Date: 	Fri, 24 Nov 1995 10:17:48 -0300
From: jinigo-AT-inscri.org.ar (Juan Inigo)
Subject: Value: Prices changes due to productivity increases


John Ernst writes:

>1.  price changes due to productivity increases.
>
>1.  In Chapter XII of Book I of CAPITAL,  Marx introduces the
>     idea of technical change and the production of realtive
>     surplus value with an example.  He suggests that the
>     capitalist who introduces a new technique will generally
>     reduce his price a bit once production takes place with
>     the new technique.  We, the readers, are given no reason
>     as to why the capitalist does this.  Note that at this point
>     the capitalist with the new technique is selling at a price
>     such that the individual value is less than the social value.
>     Marx then suggests that the process of  competition will
>     eventually drop the price such that the individual value
>     will be equal to the social value.
>
>     I am saying that we, who take Marx seriously, cannot
>     simply assert that prices will drop due to increases in
>     productivity.  We have to show the how's and why's of those
>     price decreases.  In other words, we have to complete the
>     task of showing how the "law of value" operates.  To simply
>     assert that it does is to assume that which must be shown.
>     In your post,  you refer to the task of "having to show"
>     as "just another abstraction."  I fail to understand
>     how you get to this.  You seem willing to say that
>     there is an inverse relation between values and
>     productivity.  I agree.   I am saying that adherents to Marx
>     have to show how that notion brings about not only falls
>     in prices, but also the crisis itself.  If we say  that
>     prices will fall because of competition, we allow those
>     who claim that Marx's ideas are only valid for a competitive
>     capitalism and that, with the  appearance of more and more
>     monopolies, Marx's ideas no longer hold.

a) The historically determined absence of a general direct coordination in
the allocation and development of social labor determines individuals as
private independent producers. These producers do not retain any social
relation other than being individual personifications of society's total
capacity for performing labor, society's total labor-power. This total
capacity is, as such, the capacity for human labor in general. The
development of this capacity under its different concrete forms is, thus,
the development of the general social relation among the private
independent producers in an autonomously regulated process of social
metabolism. In it, society allocates its total labor-power among the
different concrete labor modalities by representing the socially necessary
abstract labor embodied in the products of the concrete labors carried out
by the independent private producers, as the capacity of these products for
relating among themselves in exchange and, therefore, socially relate their
producers. That is, the general social relation takes form in the
determination of the use values produced by labor as commodities; and the
socially necessary abstract labor materialized in the commodities and in
that way represented, becomes the value of commodities.

b) An increase in productivity results in the same socially necessary
abstract labor being materialized in a greater mass of use-values and,
therefore, in each unity embodying a smaller amount of value.

c) The determinations of value and productivity remain unchanged when the
labor of the direct producer of commodities is replaced by wage-labor in
capitalism

d) As self-valorizing value, capital needs to constantly expand its
capacity to valorize itself as if there were no qualitative limit to this
expansion.

e) The simplest way of achieving this expansion is by increasing the length
of the labor-day, thus increasing the time in which surplus-value is
produced.

f) But as self-valorizing value, an individual capital overcomes the
limitation of this length by making the individual value of its commodity
become equivalent to a greater amount of social value. It does so by
increasing the productivity of the wage labor it productively consumes,
placing it above the social productivity. On this basis it becomes able to
sell  for 10 (social value) what embodies a social labor really equivalent
to 8 (individual value).

g) But could its production be really sold for 10? The increased
productivity results by itself in an increased mass of the use-values
produced by a given amount of living labor. So an increased amount of the
same use-value will be getting now into the market. But the commodity in
question was already being sold at its value. Therefore, the social
production was agreeing up to then with the social necessity (which in
capitalism means solvent social necessity) for this commodity that
corresponds to its original value.

h) The only way in which an individual capital can sell its expanded
production is by expanding the size of its share in the total current
production and by expanding the scale of the total social necessity itself.

i) To do so, this individual capital needs to sell its increased product
bellow its former social value, keeping for itself only part of the
difference between that social value and its individual value (9).

j) As soon as the individual capital takes a part of the share of the rest
of the individual capitals in its same sphere, these capitals will start to
accumulate at a slower pace. So the increase in productivity will be
generalized, either by being applied by the rest of the capitals in the
sphere too or by pushing these capitals and their lower productivity out of
production.

k) The limit to the increase in the social and individual production is
reached again when all individual values become equal to the new social
value (8). And here it goes back to f) again on a renewed higher
productivity base.

l) By thus pursuing the increase in their capacity for individually
valorizing themselves, individual capitals give concrete shape to the
valorization of capital through the production of relative surplus-value
(and, therefore, to the falling rate of profit). By doing exactly what
individual capitals need to do as such, capital gives shape to the
historical necessity it carries in itself: the necessity of expanding
productivity and the scale of production beyond the point where social life
can be indirectly ruled through a materialized general social relation
(capital itself), therefore, annihilating itself in its own development
through the revolutionary production of the community of the consciously,
thus freely, associated individuals.

m) When total social capital affirms itself as the concrete social subject
through the transformation of surplus-value into average profit, the
specific determinations of the increase in productivity take concrete form
through this mediation.

n) Competition is the necessary concrete form in which the general
regulation of social life (that is, the general social relation whose
specificity arises from the value-form of commodities) developed into the
formation of the average rate of profit, realizes itself. Only vulgar
economy needs to turn competition into an abstraction, either by presenting
it as the true determinant of capital accumulation, or by abstracting from
it as the necessary concrete form it is.

o) A social price of production that remains above some individual price of
production (for the sake of brevity) achieved through an increase in
productivity (excluding here of course the specificity that arises from the
submission of productivity to natural determinations beyond the control of
an average capital), points out now that the rate of profit of the rest of
the individual capitals in the same sphere has fallen bellow the average.
But, at the same time, it points out that the capitals of the whole economy
are losing a part of the surplus-value that corresponds to them, since they
are paying, directly in the case of a means of production or indirectly in
the case of a means of subsistence of the labor-power, a price above that
which corresponds to the formation of the general rate of profit. So,
through the accelerated accumulation of one capital and the decelerated
accumulation of the rest, the social price of production will fall to the
level of the individual price of production, however "monopolized" the
social production.

p) Even neo-classical vulgar economy is aware of this fact, of course in
its completely inverted fashion: in its "pure monopoly," prices are
determined exactly at the same level as in its "pure competition." Only the
vulgar economy that needs to label itself Marxism or Neo-Ricardianism seems
to ignore it. In what all vulgar economies agree, is in inverting the real
determinations, so they represent the concrete form through which the value
of commodities regulates the social life by imposing itself in capitalism,
namely, the forms taken by markets (monopoly, oligopoly, etc.), as the
cause itself of the difference in the capacity of the specific industrial
capitals for valorizing themselves.

q) The point is to follow the determinations of the average rate of profit
as they develop into the concrete forms through which this rate necessarily
realizes itself in the constant differentiation of the rate of profit of
specifically different capitals. But, for the time being, it suffices with
stopping here.

Now, what I have so briefly developed here has right in the middle what
Marx develops in chapter 12, Capital I. So it is clear that John's "we, the
readers" who "are given no reason why ..." is certainly not the universe of
Marx's readers. John should notice that he is not taking into account "we,
the readers, that critically follow Marx in his reproduction in thought of
the present-day general social relation, starting from its most abstract
specific form, commodities, through the development of its concrete forms
until discovering its necessity to annihilate itself into the conscious
regulation of social life through the revolutionary action of the
proletariat thus consciously ruled." "We, the readers" is a real concrete
form that must not be turned into an abstraction.

Juan Inigo
jinigo-AT-inscri.org.ar



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