5 Values, prices and exploitation
5.3 Homogenisation of labour
Reproduction costs shift in unpredictable patterns. Because we cannot predict what future technologies will be available at any given time in the future, we have no way of knowing in advance how long a particular capital good will be used before it will be replaced . . . We cannot calculate the values of goods produced today, because knowing the appropriate values of the constant capital being transferred today is impossible without advanced knowledge of future reproduction values . . . Alternatively, we could calculate the value of goods based on capitalists’ estimates of future depreciation patterns. Once we embark on the path of taking subjective estimates of future depreciation into consideration, we open a new can of worms . . . To begin with, we have no way of knowing the capitalists’ subjective opinions. In addition, Marx’s assertion about bankruptcies suggests that these subjective opinions are grossly mistaken.49
Uncertainty with respect to the output values has a knock-on effect on the calculation of surplus value, the residual left after the reproduction costs are subtracted from the output value and, consequently, upon the distribution of surplus value as profit, interest and rent. These difficulties are due to real contradictions in the process of economic reproduction, and they do not affect the meaning and significance of the concept of surplus value or the theoretical stature of value. However, they need to be accommodated into an analytical framework that is sufficiently flexible to allow them room to move, yet sufficiently robust to represent the structures of determination of reality, including the equivalence between labours performed in competing firms within each sector (normalisation), and in different firms across time or in firms employing distinct technologies (synchronisation).
social labour, implies that the production of money is distinctive because in this sector labour is not homogenised. Rather, the value of money is the pivot of the homogenisation of labours performed in the other sectors, and it provides the benchmark for the formation of prices.
Although homogenisation is conceptually clear, the assessment of the value produced is uncertain because prices are affected by a wide range of variables at distinct levels of complexity. For example, price reductions may be due to technical progress, the possibility of capital migration (see chapter 7), excess supply, industrial, financial, tax, trade or exchange rate policies, and other variables:
The magnitude of the value of a commodity . . . expresses a necessary relation to social labour-time that is inherent in the process by which value is created. With the transformation of the magnitude of value into the price this necessary relation . . . may express both the magnitude of value of the commodity and the greater or lesser quantity of money for which it can be sold under given circumstances. The possibility, therefore, of a quantitative incongruity between price and magnitude of value . . . is inherent in the price-form itself. This is not a defect, but, on the contrary, it makes this form the adequate one for a mode of production whose laws can only assert themselves as blindly operating averages between constant irregularities.53
For example, let us follow Marx’s analysis of differences between supply and demand. For simplicity, suppose that the workers are identical and that the firms producing the commodity (say, linen) are also identical. Even under these circumstances, the market price of linen may be different from the direct expression of its value in terms of money. This can happen if, for example, too large or too small a share of the social labour is applied in the production of linen, given the social need for this use value:
Let us suppose . . . that every piece of linen on the market contains nothing but socially necessary labour-time. In spite of this, all these pieces taken as a whole may contain superfluously expended labour- time. If the market cannot stomach the whole quantity at the normal price of 2 shillings a yard, this proves that too great a portion of the total social labour-time has been expended in the form of weaving. The effect is the same as if each individual weaver had expended more labour-time on his particular product than was socially necessary. As the German proverb has it: caught together, hung together. All the linen on the market counts as one single article of commerce, and each piece of linen is only an aliquot part of it.54
Excess supply does not imply that the commodity has lost part of its use value, that the unsold items have lost their entire use value, or that the value Values, prices and exploitation 67
of each commodity has shrunk, as if value were determined by price rather than the converse (see section 2.2.1). Excess supply merely modifies the expression of value as price; it contracts the total price of this commodity vis-à-vis its total value (money hoards, velocity changes and credit adjust the quantity of circulating money to the demand for the product, see section 8.1):
if the commodity in question is produced on a scale that exceeds the social need at the time, a part of the society’s labour-time is wasted, and the mass of commodities in question then represents on the market a much smaller quantity of social labour than it actually contains . . . These commodities must therefore be got rid of at less than their market value, and a portion of them may even be completely unsaleable.55 The products of capital aregenerally commodities, and they haveboth value and use value (see section 3.1). Overinvestment, excess capacity and the accumulation of inventories and, consequently, low profitability and the devaluation of capital show that too much capital and labour have been allocated to this sector, relative to the social need; in other words, part of this labour was not socially necessary from the point of view of exchange.
However, this does not affect either the concept of socially necessary labour in production, or the factof exploitation:
The total mass of commodities, the total product, must be sold . . . If this does not happen, or happens only partly, or only at prices that are less than the price of production, then although the worker is certainly exploited, his exploitation is not realized as such for the capitalist . . . indeed, it may even mean a partial or complete loss of his capital. The conditions for immediate exploitation and for the realization of that exploitation are not identical. Not only are they separate in time and space, they are also separate in theory. The former is restricted only by the society’s productive forces, the latter by the proportionality between the different branches of production and by the society’s power of consumption.56
The impact of economic crises is very similar. Crises may lead to market contractions and price crashes. In this case, previously created value may be redistributed or destroyed:
When speaking of the destruction of capital through crises, one must distinguish between two factors . . . [F irstly, in] so far as the repro- duction process is checked and the labour-process is restricted or in some instances is completely stopped, real capital is destroyed . . . Secondly, however, the destruction of capital through crises means the depreciation of values which prevents them from later renewing their reproduction process as capital on the same scale. This is the ruinous 68 Values, prices and exploitation
effect of the fall in the prices of commodities. It does not cause the destruction of any use-values. What one loses, the other gains . . . If the value of the commodities from whose sale a capitalist reproduces his capital was equal to £12,000, or which say £2,000 were profit, and their price falls to £6,000, then the capitalist . . . [cannot] restart his business on the former scale . . . In this way, £6,000 has been destroyed, although the buyer of these commodities, because he has acquired them at half their [price of production], can go ahead very well once business livens up again, and may even have made a profit.57
Value determination through RSNLT and its expression as price through normalisation, and the possibility of differences between value production and realisation because of the misallocation of social labour or economic crises, belong to distinct levels of analysis. The latter is more complex, because it includes not only the production conditions, but also the circumstances of exchange, the distribution of labour and the possibility of crisis. More generally, firms whose profit rates are lower than the average are always penalised. Within each branch, inefficient firms produce less value than their competitors, and may go bankrupt or become the target of takeover bids. These pressures can become stronger if the sector produces in excess of demand, which depresses the profit rate of all firms. Differences between individual and sectoral profit rates vis-à-vis the average are the capitalist mechanism of reallocation of labour across the economy and, simultaneously, the main lever of technical change.