Marx Chapter 8 plus, pages 320-332; 429-438

11/05/2013
Constant Capital defined
Constant bc past labour incorporated into products prior to
incorporation in a particular labour process
Value of means of production/Commodities is fixed
o Value gets transferred via production process into the final
product
o Total value of all means of production comes out at other end
as the same total value
Why its Constant Capital
END=BEGINNING
Poses some problems
Makes sense in cotton/shirt analogy
Dealing with energy input or inputs that disappear in
the process or machines? What happens to it
Value transfer, not material transfer going on
Value of machine gets passed onto product
But machine is still there at the end of the
day
o How much of machine gets passed on
Depreciation
Little bit passed on for
each product
Can only happen bc value is immaterial, but
objective
Socially necessary labour time
o means of its transfer is socially
mandated by value of inputs being
equally incorporated into the outputs
Transfer of value is given away to capitalist
for free by the laborer

o If laborer wasnt working, value

incorporated would be lost
o If machines not used, value
incorporated would be lost
o Laborer transfers value through the
act of productive consumption
Highly empowers labour
If we stop working, the
transfer of value stops as
well
Laborers are preserving
the Capitalists value
o Laborer also adds value to value of the means of production
Value added theory of surplus value production
Bc adding value, capacity of adding value as
variable capital
Variable bc increasing amount of value
o Laborer incorporating more socially
necessary labour time into the
existing raw materials and durable
capital goods
o As labour adds value, amount of value
added is equivalent to own labor
power
Occurs after _____ amount of
time
Adding enough value to
cover own costs of
reproduction
Labour adds even more value
We call this surplus value
Value of the product=Constant capital+variable capital
(equal to labour power)+surplus value
Embodied in EVERY COMMODITY
Definition p.317 the part of capital turned into means of production
does not undergo any alteration of value in process of production
Why its the constant capital
o The part turned into labour power has alteration of value

 Why its variable, v, capital

Constant capital cant be about creation of value
o Machines cant be source of value
Just are things that can transfer value
Their own and that of other things
o Popular misconception: Machines are a source of value
Why do capitalists invest in them if theyre not a source
of value
o Does not mean variable capital and constant capital arent
changing in value
Value of raw materials/labour may change
Constant in that it enters and exits production at the same value
Chapter 9 goal of Marx:
P. 326: Exact expression for degree of exploitation of labour power
by capital or of worker by capitalist
o C=(c+v)+s, ect
What do the ratios of c/v look like
Value of raw materials a laborer can process
The higher it is, the greater the level of
productivity
Highly productive labour can move a lot of c
without a large amount of v
o RATIO=PRODUCTIVITY
What is s/v
Surplus in relationship to variable capital
Also in terms of necessary labour to
reproduce laborer=v

o RATE OF EXPLOITATION
Amount of socially necessary
labor time you are giving to the
capitalist without being paid for
it
Usually larger than the
rate of profit
Yet capitalist always talks
about the rate of profit
What is s/(c+v)
RATE OF PROFIT
Accting system that goes beyond wealthy way to looking at
production
o You can be highly exploited, but capitalist could still have a
low rate of profit
You go to manager, Im being really exploited here
Manager says my profits are extremely low
Stupid person will sympathize, there there,
poor you, were in the same boat
o Ill work harder
In reality rate of exploitation will always be
greater than the rate of profit
Bank always looks at the rate of profit
o Actually, capitalists are likely to operate on basis of the rate
of profit
Wont be aware of rate of exploitation bc bank isnt
really judging them on that
Im guessing this is where the Jew slights comes
in
Becomes impossible for worker to know that they
have done enough adding of value to be
equivalent to their wage b/c of the focus only on
the profit
If workers knew immediately when they
were working for free for capitalist at a
certain point in the workday
o Yeah, capitalist probably wouldnt be
very well liked
o DONT WORRY, well never see
anything like this bc the value of
labour is constantly changing

Continuous labour process

Rate of surplus value is
then how worker should
think about their situation
Chapter 12: Concept of Relative Surplus-Value
Marx started off w/ theory of commodity
o How is value of commodity defined
Amount of socially necessary labour time
P. 130, 131: Followed by discussion of impact of
changing productivity upon value of commodities
WHAT DOES RISING PRODUCTIVITY DUE TO
VALUE OF COMMODITIES
LOWERS UNIT VALUE OF COMMODITIES
Combined w/ discussion on value of labour power
Labour power value is fixed by value of
means of subsistence needed to reproduce
labour at given standard of living
o That value of commodities that the
labourer would need to survive
This value varies a lot
At a given society at a
given time, we know
what the bundle is, the
value of labour power
Does any increase in
productivity do this?
Only operates w/
respect to wage goods,
stuff that anyone could
buy
Definition of rate of exploitation
o s/v
as v (value of labour power) decreases
Exploitation increases
o Imagine that the working day is a fixed length

Rate of surplus value

Number or laborers employed
Only way you could increase rate of
exploitation and rate of surplus value is by
decreasing the amount you spend on the
workers
REASONING, CAPTIALISTS ARE VERY EAGER
TO REDUCE WAGES.
MARX DOES NOT END UP LOOKING AT
THIS CASE
KNOWS CAPITALISTS WOULD TRY TO
REDUCE VALUE OF LABOUR BELOW
VALUE, BUT
o Wouldnt pass the normal limits
o REASON WHY MARX DOESNT
ADDRESS THIS IS THAT, WE
ALREADY ASSUMED THAT ALL
COMMODITIES, INCLUDING
LABOUR POWER, ARE BOUGHT
AND SOLD AT THEIR FULL VALUE
What if huge productivity increase and wage goods drop to the floor
in value
o What if you gave a bit of that saving to the working class
You could actually end up increasing rate of exploitation
while increasing physical living standard of the workers
Way to beat the refutation that workers today are
way better than they used to be, exploitation
cant be continuously increasing
Perfectly doable within capitalist system that increased
productivity produces such an increase in quantities of
commodities available that a certain amount HAS to go
to working class to preserve a market
One of the ways you can pull the working class
into support for capitalism
Sharing of productivity occurring depends
on class relations at the time
o Much like example of the length of
the working day
What happens when somebody increases productivity
o (an individual capitalist increasing productivity in whatever
field hes in)
What happens?

Capitalist produces a benefit to everybody in

capitalist working class
Value of labour power goes down, all
capitalists can pay less value
Why would he do this?
o Small amt of gain for lg effort
Idea of the coercive laws of competition as a reason for capitalist
dropping the value of labour
o Competition seems to be a method of achieving equilibrium//
supply/demand
o We have to look at the rules of competition p.433
not our intention to consider the way in which the
imminent laws of capitalist production manifest
themselves in the external movement of the individual
capitals, assert themselves as the coercive laws of
competition, and therefore enter into the consciousness
of the individual capitalist as the motives which drive
him forward, this much is clear: a scientific analysis of
competition is possible only if we can grasp the inner
nature of capital, just as the apparent motions of the
heavenly bodies are intelligible only to someone who is
acquainted with their real motions, which hare not
perceptible to the senses.
Have to understand what competition will do
Need to truly understand the nature of capital
Seems like theres a bit of commodity
fetishism reference here
o Value of Commodity itself is
disguising thing
a social average
those below avg
selling at avg but
producing at below avg
(more surplus value)
selling above social
average will be getting
less social value than the
social average
What happens when mechanization gets put in the mix
Set a weaver against a power loom
o What happens to value
The value drops a ton

Weavers cant compete, get driven out of

business
If you find a way to produce something much more
efficiently,
o You might just sell at the average
Produce at a different level
You end up with an extra piece of surplus
value
Will then start to outcompete by
extended market against other
capitalists
Still getting extra but now
outcompeting other things
o If you get into competition,
What allows my opponent to
be able to produce things so
cheaply
New machine?
Therefore go out and
buy a new machine
Durable goods version
of an arms race
Causes your surplus
value to
start/eventually
disappear
WHY CAPTIALISTS
INNOVATE
Competition tends to generate leapfrogging innovations among
capitalists
Fight for the most superior tech in search for short term form of
surplus value for near future
Capitalists rarely act individually in a class interest
Driven to act individually is to do something thats in the class
interest
o Bc it produces great economic results in the class interest
Tend to be pushed toward innovation
Innovations frequently treated as something that just happens,
outside of the market process
Marx puts it within the logic of capital itself
No way a capitalist society cant be technologically dynamic
o Big problem of USSR

Were almost never technologically dynamic across the

board
Only in laser tech and a couple other things

Liquidationist: Root of the ills

Worker exploitation+alienation
When you get rid of capitalism
o Logically those ills would disappear
This idea that policies that were already in place that were aimed at
curbing certain social ills wouldnt be necessary anymore
Social Science by-in-large was liquidated
o Statistics more or less replaced economics
Exploitation of Workers
o Extraction of surplus value goes away
Soviets got rid of their law against prostitution
Still arrested prostitutes though
Very hard to know what to do except govt would be in charge of
commanding heights
How do you have some small planned structures in larger market
o Crowding out..
They did it on purpose???????
Interest rates
Marx doesnt say anything good about interest/compound interest
o Therefore USSR:

Refused to use an interest rate

Using a 0 interest rate
Cost 50 years down the road should look
the same as a cost today
o Environmentalism got totally ignored
Everything Marx talks about in terms of economics is about capitalism
No obvious answer?
1920s in USSR=fertile time for art ect.
o Interesting ideas about how to institute a socialist economy
o In the end intellectual arguments didnt end up being
important
Stalin put an end to that
Stalin did one single service
His last book
o Was about the economic law of
socialism
Afterwards revived effort from
1920s to produce a textbook of
socialist economics
Finally got published in
the 1950s
Political Economy
Historical version is worth
looking at
Compare it to Western
Economics
Puts forth basic economic law of socialism
Making the maximum use of resources for the betterment of the
country
Book designed for intro text for micro
Came out mid-1980s, Phelps
o Flop on the market bc it was an attempt to simplify stuff
Political Economy
Economy who was in gulag for a while
After he got out
o Pointed out he couldnt study econ in gulag
Econ in USSR fell behind even faster
Tech dynamism inevitable & a good thing