Funnily enough, I just hopped on Libcom because my summer reading is to dig into Marx. I've just got done reading Value, Price, and Profit and I was going to post up to see if anyone wanted to read some Cleaver with me. Anyway, yeah that passage struck me as well. I offer this as a possible interpretation, but am also quite curious to see what other have to say: Marx was writing at a time when workers survived at just above starvation level (think developing world sweatshop workers today). Unions and the social welfare state have significantly increased the living standards of most Western workers, so the 19th century analysis Marx offered is not entirely applicable to many of today's English and American workers.
A question re: price, value and profit (marx)
Here goes!
Firstly "necessities" are always relative, for example, in the 21st century is a TV or even computer with internet access a necessity? It could be argued that they are.
Juozokas are clothes and socialising not necessities?
Also the passage refers to the working class "as a whole"
The workers will not be able to purchase the means of production through any wage increase. So the Capitalist class will recoup the extra money given out in wage increase sooner or later..
No?
Ncwob, would like to have a group reading of Marx some time but am too busy for the near future!
Some of these issues were explored on this thread.
Most importantly, the "value of labour power" has never been simply the amount necessary to keep a worker alive. It is the amount required to reproduce their labour power for the capitalist. This varies considerably depending on the type of work predominant in society, the educational requirements, the type of social outlets workers need to recover sufficiently from their labour, etc.
For example, to work in a modern call centre requires the ability to read, operate a computer system and various other pieces of technology. It also requires the social capacity to talk to a wide variety of people in a calm, coherent manner and deal with difficult customers and do so in a uniform manner for 7 - 8 hours a day. The requisite for this is a certain degree of emotional wellbeing and this part of the reason why depression has become such an issue - not because the bourgeoisie care about people being depressed but because it impacts on the ability of workers to do these kinds of jobs.
As such, having a TV, PC, an iPod (or whatever) is obviously not necessary to keep a worker alive but could be an essential element in ensuring the worker is able to reproduce their labour.
As Marx put it in Capital: "[The worker's] means of subsistence must therefore be sufficient to maintain him in his normal state as a labouring individual. His natural wants, such as food, clothing, fuel, and housing, vary according to the climatic and other physical conditions of his country. On the other hand, the number and extent of his so-called necessary wants, as also the modes of satisfying them, are themselves the product of historical development, and depend therefore to a great extent on the degree of civilisation of a country, more particularly on the conditions under which, and consequently on the habits and degree of comfort in which, the class of free labourers has been formed. In contradistinction therefore to the case of other commodities, there enters into the determination of the value of labour-power a historical and moral element."
juozokas wrote:
I am not quite sure how he works this out. If my pay goes up like $50 I am not buying more milk and bread and hopefully not paying more rent each week. The money I spend on necessaties is going to remain roughly the same and I will probably spend that on piss or clothes or if I was smart bank it. My demand for necessaties has not increased at all due to a wage hike. Anyone?
Where does Marx make the argument that rising wages leads to a rise in the prices of necessaries due to a rise in demand? I'm not aware of him saying this anywhere, and would be very surprised if he did, firstly because in Capital (and VPP) he generally assumes that the prices of commodities reflect either values or prices of production. In either case (whether prices reflect values or prices of production) supply and demand are assumed to be equal and a rise in demand is ruled out by fiat. Certainly Marx would never have denied that market prices deviate from prices of production, perhaps even dramatically, and perhaps even temporarily due to the cause that you mention, but he never treats this in a systematic way in any of his economic writings.
When Marx assumes that wages paid to the working class equal the value of labor-power, he does this in the following way: he takes the prices of the means of subsistence as given, assumes that the amount of means of subsistence "alloted" (so to speak) to each worker is given, and then assumes that the worker is paid this amount. When Marx does discuss wage variations, they are due either to a change in the price of means of subsistence or a change in the amount of means of subsistence considered customary for the working class to consume. (Although, between these two factors, the former is much more frequently discussed, especially in the theory of relative surplus-value, where the working class receives the same customary means of subsistence, but the prices of those commodities fall dues to increased productivity. Changes in the customary level of means of subsistence are mentioned on occasion but not treated in any systematic way. There is a good discussion of this issue, with possible reasons Marx did not deal with the latter despite the fact that he acknowledged it's importance, in Michael Lebowitz' "Beyond Capital".)
In all of this, a rise in the market price of consumer goods due to an increase in effective demand due to increased wages, does not figure. In fact, the theory that you understand Marx to be advocating is closely related to the theory that he is opposing in Value, Price, and Profit, the "iron law of wages" theory (promoted by Sir Weston). This theory claimed that any increase in wages captured by workers through trade union action would lead to increased inflation and thus leave the working class in the same place as it started. This theory is still rather common today, especially any time a law for the increase of minimum wage is proposed. Marx gave the speech that was later printed as "Value, Price and Profit" in order to combat it and give an economic defense of trade union action.
I agree with Mikus that Marx never said that capitalists would be compensated for having to pay more wages by getting a higher price for the goods they sold to workers. In fact "Value, Price and Profit" was a lecture given to British trade unionists precisely to refute this view. What Marx was trying to show was that a general rise in wages would be at the expense of profits, but that it would lead to a different pattern of demand.
If workers had more wages they would buy more consumer goods. In the first instance this would lead to a rise in the price of these goods (because there wouldn't be enough on the market) resulting in a higher rate of profit in this sector. This would attract more capitalists to invest in it, resulting in more such goods being produced, so their price would fall back again as would the rate of profit in the sector.
In other words, the initial rise in prices would only be temporary
mikus wrote:
Where does Marx make the argument that rising wages leads to a rise in the prices of necessaries due to a rise in demand?
From VPP (II. Production, Wages, Profits)...
It is perfectly true that, considered as a whole, the working class spends, and must spend, its income upon necessaries. A general rise in the rate of wages would, therefore, produce a rise in the demand for, and consequently in the market prices of necessaries.
nb: italics not mine
juozokas wrote:
mikus wrote:
Where does Marx make the argument that rising wages leads to a rise in the prices of necessaries due to a rise in demand?From VPP (II. Production, Wages, Profits)...
It is perfectly true that, considered as a whole, the working class spends, and must spend, its income upon necessaries. A general rise in the rate of wages would, therefore, produce a rise in the demand for, and consequently in the market prices of necessaries.
nb: italics not mine
Yes, but read the next few paragraphs. Marx goes into exactly what capricorn brings up: a rise in demand for consumer goods and a rise (or at least maintenance) of profit rates in industries that produce consumer goods, while rates of profit fall in industries that do not produce consumer goods (because wages are higher while prices remain constant because demand for those products have not increased), which causes enterprises that produce those commodities to move into consumer good industries, increasing the supply of consumer goods and driving consumer prices back down. The overall price level remains constant and the rate of profit falls. This is Marx's point.
Cool I got it, but what the fuck constitutes luxury (or 'not consumer') goods then? Jetskis?
Also, if these capitalists are moving into consumer good industries due to increased demand there, then why aren't these industries that 'do not produce consumer goods' becoming obsolete?
juozokas wrote:
Cool I got it, but what the fuck constitutes luxury (or 'not consumer') goods then? Jetskis?
Marx never defined this, and there is really no reason to. Basically you can take any moment as a base period, then see what kind of goods are normal consumption items for wage laborers, and take those goods as "consumer goods." The kinds of items that are generally only available to capitalists would then be the luxury goods. You'd have to do an empirical study to determine which actual goods fall in which category at which point in time (and it would of course very from country to country as well), but certain things are fairly obvious. (Food and clothing are consumption goods, yachts, private airplanes, etc., are luxury items, for example.)
juozokas wrote:
Also, if these capitalists are moving into consumer good industries due to increased demand there, then why aren't these industries that 'do not produce consumer goods' becoming obsolete?
Marx did not say that every producer would move into the consumer good industries. Some would. If too many entered into consumer goods production, that would cause an increase in supply and a fall in prices and a fall in profits, which would cause producers to exist those industries, thus lowering supply, raising prices and profit rates, and so on. This is the supposed tendency for rates of profit to equalize.
It is perfectly true that, considered as a whole, the working class spends, and must spend, its income upon necessaries. A general rise in the rate of wages would, therefore, produce a rise in the demand for, and consequently in the market prices of necessaries. The capitalists who produce these necessaries would be compensated for the risen wages by the rising market prices of their commodities.
I am not quite sure how he works this out. If my pay goes up like $50 I am not buying more milk and bread and hopefully not paying more rent each week. The money I spend on necessaties is going to remain roughly the same and I will probably spend that on piss or clothes or if I was smart bank it. My demand for necessaties has not increased at all due to a wage hike. Anyone?