classes.  This of course is what the law of value is– the relations between classes.  The reproduction of capital means the expansion, extension of the classes and class relations.

3. Marx is similarly “strict” — “the only way” relative surplus value can be generated– in his examination of the relation of the productivity of labor to relative surplus value in Chapter 12 of Capital, Volume 1: 

Such a fall in the value of labour implies, however, that the same necessaries of life which were formerly produced in ten hours, can now be produced in nine hours. But this is impossible without an increase in the productiveness of labour…By increase in the productiveness of labor, we mean generally and alteration in the labour-process, of such kind as to shorten the labour-time socially necessary for the production of a commodity, and to endow a given quantity of labour with the power of producing a greater quantity of use values….. 

In order to effect a fall in the value of labour power, the increase in the productiveness of labour must seize upon those branches of industry whose products determine the value of labour power, and consequently either belong to the class of customary means of subsistence, or are capable of supplying the place of those means. But the value of a commodity is determined not only by the quantity of labour which the labourer directly bestows upon that commodity, but also by the labour contained in the means of production…Hence a fall in the value of labour power is also brought about by an increase in the productiveness of labour, and by a corresponding cheapening of the commodities in those industries which supply the instruments of labour and the raw material that form the material elements of the constant capital required for producing the necessaries of life… 

But an increase in the productiveness of labour in those branches of industry which supply neither the necessaries of life, nor the means of production for such necessaries, leaves the value of labour power undisturbed.

Again we have:

A) The “productivity of labor” is the increased output of use values in a unit of time

B) The productivity of labor has a connection to the increase in the rate of surplus value

C) The productivity of labor does not determine the increase in the rate of surplus value

D) The productivity of labor must be in areas that cause a decline in the value of the commodities equivalent to the value of the variable capital.

E) Improved productivity of labor does not, in all cases, lead to increases in relative surplus value.

Still, there is the Marx who persistently “slips” into an automatic identification of labor productivity with increased machinery in the production with increased relative surplus-value.  In Chapter 15, he is writing:

The immediate result of machinery is to augment surplus-value and the mass of products in which surplus-value is embodied. 

Well, no and yes.  The immediate result is to increase the productivity of labor, amplifying output within a standard unit of time.  This result does not result immediately in the augmentation of surplus-value. The result on surplus-value, on the contrary, is mediated and it is mediated by the exchange relations of capitalism as to whether or not the machinery reduces the value of the labor power in a disproportionately greater amount than subsequent reductions in the total working period.  “Time is everything,” wrote somebody 20 years before writing Capital

4. So how do we reconcile these conflicting expressions of Marx?  Through bringing into the discussion the vague, and highly elusive to measurement, notion of the “intensity” of labor?  Marx tries that, but the simple fact is that the exchange relations of capital are blind to intensity.  Capital measures and is only measured by time.  Intensity of labor is not quantifiable by time, and cannot be measured as distinct from productivity, that is to say, the reduced time necessary for the production of use-values, which changes nothing regarding the total quantity of value.  Marx provides no mechanism to measure intensity, to make different intensities exchangeable.  He cannot.  “Time is everything,” wrote somebody 20 years before writing Capital.

5.  The “classic” demonstration of relative surplus value requires a suspension of disbelief in that it  assumes a capitalist mode of production producing only one commodity–wheat.  Workers produce wheat, workers are paid in wheat, capitalists own and exchange the wheat.  Everything is expressed in wheat.  I’ve seen the past, and it looked like Kansas.

Anyway,  case A:  Labor time (LT)10 hour working day, 200 bushels of wheat are processed in 10 hours=20 bushels per hour; necessary labor (NL) =40 bushels to reproduce the labor-power of the laborers=the wage=2 hours necessary labor-time (NLT); surplus labor (SL)=160 bushels=8 hours surplus labor-time (SLT).  Ratio of SLT to NLT =rate of surplus value= 8:2

Productivity improvement gets us to case B:

LT=10 hours, 400 bushels of wheat are processed in 10 hours=40 bushels per hour: NLT=40 bushels = 1 hour NLT; SLT=(400-40) bushels/40 bushels per hour=9 hours SLT.  Rate of surplus value = 9:1.  All is jake in the land of wheat.

The value of the wage has declined by half while the labor-power is still being compensated at its value.  Its value relation to the means of its own subsistence has not been degraded; its relation to the capital value it itself creates has been so devalued.  It is proportionately less and capital is proportionately more of the value created.  Capital can and has expanded in mass and rate.

This relation of course provides for a certain “elasticity” as the wage nominally declines but, in real “wheat” terms, improves.  Such was the case during the “long deflation” in the US between 1873 and 1898.  In that period, after declining 1/3 in the years to 1881, wages slowly recovered, sank, recovered again, ending up in 1898 about 7 percent below the 1873 mark.  However, with the expansion of capital, the reduced production and circulation times, the wholesale price index declined some 65 percent, and the consumer price index sustained a 31 percent drop.  Real wages in 1898 were approximately 22 percent above the 1873 level.  That was then.

6.  But this is now and we’re not in Kansas anymore. We know that no individual capitalist, and no individual sector of capitalist production operates in isolation; that all sectors are driven to invest in machinery to reduce the costs of  production; we know that from the real history of our “classic” case.  We know that the capitalist economy cannot exist as a single product economy; that the necessity of value requires in turn a universe of different products.

We have to conclude that the productivity of labor required for improved rates of surplus value is a general, social productivity, begetting amplified output over the entire mode of production and circulation.

In our modern demonstration, we know that and we know that the increased surplus value appropriated is not appropriated always or solely  by reducing  the wage of the workers directly involved in the “more productive” endeavor, but is appropriated from all workers with a specific reallocation of surplus value to the more productive enterprise. As a consequence, the less productive “players” are essential.

We have railroad A.  Railroad A using locomotives Series X  hauls 5000 tons of freight 100 miles in 20 crew hours (2 person train crew, 10 hours on duty).  The haul rate is 4 cents per ton mile.   The crew members each make $50 per hour (including benefits).  The train operating costs, consisting of locomotive operating costs for fuel, maintenance and depreciation; track maintenance costs; signal maintenance;  communications infrastructure maintenance; train dispatcher wages;  mechanical inspections; clerical functions, etc. are $150 per hour.

Railroad A revenues are  .04 per ton-mile x 5000 tons x 100 miles = $20,000 or $2000 per hour; Railroad A train operating costs for trains using the X series locomotives are  ($150 x 10) + ($100 X 10) or $2500 or $250 per hour.  Railroad A net income is $1750 per hour.  The crew reproduces its entire wage about 35 minutes into the trip.

Now Railroad B has the same crew costs, but uses locomotives of the Y series.  These locomotives allow the crew to haul 10,000 tons 100 miles in ten hours.  The train operating costs are a bit higher than for trains using the X series, but not that much higher, and in fact in almost all cases, unit operating costs decline with advances in locomotive technology.  Anyway,  for Railroad B, the train operating costs are $200 per hour.

Railroad B revenues are .04 per ton-mile x 10,000 tons x 100 miles =$40,000 or $4000 per hour.  The operating costs are ($200 x 10) + (100 x 10)  $3000, or $300 per hour.  Income is $3700 per hour, and the train crew reproduces its entire wage about 16 minutes into the trip.

Wait– shouldn’t railroad B be reducing its tariff from the $0.04 mark since its operating costs have declined.  Indeed.  But not all at once, and not right away.  Railroad B will charge the standard tariff as long as it is the standard tariff– an example of socially necessary labor-time–, and that will be until overall costs for the entire industry are reduced by the general adoption of the Y series locomotives.

Regardless a) no additional new value has been added by the increased productivity  b) no reduction of the wage occurs.

The general social productivity that is pushed forward by Railroad B transfers existing surplus value to its operation as mediated by the exchange relations, the market prices, and the variance between socially necessary time and individual production, or turnover, time.

The advance of the social productivity permits sufficient  surplus time to be released and facilitates, on the “use side”a) further research and development of science and technology b) the experimentation and application of science and technology in and to the production time c) a reduction in turnover time for each individual cycle   Then, the formulation of Marx for the production of more relative surplus value gets expressed as and in the production of relatively more surplus-value. .

On the “value side,” capital has expanded.  The value of capital has expanded, and more labor-power has been aggrandized.  This is mediated by the exchange relations of capital, meaning, of course, cost reduction– price competition. The enterprises with sufficient resources to experiment, apply, deploy the technology, deploy it as capital, and thus increase their own size, transferring significant pools of surplus-value as their gain and as a loss to their competitors.   Deploying these applications, this technology, this capital, however means that competition will transfer the technology through exchange relations until what was a new advance is nothing but an old standard.  The transfer of technology brings a halt to the transfer of value.   The size of the capital runs up against the boundary of other capitals expanding, which boundary is in fact itself.  Relatively more surplus value becomes………overproduction.

May 27, 2018

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