An Introduction to Marxist Economic Theory

An portal to bolshy ECONOMIC THEORY Ernest Mandel 2 An foundation to red frugal ) was the most influential exp wiznt of red frugal hypothesis in the Western homo during the second half of the twentieth century, and is best k this instant for his arche sheathful dickens-volume proceeding Marxist Economic speculation (1962) and his brilliant clean Capitalism (1972).In the versi bingler, he demonst telld that it was possible, on the stem of the contemporary data, to structure the whole economical ashes of Karl Marx 100 course of instructions afterward the offset publication of Marxs Capital. In the latter cipher, Mandel provided an exposition of the ca aims of the 20-year gesture of fast growth of the world niftyisticicicic preservation after World struggle II, which besides demonstrated that it would soon be followed by an indeterminately considerable wave of much slower economic growth, and recur exact mixer and political crises in the demonstr able keenist countries.Late Capitalism also provided the scratch comprehensive abridgment of the new features of global capitalism that emerged in the post-war period and that argon shut a authority with us today trans field of study corporations as the dominant spring of capitalist business organisation, the enormous growth of the go empyrean, the crucial role of affirm usance in propping up an economic system marked by financial instability, long-term stagnation punctuated by speculative booms, mind slight con philiaerism and accelerating environmental destruction.This pamph permit, which was declensional published in French in 1964, provides a concise exposition of the elementary princples of Marxist economic guess. In the first section, Mandel elucidates the elementary categories of Marxs economic doctrine from the emergence of the kindly superabundance reaping to the exertion guess of respect. In the second section, he explains the basic rightfulnesss o f interrogation of capitalism and its in herent contradictions.In the net second, he applies these to some of the new features exhibited by the new stage of imperialist capitalism that emerged after the second world war, which at the measure he termed neo-capitalism. In his much mature lick Late Capitalism, Mandel aban dod this term in favour of the designation deep capitalism, explaining in the introduction to 4 An IntroductIon to red ink economic hypothesis that employment that the designation neo-capitalism could be falsely interpreted to ask either a radical continuity or discontinuity with traditional capitalism. potpourri of, Mandel stressed that the era of late capitalism is non a new epoch of capitalist learning plainly merely a further development of the imperialist, monopoly-capitalist epoch with the char impresseristics of the imperialist epoch enumerated by Lenin at the beginning of the 20th century remaining fully sound for late capitalism.? I. thE thEo ry of grade And sp be VAluE In the last compend, e re solely toldy feel forward in the history of civilisation has been brought ab fall out by an change magnitude in the clamsableness of aim.As long as a given root of men b bely give a roomd enough to keep itself alive, as long as there was no pleonastic over and above this indispensable harvest, it was insufferable for a fragment of fag to take place and for artisans, artists or scholars to establish their appearance. Under these conditions, the technical prerequisites for such(prenominal) specialisation could non possibly be attained. socIAl free product As long as the productiveness of aim remains at a level where angiotensin-converting enzyme macrocosm kitty muchover produce enough for his own subsistence, amicable contri more(prenominal)overion does not take place and any social assortediation in spite of appearance hostelry is impossible.Under these conditions, both(prenominal) men ar go forrs and they be each on the equivalent economic level. E actually increase in the productiveness of labor party beyond this low point makes a sm every redundant possible, and at a eon there is a exorbitance of products, once mans 2 hands sens produce much than is demand for his own subsistence, accordingly the conditions make water been set for a struggle over how this sur cocksure result be sh ared. From this point on, the total take of a social separate no long-life consists solely of tire necessary for the subsistence of the producers.Some of this hollow output may now be apply to release a section of parliamentary law from having to work for its own subsistence. Whenever this situation arises, a section of gild can become a notion discriminate, whose outstanding characteristic is its freedom from the need of First presented at an educational weekend set up by the Paris Federation of the get together Socialist Party in 1963 and afterwards p ublished in Les Cahiers du Centre dEtudes Socialistes, February 1964. 6 An IntroductIon to red EconoMIc thEory workings(a) for its own subsistence.Thereafter, the force back of the producers can be divided into two classs. A part of this ride continues to be utilise for the subsistence of the producers themselves and we hollo this part necessary campaign the early(a) part is occasiond to maintain the ruling classify and we give it the name surplus labour. permit us illustrate this by the very clear use of orchard slavery, as it existed in certain regions and periods of the Roman Empire, or as we go back it in the West Indies and the is domains of Portuguese Africa starting with the 17th century, on the broad plantations which were established there.In these tropical areas, flat the slaves food was principally not provided by the master the slave had to produce this himself by working a tiny plot of ground on Sundays and the products from this labour subjectiveiz ed his store of food. On six days of the week the slave worked on the plantation and received in return no(prenominal) of the products of his labour. This is the labour which creates a social surplus product, surrendered by the slave as soon as it is produced and give waying solely to the slavemaster.The work week, which in this reference is seven days, can be divided into two parts the work of one day, Sunday, constitutes necessary labour, that labour which provides the products for the subsistence of the slave and his family the work of the diverse six days is surplus labour and all of its products go to the master, are utilised for his sustenance and his enrichment as well. The great domains of the early center field Ages furnish us with an some some other(prenominal) illustration. The set ashore of these domains was divided into trio parts the communal attains consisting of forest, meadows, swamps, and so on the land worked by the helot for his own and his familys s ubsistence and finally, the land worked by the serf in effectuate to maintain the feudal lord. The work week during this period was usually six days, not seven. It was divided into two equal parts the serf worked one-third days on the land from which the yield belonged to him the other terzetto days he worked on the feudal lords land, without remuneration, provide free labour to the ruling class. The products of each of these two very antithetical types of labour can be defined in different equipment casualty.When the producer is per mould necessary labour, he is producing a necessary product. When he is performing surplus labour, he is producing a social surplus product. Thus, social surplus product is that part of social labor which is produced by the labouring class plainly appropriated by the ruling class, regard slight(prenominal) of the form the social surplus product may as adde, whether this be one of inherent products, or commodities to be sold, or gold. tautol ogical take account is simply the monetary form of the social surplus product. The Theory of Value and excessiveness Value When the ruling class appropriates the part of friendships employment previously defined as surplus product exclusively in the monetary form, thence we commit the term surplus prise instead of surplus product. As we shall attain later on, however, the above lone(prenominal) constitutes a preliminary chthonictake to the commentary of surplus take account. How does social surplus product come into earth? It arises as a consequence of a gratuitous appropriation, that is, an appropriation without compensation, by a ruling class of a part of the occupation of a producing class.When the slave worked six days a week on a plantation and the total product of his labour was taken by the master without any compensation to the slave, the institution of the social surplus product here is in the gratuitous labour, the unpaid labour, supplied by the slave to th e master. When the serf worked three days a week on the lords land, the origin of this income, of this social surplus product, is also to be found in the un correct labour, the gratuitous labour, furnished by the serf.We get out assemble further on that the origin of capitalist surplus grade, that is to presuppose, the revenue of the bourgeois class in capitalist smart set, is on the preciselyton the comparable it is uncompensated labour, gratuitous labour, which the proletarian, the wage worker, gives the capitalist without receiving any range in switch. coMModItIEs, usE VAluE And ExchAngE VAluE We earn now developed several basic definitions which pull up stakes be utilisationd end-to-end this exposition. A quash of others essential(prenominal) be added at this point. Every product of benignant labour normally possesses utility it must be able to satisfy a homosexual need.We may thus say that every product of human labour has a social function respect. The t erm use value result, however, be used in two different senses. We will speak of the use value of a good we will also talk about use values, as when we refer, for example, to a cabaret in which lone(prenominal) use values are produced, that is to say, where products are created for guide employment either by the producers themselves or by ruling classes which appropriate them. Together with this use value, a product of human labour can also suck another value, an trade value.It may be produced for modify on the food market place, for the purpose of being sold, quite an than for beam con warmnessption by the producers or by wealthy classes. A bargain of products which has been created for the purpose of being sold can no longer be considered as the output of simple use values it is now a outturn of commodities. The good, therefore, is a product created to be replaced on the market, as opposed to one which has been do for cover consumption. Every 8 An IntroductIon to Marxist EconoMIc thEory good must score twain a use value and an sub value.It must have a use value or else nobody would debase it, since a buyer would be concerned with its ultimate consumption, with satisfying some want of his by this purchase. A trade good without a use value to anyone would consequently be unsaleable, would constitute useless take, would have no exchange value on the dot because it had no use value. On the other hand, every product which has use value does not necessarily have exchange value. It has an exchange value only to the extent that the society itself, in which the goodness is produced, is founded on exchange, is a society where exchange is car park practice.Are there societies where products do not have exchange value? The foundation for exchange value, and a fortiori for manage and the market place, is constituted by a given degree of development of the division of labour. In order for products not to be this instant consumed by their produ cers, it is requirement that everybody should not be engaged in turning out the resembling thing. If a picky community has no division of labour, or only its most rudimentary form, then it is clear that no reason for exchange exists. Normally, a pale yellow farmer has nothing to exchange with another wheat farmer.But as soon as a division of labour exists, as soon as there is contact amid social sort outs producing different use values, then exchange can come about, at first on an occasional basis, subsequently on a more persistent one. In this way, little by little, products which are made to be exchanged, commodities, make their appearance alongside those products which are simply made for the direct consumption of their producers. In capitalist society, commodity merchandise, the production of exchange values, has reached its greatest development.It is the first society in human history where the major part of production consists of commodities. It is not original, howev er, that all production under capitalism is commodity production. 2 classes of products whitewash remain simple use value. The first group consists of all things produced by the peasan separate out for its own consumption, everything flat consumed on the farms where it is produced. such production for self-consumption by the farmer exists even in march on capitalist countries like the United States, although it constitutes only a low-down part of total pastoral production.In frequent, the more backward the market-gardening of a country, the greater is the fraction of agricultural production going for self-consumption. This factor makes it extremely baffling to calculate the exact national income of such countries. The second group of products in capitalist society which are not commodities but remain simple use value consists of all things produced in the home. Despite the fact that considerable human labour goes into this type of theater The Theory of Value and Surplus V alue 9 production, it tranquillise remains a production of use values and not of commodities.Every m a soup is made or a button stitch on a garment, it constitutes production, but it is not production for the market. The appearance of commodity production and its subsequent regularisation and world(a)isation have radically change the way men labour and how they organise society. thE red thEory of delirium You have no doubt already heard about the Marxist theory of alienation. The emergence, regularisation and generalisation of commodity production are directly related to the expanding character of this phenomenon of alienation.We cannot dwell on this perspective of the straits here but it is extremely important to call attention to it, since the history of trade covers far more than the capitalist era. It also includes diminished commodity production, which we will discuss later. There is also a postcapitalist society base on commodities, a transitional society among cap italism and socialism, such as present-day Soviet society, for the latter unflurried rests in very long measure on the foundations of exchange value production.Once we have grasped certain underlying characteristics of a society based on commodities, we can quickly see why it is impossible to surmount certain phenomena of alienation in the transitional period amidst capitalism and socialism, as in Soviet society, for example. plainly this phenomenon of alienation does not exist at to the lowest degree in the uniform form in a society where commodity production is uncharted and where the life of the single and his social activeness are united in the most elementary way. Man works, but generally not by himself most often he is part of a collective group having a more or less organic structure.His labour is a direct transformation of material things. All of this means that labour legal action, the act of production, the act of consumption, and the dealing between the i ndividual and his society are command by a condition of counterweight which has relative stability and permanence. We should not, of course, go ballistic the show up of rough society, which was subject to pressures and periodic catastrophes because of its extreme poverty. Its equilibrium was incessantly endangered by scarcity, hunger, natural disasters, etc.But in the periods between catastrophes, especially after agriculture had attained a certain degree of development and when climatical conditions were favourable, this kind of society endowed all human activities with a tremendous degree of unity, harmony and stability. Such disastrous consequences of the division of labour as the elimination of all aesthetic activity, artistic inspiration and creative activity from the act 10 An IntroductIon to redness EconoMIc thEory of production and the substitution of purely mechanical and repetitive tasks were nonexistent in primitive society.On the contrary, most of the arts, musi c, sculpture, painting, the dance, were originally linked to production, to labour. The desire to give an attractive and likeable form to products which were to be used either by the individual, his family, or large kinship groups, found a normal, harmonious and organic expression inside the framework of the days work. Labour was not looked upon as an promise imposed from without, first of all because it was far less intense, far less exhausting than under capitalism today. It conformed more jamly to the rhythms of the human being as well as to the rhythms of nature.The number of working days per year rarely exceeded 150 to 200, whereas under capitalism the figure is dangerously fill to 300 and sometimes even greater. Furthermore, there was a unity between the producer, his product and its consumption, since he generally produced for his own use or for those close to him, so that his work possessed a directly functional perspective. modernistic alienation originates basical ly in the cleavage between the producer and his product, resulting both from the division of labour and commodity production.In other words, it is the consequence of working for the market, for unknown consumers, instead of for consumption by the producer himself. The other side of the picture is that a society which only produces use values, that is, goods which will be consumed directly by their producers, has ever in the past been an impoverished society. Not only was it subject to the hazards of nature but it also had to set very set apart limits to mans wants, since these had to conform exactly to its degree of poverty and restrict variety of products.Not all human wants are innate to man. There is a constant interaction between production and wants, between the development of the productive forces and the rise of new wants. Only in a society where labour productivity will be developed to its highest point, where an infinite variety of products will be available, will it be possible for man to experience a continuous expansion of his wants, a development of his own unlimited potential, an integrated development of his humanity. thE lAw of VAluEOne of the consequences of the appearance and progressive generalisation of commodity production is that labour itself begins to take on regular and measurable characteristics in other words, it ceases to be an activity tied to the rhythms of nature and according with mans own physiological rhythms. Up to the 19th century and possibly even into the 20th, the peasants in motley regions of Western Europe did not work in a regulated way, that is to The Theory of Value and Surplus Value 11 say, they did not work with the said(prenominal) intensity every month of the year.There were periods in the work year when they worked very hard and other periods, specially during the winter, when all activity virtually came to a halt. It was in the most backward agricultural areas of most of the capitalist countries that cap italist society, in the course of its development, found a most attractive source of reserve man precedent, for here was a labour force available for four to six months a year at much lower reward, in view of the fact that a part of its subsistence was provided by its agricultural activity.When we look at the more highly developed and prosperous farms, those bordering the big cities, for example, and which are basically on the road to graceful industrialised, we see that work is much more regular and the center of expended labour much greater, being distributed in a regular way throughout the year, with dead seasons progressively eliminated. This holds true not only for our times but even as early as the Middle Ages, at least from the 12th century on.The closer we get to the cities, that is to say, to the marketplace, the more the peasants labour becomes labour for the market, that is to say, commodity production, and the more regulated and more or less stable his labour becomes, just as if he were working inside an industrial try. Expressed another way, the more generalised commodity production becomes, the greater the regulation of labour and the more society becomes organised on the basis of an be system founded on labour.When we examine the already fairly advanced division of labour at heart a pass on at the beginning of commercial and craft development in the Middle Ages, or the collectives in such civilisations as the Byzantine, Arab, Hindu, Chinese and Japanese, certain honey oil factors emerge. We are struck by the fact that a very advanced integration of agriculture and various craft techniques exists and that regularity of labour is true for the countryside as well as the city, so that an accounting system in terms of labour, in labour-hours, has become the force governing all the activity and even the very structure of the collectives.In the chapter on the law of value in my Marxist Economic Theory, I give a whole serial publication of exam ples of this accounting system in work-hours. There are Indian villages where a certain caste holds a monopoly of the blacksmith craft but continues to work the land at the uniform time in order to feed itself. The sway which has been established is this when a blacksmith is engaged to make a tool or weapon for a farm, the client supplies the raw materials and also works the blacksmiths land during the whole period that the latter is engaged in devising the implement.Here is a very transparent way of stating that exchange is governed by an compare in work-hours. In the Japanese villages of the Middle Ages, an accounting system in work- 12 An IntroductIon to MArxIst EconoMIc thEory hours, in the echt sense of the term, existed inside the village community. The village accountant kept a kind of great book in which he entered the number of hours of work done by villagers on each others fields, since agriculture was still in the first place based on cooperative labour, with harves ting, farm construction and stock behavior being done in common.The number of work-hours furnished by the members of one household to the members of another was very carefully tallied. At the end of the year, the exchanges had to balance, that is, the members of household B were required to have given household A exactly the very(prenominal) number of work-hours which members of household A had given household B during the year. The Japanese even refined things to the point almost 1000 age ago where they took into account that children provided a smaller step of labour than adults, so that an hour of child labour was worth only a half-hour of adult labour. A whole system of accounting was set up along these lines. There is another example which gives us a direct insight into this accounting system based on labour-time the conversion of feudal rent from one form to another. In feudal society, the agricultural surplus product could take three different forms rent in the form of l abour (the corvee), rent in kind, and money rent.When a change is made from the corvee to rent in kind, obviously a process of conversion takes place. Instead of giving the lord three days of labour per week, the peasant now gives him a certain tote up of wheat, livestock, etc. , on a seasonal basis. A second conversion takes place in the changeover from rent in kind to money rent. These two conversions must be based on a fairly rigorous accounting in work-hours if one of the two parties does not care to suffer a loss in the process.For example, if at the time the first conversion was effected, the peasant gave the lord a touchstone of wheat which required only 75 workdays of labour, whereas previously he had given the lord 150 workdays of labour in the same year, then this conversion of labour-rent into rent in kind would result in the explosive impoverishment of the lord and a rapid enrichment of the serfs. The landlords you can depend on them were careful to see to it when the conversion was made that the different forms of rent were virtually equivalent. Of course the conversion could eventually turn out to be dreadful one for one of the participating classes, for example, once against the landlords, if a sharp rise in agricultural exists occurred after rent was converted from rent in kind to money rent, but such a result would be historical in character and not directly attributable to the conversion per se. The origin of this rescue based on an accounting in labour-time is also representably apparent in the division of labour indoors the village as it existed The Theory of Value and Surplus Value 13 between agriculture and the crafts. For a long time the division remained quite rudimentary.A section of the peasantry continue to produce part of its own stuffing for a protracted historical period, which in Western Europe extended almost a universal gravitational constant age that is, from the beginning of the medieval cities right up to the 19th century. The technique of making fabricing was sure no mystery to the cultivator of the soil. As soon as a regular system of exchange between the farmer and textile craftsman was established, standard equivalents were likewise established for example, an ell of cloth a measure varying from 27 to 48 inches would be exchanged for 10 jams of butter, not for 100 pounds. on the face of it the peasants knew, on the basis of their own experience, the approximate labour-time needed to produce a given quantity of cloth. Had there not been a more or less exact equivalence between the time needed to produce the cloth and the time needed to produce the butter for which it was exchanged, there would have been an immediate shift in the division of labour.If cloth production were more lucrative than butter production, the butter producers would switch to producing cloth. Since society here was only at the threshold of an extreme division of labour, that is to say, it was still at a point where the frame inaries between different techniques were not all the way marked, the passage from one economic activity to another was still possible, particularly when striking material gains were possible by means of such a change.In the cities of the Middle Ages as well, a very skilfully calculated equilibrium existed between the various crafts and was written into the charters which specified almost to the minute the amount of labour-time necessary for the production of different articles. It is inconceivable that under such conditions a shoemaker or blacksmith might get the same amount of money for a product which took half the labour-time which a weaver or other artisan might require in order to get the same amount of money for his products.Here again we clearly see the mechanism of an accounting system in workhours, a society functioning on the basis of an economy of labour-time, which is generally characteristic of the whole phase which we call low commodity produc tion. This is the phase intervening between a purely natural economy, in which only use values are produced, and capitalist society, in which commodity production expands without limit. dEtErMInAtIon of thE ExchAngE VAluE of coMModItIEsOnce we have decided that the production and exchange of commodities becomes regular and generalised in a society based on an economy of labourtime, on an accounting system in work-hours, we can readily understand why 14 An IntroductIon to MArxIst EconoMIc thEory the exchange of commodities, in its origins and inherent nature, rests on this ingrained basis of an accounting system in work-hours and consequently follows this general see the exchange value of a commodity is compulsive by the quantity of labour necessary to produce it.The quantity of labour is measured by the length of time it takes to produce the commodity. This general definition of the labour theory of value is the basis of both classical bourgeois political economy from the 17th c entury to the beginning of the 19th century, from William Petty to Ricardo and Marxist economic theory, which took over the theory of labour value and perfected it. However, the general definition must be qualified in several respects.In the first place, not all men are endowed with the same capacity for work, with the same strength or the same degree of skill at their trade. If the exchange value of commodities depended only on the quantity of labour expended individually, that is, on the quantity of labour expended by each individual in the production of a commodity, we would arrive at this absurdity the lazier or more incompetent the producer, and the larger the number of hours he would spend in making a copulate of shoes, the greater would be the value of the shoesThis is obviously impossible since exchange value is not a moral reward for mere willingness to work but an objective bond set up between self-sufficing producers in order to equalise the various crafts in a society based both on a division of labour and an economy of labour-time. In such a society wasted labour receives no compensation on the contrary, it is automatically penalised. Whoever puts more time into producing a check of shoes than the sightly necessary hours an fairish determined by the average productivity of labour and recorded in the Guild Charters, for example such a individual has wasted human labour, worked to no avail for a certain number of hours. He will receive nothing in exchange for these wasted hours. Expressed another way, the exchange value of a commodity is not determined by the quantity of labour expended by each individual producer engaged in the production of this commodity but by the quantity of labour socially necessary to produce it. The expression socially necessary means the quantity of labour necessary under the average conditions of labour productivity existing in a given country at a given time.The above might has very important applications when we examine the functioning of capitalist society more closely. Another clarifying statement must be added here. Just what do we mean by a quantity of labour? Workers differ in their qualifications. Is there complete e persona between one persons hour of work and everybody elses, regardless of such differences in skills? Once again the question is not a moral one but has The Theory of Value and Surplus Value 15 o do with the essential logic of a society based on an e flavor between skills, an e flavour in the marketplace, and where any disruption of this equality would presently destroy the social equilibrium. What would happen, for example, if an hours work by an unskilled gob was worth as much as an hours work by a skilled craftsman, who had spent four to six years as an apprentice in acquiring his skill? Obviously, no one would want to become skilled. The hours of work spent in learning a craft would be wasted hours since the craftsman would not be compensated for them after beco ming qualified.In an economy founded on an accounting system of work-hours, the untested will desire to become skilled only if the time incapacitated during their training period is subsequently paid for. Our definition of the exchange value of a commodity must therefore be completed as follows An hour of labour by a skilled worker must be considered as complex labour, as compound labour, as a multiple of an hour of unskilled labour the coefficient of multiplication obviously cannot be an arbitrary one but must be based on the follow of acquiring a given skill. It should be pointed out, in passing, that there was always a certain fuzziness in the prevailing explanation of compound labour in the Soviet Union under Stalin which has persisted to this very day. It is claimed that compensation for work should be based on the quantity and quality of the work, but the concept of quality is no longer understood in the Marxist sense of the term, that is to say, as a quality measurable qua ntitatively by means of a specific coefficient of multiplication. On the contrary, the idea of quality is used in the ourgeois ideological sense, according to which the quality of labour is supposed(p) to be determined by its social usefulness, and this is used to shrive the incomes of marshals, ballerinas and industrial managers, which are ten times higher than the incomes of unskilled labourers. Such a theory belongs in the domain of apologetics despite its widespread use to justify the enormous differences in income which existed under Stalin and continue to exist in the Soviet Union today, although to a lesser extent.The exchange value of a commodity, then, is determined by the quantity of labour socially necessary for its production, with skilled labour being taken as a multiple of simple labour and the coefficient of multiplication being a reasonably measurable quantity. This is the kernel of the Marxist theory of value and the basis for all Marxist economic theory in genera l.Similarly, the theory of social surplus product and surplus labour, which we discussed at the beginning of this work, constitutes the basis for all Marxist sociology and is the bridge connecting Marxs sociological and historical analysis, his theory of classes and the development of society 16 An IntroductIon to MArxIst EconoMIc thEory generally, to Marxist economic theory, and more precisely, to the Marxist analysis of all commodity-producing societies of a precapitalist, capitalist and postcapitalist character. hAt Is socIAlly nEcEssAry force back? A short while back I stated that the particular definition of the quantity of socially necessary labour for producing a commodity had a very special and extremely important application in the analysis of capitalist society. I think it will be more useful to deal with this point now although logically it might belong to a later section of this presentation. The totality of all commodities produced in a country at a given time has been produced to satisfy the wants of the sum total of the members of this society.Any article which did not satisfy somebodys needs, which had no use value for anyone, would be a priori unsaleable, would have no exchange value, would not constitute a commodity but simply a product of ca damage or the idle jest of some producer. From another angle, the sum total of buying source which exists in this given society at a given second and which is not to be hoarded but spent in the market, must be used to buy the sum total of commodities produced, if there is to be economic equilibrium.This equilibrium therefore implies that the sum total of social production, of the available productive forces in this society, of its available work-hours, has been distributed among the various spheres of sedulousness in the same proportions as consumers distribute their buying power in satisfying their various wants. When the distribution of productive forces no longer corresponds to this division in wa nts, the economic equilibrium is destroyed and both overproduction and underproduction appear side by side.Let us give a rather commonplace example toward the end of the 19th and beginning of the 20th century, a city like Paris had a coach-building industry, which together with associated harness trades industrious thousands or even tens of thousands of workers. In the same period the automobile industry was emerging and although still quite small it already numbered some tally of manufacturers employing several thousands of workers. Now what is the process taking place during this period? On the one hand, the number of private instructors begins to decline and on the other, the number of automobiles begins to increase.The production of zoris and carriage equipment therefore shows a trend toward exceeding social needs, as these are reflected in the manner in which the inhabitants of Paris are dividing their buying power on the other side of the picture, the production of automob iles is below social needs, for from the time the industry was launched until the advent The Theory of Value and Surplus Value 17 of mint candy production, a climate of scarcity existed in this industry. The supply of automobiles on the market was never equal to the demand. How do we express these phenomena in terms of the labour theory of value?We can say that in the carriage industry more labour is expended than is socially necessary, that a part of the labour expended by the sum total of companies in the carriage industry is socially wasted labour, which no longer finds an equivalent on the marketplace and is consequently producing unsaleable goods. In capitalist society, when goods are unsaleable it means that an enthronement of human labour has been made in a specific industrial starting time which turns out to be socially unnecessary labour, that is to say, it is labour which finds no equivalent in buying power in the marketplace.Labour which is not socially necessary is wa sted labour it is labour which produces no value. We can see from this that the concept of socially necessary labour embraces a whole serial publication of phenomena. For the products of the carriage industry, supply exceeds demand, prices fall and goods remain unsaleable. The reverse is true in the automobile industry where demand exceeds supply, causing prices to rise and under-production to exist. To be snug with these commonplaces about supply and demand, however, means stopping at the psychological and individual aspects of the chore.On the other hand, if we probe into the deeper social and collective side of the problem, we begin to understand what lies below the surface in a society organised on the basis of an economy of labour-time. The meaning of supply exceeding demand is that capitalist production, which is anarchistic, unplanned and unorganised, has anarchistically invested or expended more labour hours in an industrial branch than are socially necessary, so that a wh ole segment of labour-hours turns out to be pure loss, so much wasted human labour which remains unrequited by society.Conversely, an industrial sector where demand continues to be greater than supply can be considered as an underdeveloped sector in terms of social needs it is therefore a sector expending fewer hours of labour than are socially necessary and it receives a bonus from society in order to stimulate an increase in production and win an equilibrium with social needs. This is one aspect of the problem of socially necessary labour in the capitalist system. The other aspect of the problem is more directly related to changes in the productivity of labour.It is the same thing but makes an raiseion of social needs, of the use value aspect of production. In capitalist society the productivity of labour is constantly changing. generally speaking, there are always three types of endeavors (or industrial sectors) those which are technologically right at the social average thos e which 18 An IntroductIon to MArxIst EconoMIc thEory are backward, obsolete, on the downgrade, below the social average and those which are technologically advanced and above average in productivity.What do we mean when we say a sector or an enterprise is technologically backward and has a productivity of labour which is below the average? Such a branch or enterprise is analogous to our previously mentioned sluggish shoemaker, that is, it is one which takes five hours to produce a specific quantity of goods in a period when the average social productivity demands that it be done in three hours. The two extra hours of expended labour are a total loss, a waste of social labour.A portion of the total amount of labour available to society having thus been wasted by an enterprise, it will receive nothing from society to compensate it. Concretely it means that the fail prices in this industry or enterprise, which is operating below average productivity, near its production cost or ev en fall below them, that is to say, the enterprise is operating at a very low rate of make headway or even at a loss. On the other hand, an enterprise or industrial sector with an above average level of productivity (like the shoemaker who can produce two pairs of shoes n three hours when the social average is one pair per three hours) economises in its expenditure of social labour and therefore makes a surplus profit, that is to say, the difference between its costs and exchange prices will be greater than the average profit. The rocking horse of this surplus profit is, of course, the driving force behind the entire capitalist economy. Every capitalist enterprise is forced by competition to try to get greater profits, for this is the only way it can constantly amend its technology and labour productivity.Consequently all firms are forced to take this same direction, and this of course implies that what at one time was an aboveaverage productivity winds up as the new average pro ductivity, whereupon the surplus profit disappears. All the strategy of capitalist industry stems from this desire on the part of every enterprise to achieve a rate of productivity superior to the national average and thereby make a surplus profit, and this in turn provokes a driving which causes the surplus profit to disappear, by virtue of the trend for the average rate of labour productivity to rise continuously.This is the mechanism in the tendency for profit rates to become equalised. thE orIgIn And nAturE of surplus VAluE And now, what is surplus value? When we consider it from the viewpoint of the Marxist theory of value, the answer is readily found. Surplus value is simply the monetary form of the social surplus product, that is to say, it is the monetary form of that part of the workers production which he surrenders to the owner of the means of production without receiving anything in return. The Theory of Value and Surplus Value 19 How is this surrender accomplished in p ractice within capitalist society?It takes place through the process of exchange, like all important operations in capitalist society, which are always relations of exchange. The capitalist buys the labour-power of the worker, and in exchange for this wage, he appropriates the entire production of that worker, all the newly produced value which has been incorporated into the value of this production. We can therefore say from here on that surplus value is the difference between the value produced by the worker and the value of his own labourpower. What is the value of labour-power?In capitalist society, labour-power is a commodity, and like the value of any other commodity, its value is the quantity of labour socially necessary to produce and reproduce it, that is to say, the living costs of the worker in the wide meaning of the term. The concept of a stripped-down living wage or of an average wage is not a physiologically rigid one but incorporates wants which change with advances in the productivity of labour. These wants tend to increase parallel with the progress in technique and they are consequently not comparable with any degree of accuracy for different periods.The minimum living wage of 1830 cannot be compared quantitatively with that of 1960, as the theoreticians of the French Communist party have learned to their sorrow. There is no valid way of comparing the price of a motorcycle in 1960 with the price of a certain number of kilograms of meat in 1830 in order to come up with a conclusion that the first is worth less than the second. Having made this reservation, we can now repeat that the living cost of labour-power constitutes its value and that surplus value is the difference between this living cost and the value created by this labour-power.The value produced by labour-power can be measured in a simple way by the length of time it is used. If a worker works 10 hours, he produces a value of 10 hours of work. If the workers living costs, that is to say, the equivalent of his wage, is also 10 hours of work, then no surplus value would result. This is only a special elusion of the more general rule when the sum total of labour product is equal to the product required to feed and maintain the producer, there is no social surplus product.But in the capitalist system, the degree of labour productivity is such that the living costs of the worker are always less than the quantity of newly created value. This means that a worker who labours for 10 hours does not need the equivalent of 10 hours of labour in order to have a bun in the oven himself in accordance with the average needs of the times. His equivalent wage is always only a fraction of his days labour everything beyond this fraction is surplus value, free labour supplied by the worker and appropriated by the capitalist without an equivalent offset.If this difference did not exist, of course, then no employer would claim 20 An IntroductIon to MArxIst EconoMIc thEory any worker, since such a purchase of labour-power would bring no profit to the buyer. thE VAlIdIty of thE childbed thEory of VAluE To conclude, we present three traditional proofs of the labour theory of value. The first of these is the analytical proof, which proceeds by breaking down the price of a commodity into its constituent elements and demonstrating that if the process is extended far enough, only labour will be found.The price of every commodity can be reduced to a certain number of components the amortisation of machinery and buildings, which we call the renewal of wintry capital the price of raw materials and accessory products wages and finally, everything which is surplus value, such as profit, rent, taxes, etc. So far as the last two components are concerned, wages and surplus value, it has already been shown that they are labour pure and simple. With regard to raw materials, most of their price is by and large reducible to labour for example, more than 60% of the mining cost of blacken consists of wages.If we start by breaking down the average manufacturing cost of commodities into 40% for wages, 20% surplus value, 30% for raw materials and 10% in fixed capital and if we assume that 60% of the cost of raw materials can be reduced to labour, then we already have 78% of the total cost reduced to labour. The rest of the cost of raw materials breaks down into the cost of other raw materials reducible in turn to 60% labour plus the cost of amortising machinery. The price of machinery consists to a large degree of labour (for example, 40%) and raw materials (for example, 40% also).The share of labour in the average cost of all commodities thus passes successively to 83%, 87%, 89. 5%, etc. It is obvious that the further this breakdown is carried, the more the entire cost tends to be reduced to labour, and to labour alone. The second proof is the logical proof, and is the one presented in the beginning of Marxs Capital. It has perplexed quite a few rea ders, for it is certainly not the simplest pedagogical approach to the question. Marx poses the question in the following way. The number of commodities is very great.They are interchangeable, which means that they must have a common quality, because everything which is interchangeable is comparable and everything which is comparable must have at least one quality in common. Things which have no quality in common are, by definition, not comparable with each other. Let us inspect each of these commodities. What qualities do they possess? The Theory of Value and Surplus Value 21 First of all, they have an infinite set of natural qualities weight, length, density, colour, size, molecular nature in short, all their natural visible, chemical and other qualities.Is there any one of the physical qualities which can be the basis for comparing them as commodities, for serving as the common measure of their exchange value? Could it be weight? Obviously not, since a pound of butter does not h ave the same value as a pound of gold. Is it volume or length? Examples will immediately show that it is none of these. In short, all those things which make up the natural quality of a commodity, everything which is a physical or chemical quality of this commodity, certainly determines its use value, its relative usefulness, but not its exchange value.Exchange value must consequently be overturned from everything that consists of a natural physical quality in the commodity. A common quality must be found in all of these commodities which is not physical. Marxs conclusion is that the only common quality in these commodities which is not physical is their quality of being the products of human labour, of abstract human labour. Human labour can be vox populi of in two different ways. It can be considered as specific cover labour, such as the labour of the baker, butcher, shoemaker, weaver, blacksmith, etc.But so long as it is thought of as specific concrete work, it is being viewed in its aspect of labour which produces only use values. Under these conditions we are concerning ourselves only with the physical qualities of commodities and these are precisely the qualities which are not comparable. The only thing which commodities have in common from the viewpoint of exchanging them is that they are all produced by abstract human labour, that is to say, by producers who are related to each other on a basis of equivalence as a result of the fact that they are all producing goods for exchange.The common quality of commodities, consequently, resides in the fact that they are the products of abstract human labour and it is this which supplies the measure of their exchange value, of their exchangeability. It is, consequently, the quality of socially necessary labour in the production of commodities which determines their exchange value. Let us immediately add that Marxs reasoning here is both abstract and difficult and is at least subject to questioning, a point whi ch many opponents of Marxism have seized upon and sought to use, without any marked success, however.Is the fact that all commodities are produced by abstract human labour really the only quality which they have in common, apart from their natural qualities? There are not a few writers who thought they had discovered others. In general, 22 An IntroductIon to MArxIst EconoMIc thEory however, these have always been reducible either to physical qualities or to the fact that they are products of abstract labour. A third and final proof of the correctness of the labour theory of value is the proof by reduction to the absurd. It is, moreover, the most elegant and most modern of the proofs.Imagine for a moment a society in which living human labour has entirely disappeared, that is to say, a society in which all production has been 100% automated. Of course, so long as we remain in the current intermediate stage, in which some labour is already whole automated, that is to say, a stage in which plants employing no workers exist alongside others in which human labour is still utilised, there is no special theoretical problem, since it is merely a question of the transfer of surplus value from one enterprise to another.It is an illustration of the law of equalisation of the profit rate, which will be explored later on. But let us imagine that this development has been pushed to its extreme and human labour has been completely eliminated from all forms of production and services. Can value continue to exist under these conditions? Can there be a society where nobody has an income but commodities continue to have a value and to be sold? Obviously such a situation would be absurd. A huge mass of products would be produced without this production creating any income, since no human being would be involved in this production.But someone would want to sell these products for which there were no longer any buyers It is obvious that the distribution of products in such a soci ety would no longer be effected in the form of a sale of commodities and as a matter of fact interchange would become all the more absurd because of the abundance produced by general automation. Expressed another way, a society in which human labour would be totally eliminated from production, in the most general sense of the term, with services included, would be a society in which exchange value had also been eliminated.This proves the validity of the theory, for at the moment human labour disappears from production, value, too, disappears with it. II. cApItAl And capitalism cApItAl In prEcApItAlIst socIEty Between primitive society founded on a natural economy in which production is limited to use values destined for self-consumption by their producers, and capitalist society, there stretches a long period in human history, embracing essentially all human civilisations, which came to a halt before reaching the frontiers of capitalism.Marxism defines them as societies in which diminished commodity production prevailed. A society of this kind is already well-known(prenominal) with the production of commodities, of goods designed for exchange on the market and not for direct consumption by the producers, but such commodity production has not yet become generalised, as is the case in capitalist society. In a society founded on small-scale commodity production, two kinds of economic operations are carried out.The peasants and artisans who bring their products to market wish to sell goods whose use value they themselves cannot use in order to obtain money, means of exchange, for the scholarship of other goods, whose use value is either necessary to them or deemed more important than the use value of the goods they own. The peasant brings wheat to the marketplace which he sells for money with this money he buys, let us say, cloth. The artisan brings his cloth to the market, which he sells for money with this money he buys, let us say, wheat.What we have here , then, is the operation selling in order to buy . C ommodity goldCommodity, C MC w hich has this essential character the value of the two extremes in this formula is, by definition, exactly the same. But within small-scale commodity production there appears, alongside the artisan and small peasant, another personage, who executes a different kind of economic operation. Instead of selling in order to buy, he buys in order to sell. This type of person goes to market without any commodities he is an owner of money.Money cannot be sold but it can be used to buy, and that is what he does buys in order to sell, in order to resell MCM. There is a fundamental difference between the two types of operation. The 24 An IntroductIon to MArxIst EconoMIc thEory second operation makes no sense if upon its ending we are confronted by exactly the same value as we had at the beginning. No one buys a commodity in order to sell it for exactly the same price he paid for it. The operation buy in order to sell makes sense only if the sale brings a supplementary value, a surplus value.That is why we state here, by way of definition. M is greater than M and is made up of M+m m being the surplus value, the amount of increase in the value of M. We now define capital as a value which is increase by a surplus value, whether this occurs in the course of commodity circulation, as in the example just given, or in production, as is the case in the capitalist system. Capital, therefore, is every value which is augmented by a surplus value it therefore exists not only in capitalist society but in any society founded on small-scale commodity production as well.For this reason it is necessary to distinguish very clearly between the life of capital and that of the capitalist mode of production, of capitalist society. Capital is far older than the capitalist mode of production. The former belike goes back some 3000 years, whereas the latter is barely 200 years old. What form does capital take in precapitalist society? It is basically usury capital and merchant or commercial capital. The passage from precapitalist society into capitalist society is characterised by the penetration of capital into the sphere of production.The capitalist mode of production is the first mode of production, the first form of social organisation, in which capital is not limited to the sole role of an intermediary and exploiter of non-capitalist forms of production, of small-scale commodity production. In the capitalist mode of production, capital takes over the means of production and penetrates directly into production itself. orIgIns of thE cApItAlIst ModE of productIon What are the origins of the capitalist mode of production?What are the origins of capitalist society as it has developed over the past 200 years? They lie first of all in the separation of the producers from their means of production. Subsequently, it is the establishment of these means of production as a monopoly in the hands of a single social class, the bourgeoisie. And finally, it is the appearance of another social class which has been separated from its means of production and therefore has no other resources for its subsistence than the sale of its labour-power to the class which has monopolised the means of production.Let us consider each of these origins of the capitalist mode of production, which are at the same time the fundamental characteristics of the capitalist Capital and Capitalism 25 system as well. First characteristic separation of the producer from his means of production. This is the fundamental condition for existence of the capitalist system but it is also the one which is generally the most poorly understood. Let us use an example which may seem paradoxical since it is taken from the early Middle Ages, which was characterised by serfdom.We know that the mass of peasant-producers were serfs bound to the soil. But when we say that the serf was bound to the soil, we imply that the so il was also bound to the serf, that is, he belonged to a social class which always had a base for supplying its needs, enough land to work so that the individual serf could meet the needs of a household even though he worked with the most primitive implements. We are not viewing people condemned to death by starvation if they do not sell their labour-power.In such a society, there is no economic compulsion to hire out ones arms, to sell ones labour-power to a capitalist. We can express this another way by stating that the capitalist system cannot develop in a society of this kind. This general truth also has a modern application in the way colonialists introduced capitalism into the African countries during the 19th and early 20th centuries. Let us look at the livin