Following up on my reply to Rory, in this note I offer a more complete model of Marx’s argument on the transformation problem.
In this case we have three capitals, each with an identical magnitude of 100:
- Capital A: 100
- Capital B: 100
- Capital C: 100
I am assuming a rate of surplus value of 100%.
The first capital, “A”, consumes 50 hours for constant capital and 30 hours for labor power in a given period. It sets this labor power to work. At the end of the period, produces 100 widgets.
The second capital, “B”, consumes 50 hours for constant capital and 15 hours for labor power. It sets this labor power to work. At the end of the period, produces 100 widgets.
The third capital, “C”, however, pays nothing for labor power. The capitalist sets his machines to work for the period, while he goes fishing, hunting and criticizing. At the end of the period, he returns to his workshop to find 100 widgets has been produced by his machine.
Based on the above information:
- What is the total value of the widgets?
- What is the total value of the labor powers employed in the production of the widgets?
- What is the total surplus value created by the labor power?
For capital “A”:
- 110 hours of value for the widgets
- 30 hours of value for the labor power
- 30 hours of surplus value created in the production of the widgets
For capital “B”, we get this result:
- 80 hours of value for the widgets
- 15 hours of value for the labor power
- 15 hours of surplus value created in the production of the widgets
For capital “C”, we get this result:
- 50 hours of value for the widgets
- 0 hours of value for the labor power
- 0 hours of surplus value created in the production of the widgets
To understand the logic of Marx’s approach, however, we again assume there are not three but only one capital in our original example. In place of capitals “A”, “B” and “C” we have only a single composite capital. The answer then becomes simplified:
- 240 hours of value for 300 widgets
- 45 hours of value for the labor power consumed in production
- 45 hours of surplus value created in the production of the widgets
If we treat the labor powers employed as if they were a single homogenous labor power, how the prices of production of capitalistically produced commodities form becomes a great deal easier to grasp. The value of each widget (including the value of the constant capital consumed in their production) is equal to about 48 minutes of socially necessary labor time. The labor power employed in the production of the widgets is about nine minutes of socially necessary labor time. The surplus value produced by the labor power is also about nine minutes per widget.
This means that for each capital on average we get roughly this result for 100 widgets:
- 80 hours of value for 100 widgets on average
- 15 hours of value for the labor power consumed in production of the widgets on average
- 15 hours of surplus value created in the production of the widgets on average
Yet we know that Capital “A”, employed 30 hours of labor power in its production of widgets and created 30 hours of surplus value. While capital “C” employed no labor power in its production and produced no surplus value. Despite this fact, the commodities sold by capital “C” realize a price in the market above their value while the widgets sold by capital “A” realize a price below their value, as explained below:
For capital “A”:
- 110 hours of value for the widgets
- 30 hours of value for the labor power
- 30 hours of surplus value created in the production of the widgets
- A price of production of 95 hours
- 15 hours of surplus value realized in exchange, i.e., less surplus value than was actually produced
For capital “B”, we get this result:
- 80 hours of value for the widgets
- 15 hours of value for the labor power
- 15 hours of surplus value created in the production of the widgets
- A price of production of 80 hours
- 15 hours of surplus value realized in exchange
For capital “C”, we get this result:
- 50 hours of value for the widgets
- 0 hours of value for the labor power
- 0 hours of surplus value created in the production of the widgets
- A price of production of 65 hours
- 15 hours of surplus value realized in exchange, i.e., more surplus value than was actually produced
It would appear that a portion of the surplus value produced by one capital (A) appears as the profits realized by another capital (C).
Thus, the transformation problem is not simply, (nor even mainly), about the conversion of labor values into prices of production. Nor is it simply about the production and subsequent distribution of surplus value. Finally, it is not simply about accumulation. Rather, Marx solution shows that concentration and centralization of capital is literally built into the system of wage slavery from its inception. This concentration and centralization operates to the advantage of capitals that most aggressively economize on the use of labor power in production.
Marx summarizes this result in Capital, volume 1, chapter 25:
It is concentration of capitals already formed, destruction of their individual independence, expropriation of capitalist by capitalist, transformation of many small into few large capitals. This process differs from the former in this, that it only presupposes a change in the distribution of capital already to hand, and functioning; its field of action is therefore not limited by the absolute growth of social wealth, by the absolute limits of accumulation. Capital grows in one place to a huge mass in a single hand, because it has in another place been lost by many. This is centralisation proper, as distinct from accumulation and concentration.
The laws of this centralisation of capitals, or of the attraction of capital by capital, cannot be developed here. A brief hint at a few facts must suffice. The battle of competition is fought by cheapening of commodities. The cheapness of commodities demands, caeteris paribus, on the productiveness of labour, and this again on the scale of production.
What is taking place here, side by side the brutal exploitation of the working class, is the real expropriation of many capitals by a few with the relentlessness of a physical law.
September 28, 2018
Twentieth note on Moseley’s “Money and Totality”
Following up on my reply to Rory, in this note I offer a more complete model of Marx’s argument on the transformation problem.
In this case we have three capitals, each with an identical magnitude of 100:
I am assuming a rate of surplus value of 100%.
The first capital, “A”, consumes 50 hours for constant capital and 30 hours for labor power in a given period. It sets this labor power to work. At the end of the period, produces 100 widgets.
The second capital, “B”, consumes 50 hours for constant capital and 15 hours for labor power. It sets this labor power to work. At the end of the period, produces 100 widgets.
The third capital, “C”, however, pays nothing for labor power. The capitalist sets his machines to work for the period, while he goes fishing, hunting and criticizing. At the end of the period, he returns to his workshop to find 100 widgets has been produced by his machine.
Based on the above information:
For capital “A”:
For capital “B”, we get this result:
For capital “C”, we get this result:
To understand the logic of Marx’s approach, however, we again assume there are not three but only one capital in our original example. In place of capitals “A”, “B” and “C” we have only a single composite capital. The answer then becomes simplified:
If we treat the labor powers employed as if they were a single homogenous labor power, how the prices of production of capitalistically produced commodities form becomes a great deal easier to grasp. The value of each widget (including the value of the constant capital consumed in their production) is equal to about 48 minutes of socially necessary labor time. The labor power employed in the production of the widgets is about nine minutes of socially necessary labor time. The surplus value produced by the labor power is also about nine minutes per widget.
This means that for each capital on average we get roughly this result for 100 widgets:
Yet we know that Capital “A”, employed 30 hours of labor power in its production of widgets and created 30 hours of surplus value. While capital “C” employed no labor power in its production and produced no surplus value. Despite this fact, the commodities sold by capital “C” realize a price in the market above their value while the widgets sold by capital “A” realize a price below their value, as explained below:
For capital “A”:
For capital “B”, we get this result:
For capital “C”, we get this result:
It would appear that a portion of the surplus value produced by one capital (A) appears as the profits realized by another capital (C).
Thus, the transformation problem is not simply, (nor even mainly), about the conversion of labor values into prices of production. Nor is it simply about the production and subsequent distribution of surplus value. Finally, it is not simply about accumulation. Rather, Marx solution shows that concentration and centralization of capital is literally built into the system of wage slavery from its inception. This concentration and centralization operates to the advantage of capitals that most aggressively economize on the use of labor power in production.
Marx summarizes this result in Capital, volume 1, chapter 25:
What is taking place here, side by side the brutal exploitation of the working class, is the real expropriation of many capitals by a few with the relentlessness of a physical law.