Part V: The Production of Absolute and Relative Surplus Value

Part 5 of Harry Cleaver's study guide to Marx's Capital, covering chapters 16-18.

In Part III, Chapters 7-11 on absolute surplus value and in Part IV, Chapters 12-15 on relative surplus-value Marx analyzes these strategies of exploitation in terms of value, not in terms of money, an embodiment of value, nor in terms of profit, a monetary form of surplus-value. These three short Chapters 16-18 provide a bridge to Part VI on wages—the money form of the value of labor-power. They both remind the reader of ideas already discussed and begin to analyze some of the consequences of the value of labor-power taking the form of money.

Chapter 16: Absolute and Relative Surplus-Value

Mostly a reminder of the distinction and interrelationships between the two forms of surplus-value with some observations on the concept and historical evolution of productivity. The chapter ends with a critique of the failure of classical political economists and those who followed them to discover the antagonistic social relationships underlying such monetary phenomena as profits and wages.

Chapter 17: Changes of Magnitude in the Price of Labour-Power and in Surplus Value

The title of this chapter announces the transition from value analysis to money by indicating that the value of labor-power will be discussed in terms of its price. Thus, while reviewing his previous analysis of how absolute and relative surplus-value vary according to changes in productivity, intensity and value of labor-power, he examines the relation between those changes and the price (or wages) of labor. Marx highlights the centrality of rising productivity, not only for the struggle between workers and capitalists over how its fruits are shared but for a post-capitalist future in which rising productivity could be channeled into ever less shared work and ever more shared wealth.

Chapter 18: Different Formulae for the Rate of Surplus-value

Marx juxtaposes his theory to that of the classical political economists. He argues that their formulations hide the existence of exploitation and create the illusion that workers and capital receive income equal to their contribution to production. He also upholds the reasonableness of characterizing exploitation in terms of the extraction of unpaid labor, i.e., labor performed without compensation.

Comments

Harry Cleaver's study guide to chapter 16 of Marx's Capital volume one.

Outline of Marx’s Analysis

formal

real

Commentary

In this, the first of the three chapters that take us from analyses in terms of value, to those of the monetary form of the value of labor-power, Marx reminds us of the distinction between absolute and relative surplus-value, of how they are produced and of the relationship between the two. Absolute surplus-value emerges early when capitalists only command or subsume the labor of others formally, that is to say, without taking over and transforming tools and how they are used. Under those circumstances, their only available strategy for increasing the extraction of surplus-value involves getting people to work longer. Because workers control their tools and the rhythm of their work, capitalists have little leverage to extract more surplus-value via the intensification of labor. Relative surplus-value emerges as capitalists do obtain that leverage, by gaining control over tools and organizing them in factories that facilitate oversight and control. Protected by new property laws, they reshape both tools and their use to raise productivity and increase surplus-value—both by reducing the labor time necessary to produce each unit and by increasing the intensity of labor.

Given the increasing centrality of productivity, he also reminds us of how the conditions and meaning of productive labor depends upon the context. At the level of the individual, a productive worker is simply one who produces some product directly, using mind, hands and tools to transform raw materials. That was the generic concept he set out in the first section of Chapter 7. But as human society developed most labor became social, such that individuals came to collaborate in the production of ever more things and in so doing formed a collective worker with a division of labor—that he analyzed in some detail in Chapter 14. With the rise of various kinds of class society, including capitalism, antagonistic relationships develop as some are able to impose surplus work on others and appropriate the resulting surplus product. Within capitalism that surplus product takes the form of surplus-value, so that from the point of view of the appropriating capitalists the only productive workers, i.e., the only workers whose labor makes it possible to impose more work, are those who produce surplus-value, i.e., surplus labor whose products can be used to impose more work in the future. As a result, there is a clear distinction between the vernacular, everyday sense of being productive, i.e., being able to produce something, and the only kind of productivity that matters to capitalists. This is consistent with the emphasis we saw in Chapter 1 between use-value and exchange-value/value. Use-values and the ease with which we can obtain them preoccupy those of us who work; the exchange-value of the surplus production preoccupies those who put us to work.

In illustrating the capitalist case, Marx draws a parallel between those industries that produce things and those that produce services.

. . . a schoolmaster is a productive worker when, in addition to belaboring the heads of his pupils, he works himself into the ground to enrich the owner of the school. That the latter has laid out his capital in a teaching factory, instead of a sausage factory, makes no difference to the relation.

Given that such “productivity” involves exploitation, he adds that, “To be a productive worker is therefore not a piece of luck, but a misfortune.” (1)

Marx then goes on to remind us of the connections that he demonstrated in Chapter 15 between absolute and relative surplus-value. Namely, how the methods used to produce relative surplus-value, i.e., introducing new machines and new technology, also made possible the prolongation of the working day and the intensification of work, both of which added surplus-alue by extracting more work from those subject to the new methods. What he does not remind us of here, is how the shift to relative surplus-value strategies was the result of the success of workers’ struggles to shorten the working day and by so doing undermine absolute surplus-value. (2) Nor does he reiterate his previous analysis of how new machines are designed and new technologies are chosen with the objective of undermining those struggles through the reorganization of the labor process. (3)

These reminders are followed by a brief analysis of the impact of natural conditions on the availability of surplus labor, both potential and actual. Where nature has provided plenty to meet limited needs and wants, as has sometimes been the case in the tropics, little work has been required and this resulted in a lot of spare, disposable time.(4) Marx’s remarks here have received substantial support from later studies by anthropologists of what Marshall Sahlins called “original affluent societies”.(5) Late in his life, partly as a result of his studies of the Russian peasant commune and its potential for providing the basis of a post-capitalist social regeneration, Marx devoted considerable time to the study of pre-capitalist societies. (6) The importance of his recognition of diverse possible paths to revolution and the transcendence of capitalism has been highlighted by Raya Dunayevskaya.(7) The contemporary renaissance in indigenous resistance to capitalism has led to new critiques of the orthodox Marxist dismissal of such struggles and to new appreciation of the insights being offered by those participating in that resistance into alternatives to capitalist ways of organizing the world. The widespread positive response to, and support for, the Zapatista rebellion in Mexico marked a new level of global awareness among those fighting capitalism; that awareness and support has continued for a wide variety of struggles in many parts of the world. Two examples illustrate the spreading support for the indigenous defense of the sacredness of land against capitalist exploitation. First, has been the resistance of First Peoples in Canada to tar sands development and second, has been the resistance of Native Americans in the U.S. to the construction of the Keystone and Dakota Access Pipelines.

In the long-run, Marx suggests that the rise in labor productivity has taken place via the organization of social, collective labor and technological development in response to the need to overcome obstacles presented by nature. A certain Eurocentrism appears implicit in his suggestion that this has been truer in temperate climates than in tropical ones.

The mother country of capitalism is not the tropical region, with its luxuriant vegetation, but the temperate zone. It is not the absolute fertility of the soil but its degree of differentiation, the variety of its natural products, which forms the natural basis for the social division of labor, and which, by changes in the natural surroundings, spurs man on to the multiplication of his needs, his capacities and the instruments and modes of this labour. (8)

His illustrations, however, which include water works in Egypt, India, and Persia as well as Italy and Holland, show that his suggestion here was not Eurocentric. Others, however, have been prone to insist on the climate differences (as they have sometimes done with “racial” differences) between temperate and tropical zones, in trying to explain why early capitalist development seemed to have been concentrated in Europe. Such views have been countered over the years not only by the rediscovery of the independent development of capitalism in places such as India but also by the recognition of the tremendous natural “differentiation” that obtains in the tropics. Such understanding came first as colonialists discovered competitors to suppress and more and more “resources” to exploit. More recently, modern ecological research has revealed the incredible diversity of life in the tropics. To these discoveries we should also add that of long-ignored indigenous knowledge and innovation in the utilization of plant and animal life for artistic, medicinal and nutritional purposes. The onslaught of biopiracy by the pharmaceutical industry out to patent, monopolize and exploit that knowledge provides perverse testimony to its importance. So, while we may accept Marx’s intuition that challenges provoke innovation, we must also recognize that the diversity of innovations throughout the world—both social and technological—has been much greater that he recognized.

Marx ends this chapter with a brief, sarcastic attack on Ricardo—and by implication all the classical political economists of his time—and John Stuart Mill, their successor, for the superficiality of their understanding of monetary phenomena. They did seek to explain such monetary categories as profit, interest and rent, but their efforts to understand their origin stalled at the simple concept of labor. Their failure, he argues, lay in their inability to recognize and analyze the origin of surplus-value—a failure he attributes to their instinct that “it was very dangerous to penetrate too deeply into the burning question of the origins of surplus-value”. The question was “burning”, of course, because with the development of workers’ self-organization, came increasingly intense challenges to the injustice of capitalist profit. While recognizing that “the productive power of labor is the originating cause of profit”, Ricardo et al. failed to identify the essence of surplus-value in surplus labor and the exploitative nature of capitalism. Despite this theoretical lacuna, their emphasis on labor as the source of value did lead workers to the inevitable conclusion that if the source of value was labor, then all value should belong to them and none to the capitalists. Equally inevitable was the response of economists who set aside the labor theory of value and replaced it, first with utility theory in the late 19th Century and then with preference theory early in the 20th. With this brief evocation of the money form of surplus-value, Marx takes us one step closer to his exposition of the money form of the value of labor-power.

Footnotes

1 Both this and the quoted passage are from Capital, Vol. I, p. 644.

2 Ibid., Chapter 15, Section 2, subsections (b) and (c).

3 Ibid., Chapter 15, Sections 4 and 5.

4 Recall Marx's celebration, cited in my commentary on Section 5 of Chapter 10 of the Quashees of Jamaica thumbing their noses at the capitalist planters.

5 Marshall Shalins,Stone Age Economics, Livingston, NJ: Aldine Transaction, 1974, Chapter 1, "The Original Affluent Society".

6 Lawrence Krader (ed.), The Ethnographic Notebooks of Karl Marx, 2nd edn., Assen: Van Gorcum & Co., 1974.

7 Raya Dunayevskaya, "Marx's 'New Humanism' and the Dialectics of women's Liberation in Primitive and Modern Societies", Praxis International, Vol. 3, no. 4, 1984, pp. 369-81.

8 Capital, Vol. I,p. 649. The "tropical region", it is worth remembering, formally lies between the Tropic of Cancer (roughly 23^o27' North Latitude) and the Tropic of Capricorn (roughly 23^o27' South Latitude). The precise latitude varies from year to year because the tropics, both north and south, are defined by the most northerly or southerly circle of latitude at which the sun appears directly overhead.

Comments

Harry Cleaver's study guide to Marx's Capital volume 1 chapter 17.

Outline of Marx’s Analysis

productivity of labor varies

intensity of labor varies

length of the working day varies

Commentary

The title of this chapter announces a transition from value analysis to money by making clear that the value of labor-power will be discussed in terms of its price. Price, as we saw in Chapter 1, is the money expression of the value of a commodity, in this case of the value of labor-power. In this chapter, Marx reiterates his analysis of past chapters in terms of changes in both the value and the price of labor-power and notes how changes in price may differ from changes in value. In passing from analysis in terms of value to one in terms of money, Marx must, and does, take into account changes in the real value of money wages, e.g., caused by a change in the price of consumer goods. Therefore, the price of labor-power may not equal its value.

Throughout this analysis, the price of labor-power can be assumed to be wages, in as much as money wages were predominant over other expressions of the value of labor-power in the period in which Marx was writing. (As opposed to wages in kind, salaries, commissions or government payments to the unemployed or the poor.)

While the reiteration of previously explained material has often caused this chapter to be passed over as pure pedantry, there are two reasons for its close study. First, thinking of the value of labor-power in terms of its price, its monetary equivalent, lays the groundwork for Part VI, Chapters 19-22 on wages. Second, among familiar words and phrases there are also politically important points well worth repetition.

The first of these is his highlighting of how, in the dynamic of capitalist development, despite the existence of some zero-sum relationships where one class can benefit only at the expense of the other, there are situations in which the material situation of both can be improved. The most important of these being when a rise in the productivity of labor results, to use modern terms, in an increase in the size of the pie being produced. When the pie/output grows, it is at least possible for both workers and capitalists to get more of what they want: means of consumption and life for workers, means of production to impose more work for capitalists. Marx writes that it is “possible that owing to an increase in the productivity of labor both the worker and the capitalist may simultaneously be able to appropriate a greater quantity of means of subsistence [or of means of production] without any change in the price of labor-power or in surplus-value.”(1) The same mutual benefit is possible with increases in the length and intensity of the working day; where more is produced, more could potentially be shared. In this second case, because longer and/or more intense working hours use up workers’ energy faster, any increase in real consumption requires an excess over the necessary compensation for the accelerated wearing out of workers. But it is at least possible for the increase to be large enough.

The importance of these observations is they show how his theory is perfectly compatible with historically observed increases in standards of living among some workers, even as others are thrown into poverty and pauperism. It is also compatible with, and indeed predates, the recognition by neoclassical economists (from at least Alfred and Mary Marshall on) that increases in wages can go hand in hand with increased profits.(2) This was the reality on the basis of which John Maynard Keynes built his theory of how capitalist development could be socially progressive, i.e., one in which growing profits and investment were stimulated by growing wages and benefits.(3) In the process, he overthrew the traditional business view that any increase in wages would undermine profits and therefore had to be resisted by all means possible—including violence when necessary.

Under these circumstances, Marx also points out how the degree to which the fruits of higher productivity and more work are shared depends in large part upon the balance of class forces, i.e., on the struggle between workers seeking to share in increases in the social wealth resulting from increased productivity and the efforts by capitalists to arrogate all increases to themselves. “The new value of labor-power”, Marx writes, “depends on the relative weight thrown into the scale by the pressure of capital on the one side, and the resistance of the workers on the other.”(4) In the wake of the Russian Revolution and of World War I, Keynes pointed out that the English working class would no longer accept reductions in real wages and was well enough organized to insist on rising real wages. The alternative to provoking a general strike by trying to lower wages, he suggested, was raising productivity (either by shutting down low-productivity operations or by investing in new technology) that could make higher wages possible with no loss to capitalists.

Although Keynes’ observations and proposals were made in Britain, similar recognition in the United States underlay the acceptance and legalization by the Roosevelt Administration of industrial unions and collective bargaining. Those changes forced capitalists in major industries, such as motor vehicles and mining, to recognize unions, bargain with them collectively and cut “productivity deals” in which workers were allowed to share in the fruits of rising productivity in exchange for cooperation in the introduction of new technology that made that rise possible. Although such deals were written into union-industry contracts, how the agreements worked out in practice continued to depend on struggle and the balance of class power on the shop floor and in the pits.

Marx draws our attention to two cases. The first was during the period of the Napoleonic Wars, 1799–1815. He cites 1799 presumably because it was in November of that year that Napoléon Bonaparte (1769–1821) seized power—ten years after the French revolution. Actual war between the British and French governments began in 1803 as Bonaparte’s armies began to conquer much of Europe. He was finally defeated at Waterloo in 1815 after his disastrous withdrawal from Moscow and despite Britain’s defeat in the War of 1812 with the United States. During those years of warfare, the ability of England to import grain from the European continent was curtailed—both by the French government’s closing of its territory to British trade and by the British naval blockade of French ports.(5) As a result, the British economy was forced to rely on less productive local agriculture, especially of corn (the English term for wheat and other grains requiring grinding). The resulting increase in the price of bread for workers helped drive them to accept the longer, harder hours that Marx cites. The increased price of grain and bread not only reduced real wages, but increased ground rents profiting landlords. This situation was prolonged after the war by so-called Corn Laws, enacted in 1815, putting tariffs on imported grain. The continued high price of grain and bread intensified class conflicts and led to the famous debate between Malthus, who defended the tariffs as vital to national security and Ricardo who critiqued them as harmful to industrial development because they diverted income from profits that could be invested to rents that went largely to luxury consumption by landlords. Capitalists mounted a sustained movement, enlisting workers, to end the Corn Laws, increase wheat imports, and lower the price of bread, an effort that finally succeeded in 1846. Of course, they didn't mention to the workers their plans to lower wages once the price of bread dropped!

The second of the two cases, involving a shortening of the working day but increased intensity and productivity, became dominant in the period of the real subsumption of labor to capital once workers organized themselves effectively enough to force down their hours of work. This forced capitalists to resort to relative surplus-value strategies. In other words, the history analyzed in detail in Part IV, Chapters 12-15.

What is interesting in Marx’s treatment here, is how he draws from that analysis implications for the possibilities beckoning from a future beyond capitalism. In such a future world, he argues, those dreams of Aristotle that he evoked in Chapter 15 could finally be realized. Freed of the capitalist mandate to order society through imposed work, rising productivity could be converted into more and more free time. His brief discussion here echoes Engels’ lectures at Elberfeld two decades earlier, where he blasted all the wasteful forms of work that capitalism requires, e.g., police and juridical protection of private property, finance, a military-industrial complex, and so on, imagining all those wasting their time in such activities changing occupations and sharing a declining burden of actually useful labor.(6) No more separate leisure class, freed from work by the labor of others, but an equal sharing by all in less and less work and more and more leisure. Such a future, Marx argues, would allow “the free intellectual and social activity of the individual”.(7) Here Marx is also echoing his own words from the Grundrisse notebooks a decade before. There he wrote, “The saving of labor time [is] equal to an increase of free time, i.e., time for the full development of the individual, which in turn reacts back upon the productive power of labor as itself the greatest productive power.”(8)

A final note: in the midst of pointing out the potentialities created by raising productivity, Marx recognizes how the development of individuals, both intellectual and social, changes their aspirations and therefore their needs and desires. As a result, the amount and diversity of labor required to provide the means for satisfying those needs and desires grows. Therefore, “what is now surplus labor would then count as necessary labor, namely the labour which is necessary for the formation of a social fund for reserve and accumulation.” (9) In a post-capitalist world, clearly “accumulation” would no longer involve the expanded reproduction of antagonistic class relationships, but rather the growth in all those elements necessary to satisfying changing aspirations. Here we have an answer to an objection long posed by mainstream economists to Marx’s theory of surplus labor/value and exploitation within capitalism. “Would not”, they have argued, “people in a post-capitalist society still need to do more work than is required to meet their immediate needs in order to create the wherewithal to meet future needs?” Yes, but in such a society, as Marx says here, such extra work would not be “surplus-value” because it would not be dedicated to the expanded imposition of social control via more and more work.

Footnotes

1 Capital, Vol. I, p. 659. No change in nominal or money wages, but an increase in real wages because the money buys more due to lower prices of consumption goods.

2 Neoclassical microeconomics allows wage increases to be compatible with increases in profit as long as the marginal productivity of labor rises.

3 In Keynesian macroeconomics, rising wages increase consumer demand, which, ceteris paribus, induces investment and greater output.

4 Capital, Vol. I, p.659.

5 For vivid fictional accounts—often based on real historical documents—of the British blockade from France's northern ports along the Channel to Gibralter and ports along the Mediterranean coast, see the Napoleonic War novels of C. S. Forester and those of Patrick O'Brian, and the films based upon them. Forester's novels provided the basis for a 1951 film Captain Horatio Hornblower starring Gregory Peck and an ITV and A&E TV series Hornblower (1998–2003) starring Ioan Gruffudd. O'Brian's Aubrey–Maturin novels provided the material for Master and Commander: The Far Side of the World (2003) starring Russell Crowe and Paul Bettany.

6 See his two speeches, delivered in February 1845 in MECW, Vol. 4, pp. 243–264.

7 Capital, Vol. I, p. 667.

8 Grundrisse, p. 711.

9 Mainstream economists, apologists as they are for capitalism, argue that what is produced in capitalism is always a function of people's needs and desires, as manifested in how they spend their money. While making that argument, they completely ignore not only all the ways in which capitalists manipulate need and desire to create more opportunities for imposing more work, but also all of those kinds of work that both Engels and Marx deplored as superfluous to a society freed of capitalist domination.

Comments

Harry Cleaver's study guide to Marx's Capital volume 1, chapter 18.

Outline of Marx’s Analysis

s/v

s+v

Commentary

In this chapter Marx, pauses a moment before the section on wages, to juxtapose his own formulations to those of classical political economy and to critique the latter in ways that foreshadow the critiques he will make in the next three chapters.

By always comparing surplus value (or product) to the total value (or product), classical political economists portrayed the relationship between workers and capitalists in ways that 1) hid the existence of exploitation and 2) created an illusion that labor was getting its fair share. The existence of exploitation was hidden by making it appear that each factor of production, i.e., labor and capital, is rewarded according to its contribution to production. So, surplus value, s, appears to equal capital’s contribution and s/(s + v), its share, while by implication, variable capital, v, appears to equal labor’s contribution and v/(v+s), its share. Within a few decades after Capital was published, neoclassical economists, having substituted utility for labor value, would use the same trick but with fancier mathematics.

Mathematical concepts such as production functions, e.g., Q = f(K, L), permitted the use of calculus to derive marginal products for K (dQ/dK) and L (dQ/dL) and with a few more assumptions, conclude that wages = market value of dQ/dL and profits = the market value of dQ/dK. In the development of this theory of production, the labor theory of value of the classical political economists was set aside, so the only “value” left was money price determined by markets. Yet the conclusion was essentially the same, both the old formulae and the new ones hid exploitation by reducing the antagonistic social relations of production to engineering-like technical relations among things.(1)

For Marx, by formulating the value of labor as one part of the working day, the classical political economic formulation understated what was for him the essential issue: how much of workers’ time toiling produced the means of consumption they needed (or their value/money equivalent) and how much of their work time produced the means of production (or their value/money equivalent) capital needed. Clearly, both formulations of the rate of surplus-value, the classical one, s/(v+s), and his own, s/v, are possible measures of capital’s share of the total new value created. He preferred s/v because it provided a more direct representation of the division of workers’ days. When he notes how s/(v+s) is a “mode of presentation which arises, by the way, out of the capitalist mode of production itself” (2) and promises to return to the point later on, odds have it that he was thinking about the parallel between s/(v+s) and s/(c+v), the rate of profit. He did return to juxtapose the rate of profit to the rate of exploitation in material included in Volume III of Capital where he presents the rate of profit as expressing capital’s preoccupation with the rate of return on its investment (c+v) and the rate of exploitation as expressing the degree to which workers are being exploited, i.e., forced to produce products and value for someone else.(3)

Commenting on the “popular expression” that juxtaposes unpaid to paid labor, instead of surplus to necessary labor, Marx affirms the reasonableness of that way of talking about exploitation in money terms. By pretending to buy labor, rather than labor-power, capitalists argue that all labor is paid for. But as workers grasp intuitively and Marx’s analysis in Chapter 6 demonstrated, although fluctuations in supply and demand can push wages above, or drive them below the value of labor-power, on the average workers are only paid wages equivalent to the amount of work that produces the value of their labor-power and capitalists arrogate to themselves the fruits of all excess labor beyond that—with no compensation to those performing it. He concludes, “Capital, therefore, is not only command over labour, as Adam Smith thought. It is essentially the command over unpaid labor. All surplus-value . . . is in substance the materialization of unpaid labor time.” (4) But what is the importance of this command over unpaid labor time? We have seen how Marx’s focus is on one, and only one, use of surplus-value, or unpaid labor time: investment, i.e., employing it to impose more work in the future!

Footnotes

1 It would not be until the 1960s, when economists at Cambridge University in England, building on the work of Piero Sraffa (1898&ndash1983), attacked these formulations and forced neoclassical economists to admit that they were built on logical flaws, e.g., they pretend to derive the price of capital but to do so they must assume the price of capital in order to aggregate heterogeneous capital to come up with "K". See G. C. Harcourt, Some Cambridge Controversies in the Theory of Capital, Cambridge: Cambridge University Press, 1972.

2 Capital, Vol. I, p. 670.

3 Capital, Vol. III, Part One, Chapter 3: "The Relationship between Rate of Profit and Rate of Surplus-Value".

4 Capital, Vol. I, p. 672.