Date: Thu, 7 Mar 1996 20:54:58 +0100
From: m-14970-AT-mailbox.swipnet.se (Hugh Rodwell)
Subject: Re: "Value Pump"


Thanks everyone for the positive feedback.

Brad's remarks on the 'need to overcome the legacy of Ernest Mandel' set us
a very urgent task. One way of getting to grips with it is to go back to
the source and see just how much we can get from Marx himself without
having it filtered through distorting commentaries by latter-day
scholastics with their own axes to grind.

Adam Rose writes:

>I instinctively feel that sectors with a high organic composition
>are the most profitable eg the British based Chemical industry is one of
>the few industries which is internationally competitive. Yet the assumption
>is that low organic composition industries generate more surplus. I just
>don't believe this. I think that perhaps the key is that the rate of
>exploitation is also different.

I think I'm beginning to see what's bothering you. My assumption (and
Marx's) is that low organic composition means more surplus VALUE. I'm not
talking about surplus profits at all here (be with you in a second, Rakesh
& Brad). My view is not at all that 'certain sectors of the economy (
services, agriculture ) are *permanently* prone to a lower organic
composition of capital than others ( manufacturing , chemicals )' [Hugh's
emphasis].It's that they have been so historically. As your argument
indicates, heavy investment in agriculture, along with the forcible
expropriation of hundreds of millions of small and middle peasants (usually
referred to by the euphemism 'urbanization'), has created an agribusiness
sector which is approaching manufacturing in its composition of capital.
This has long been the case in Britain, with a very small agricultural
population producing enormous quantities of food and profits, it is the
case in New Zealand and Denmark etc, and it is becoming the general case in
countries such as the US with the removal of small-scale family farms
leaving the field to the real giants (France and Germany with their very
powerful small- and not so small-holder lobbies are heading into terrible
political stress over this, as is Poland in the process of restoration,
which in fact means the process of destruction of small peasants who were
artificially kept alive under Stalinism - the irony is terrible. The
so-called 'green revolution' and the class-ifying of India are all part of
this process, too.

Which of course means that less surplus value is produced in agriculture to
be pumped over or siphoned off to core manufacturing. Where's the necessary
value going to be found? In services, the ultimate low-tech sector.

Here there are big problems, as Marx goes against the grain of all
bourgeois economists in his definition of services. A couple of years ago,
Scientific American had a big article on problems in the service sector,
and it was chaos, conceptually speaking. Almost everything was there -
transport, postal activities, communications, restaurants - I can't recall
everything off-hand. Trouble is, Marx is very clear in both Book II and
Book III that activities involving material movement of commodities are
actually adding value to these commodities and are a part of the production
process taking place in the sphere of circulation (eg 'expressage,
transport, storage, etc' Bk III, ch 17 'Commercial Profit' Prog Pub 1966 p
288, and Book II, the start of ch 8 'Fixed Capital and Circulating
Capital', eg p 162). The movement is the use value imparted to the
commodity by the process of say transportation. But even consumption of say
travel by individuals becomes commodified. Marx says in Book II ch 17:

        The instruments of labour properly so called, the material vehicles of
        the fixed capital, are consumed only productively and cannot enter
        into individual consumption, because they do not enter into the
        product, or the use-value which they helped to create but retain their
        independent form with reference to it until they are completely worn
        out. The means of transportation are an exception to this rule. The
        useful effect which they produce during the performance of their
        productive function, hence during their stay in the sphere of
        production, the change of location, passes simultaneously into the
        individual consumption of, for instance, the passenger. He pays for
        their use in the same way he pays for the use of other articles of
        consumption. (p162).

Postal operations and telecommunications involve the movement of messages
(among other things), the material shift in space is the material aspect of
the commodity, and the labour involved in the shifting is labour productive
of value (more to the point, surplus value). Not really a service, then, in
fact. So no great deal that this sector, as you say, Adam, is very
high-tech and has a high composition of capital.

Perhaps real services could be described as a 'laying on of hands',
touchy-feely person-to-person thing. The thing is, capitalism is so
thoroughly socialized now, and has outlived itself so long (Marx writes
that it's outlived itself in the Manifesto, that makes it 150 years past
its best-before date) that even touchy-feely stuff is becoming
commoditized. It's being organized by capitalists who employ workers whose
labour-time is very strictly supervised and measured. Like MacDonald's
converting the serving of hamburgers into the spitting out of gobbets of
labour-time. You get things like hair-dressing and massage coming into
this, hack writers paid by the word, hack musicians paid by the session etc
etc, as well as huge sectors such as education.

(Briefly on education. As Chris says, the private teacher is quite the
productive labourer when organized by a capitalist and stuffing dollops of
know-how into sausage-skin students who pay to be filled. But remember that
labour power is a commodity and has to be produced - and a very big part of
that production takes place in the education system. The conceptual
problems of this and other public sector production/services derive from
complete market failure because of the period of production and ideological
denial of the commodity character of labour-power. Nevertheless there is a
good case to be made out for the production of value by teachers.)

Now, as for equilibrium and surplus profits - Brad writes:

        as far as I can see, the process of drawing off the surplus profit
        exists not *in order to* equilize the rate of profit, but rather
the
        other way around: the tendency towards the equilization of the rate of
        profit generates an uneven distribution of the surplus value on the
        basis of the differing organic compositions. Thus disequilibrium.

And Rakesh writes:

        What about the competition which results from the pursuit of extra
        surplus, the techno-organizational transformations by which one
        capital outstrips and eventually destroys another, temporarily
        enjoying surplus profits?  Here competition does not function to bring
        the system in equilibrium.
        The person who taught me Marx (Richard A. Walker, Prof of geography
        here at UC Berkeley) refers to the equilibriating function as weak
        competition and the latter function as strong competition.

I think that Brad's *in order to* confuses the issue. Marx describes what
happens as a process in which the rate of profit in an economy tends to get
equalized as competition between capitals levels out differences between
the rates of profit in different sectors. This works best, as Marx says in
Book III, when capital can move freely between the different sectors.
Monopoly obviously puts obstacles in the way of such free movement and
distorts the process. But the amount of value in any society to be
redistributed is limited by the actual labour expended in it, hence the
fighting over the limited amount of surplus value available. In value
terms, each sector produces different amounts of surplus value depending on
its organic composition. The equalization process has nothing to do with
this being so. What the equalization does is ensure that in the long run,
given free competition and free movement of capital, equal portions of
capital will receive equal portions of surplus value transformed into
profit, something that is not the case to start with. If you like, there is
inequity in the fact that sectors producing a lot of value (those with a
low composition of capital) have it sucked away from them to sectors
producing next to no value (high organic composition), but Marx goes to
some lengths to describe the mechanisms forcing individual capitals to
invest and rationalize or die. All this happens behind the backs of the
actors. It's an automatic process.

I don't think I agree with Richard Walker's distinction between 'weak' and
'strong' competition. It's the *same* competition producing devastatingly
different effects. Capital is always moved around to get an edge over
competitors. There's no point in doing this half-heartedly, you do it to
kill. And if mutual assured destruction is likely, you make an agreement
(cartel, say) to peacefully co-exist until such time as one of you can eat
the other with impunity. The equalization is just as much a product of this
as is the monopolization.

As both Marx and Engels insisted, and Lenin demonstrated very powerfully,
the end towards which capitalism is tending is in fact monopoly - the
antithesis of individual private capitals freely competing and stably
equalizing prices and profits. Again, this socialization of capital (Engels
notes the emergence of cartels and trusts in Book III ch 27, in dealing
with limited companies/corporations based on share-holding and Marx
characterizes this process as 'the abolition of capital as private property
within the framework of capitalist production itself') has nothing to do
with conscious intent. 'They are not aware of it, but they do it none the
less'.

I stated my views on the instability of capitalism in my posting on Working
Class Subjectivity of 5 Feb, where I wrote among other things:

        Important limits are those involved in Marx's characterization of
        capital as a dynamic, non-reversible, unstable mode of production,
        that already in his day had outlived its 'progressive historic task'
        of disciplining, developing and universalizing social production. (All
        features at the centre of Lenin's characterization of the imperialist
        epoch as an epoch of wars, revolutions AND THE TRANSITION FROM
        CAPITALISM TO SOCIALISM.)

This inbuilt disequilibrium is a tragedy for capitalist apologists. They
have to present this man-eating, madly careering tyrannosaurus as a
dependable,
docile work-horse, or perhaps a friendly dragon with no fire and drawn
teeth. However, the operations of capitalism require the rate of profit to
equal out, and that any unevennesses between sectors get balanced out - in
the same way as the operations of the tectonic plates require accumulated
tensions to get balanced out. The results are the same - earthquakes, whose
social equivalents are wars, mass migrations, mass misery, mass bankruptcy,
and massive inequalities. And massive repression to impose bourgeois
'order' on the mess and prevent the actual producers from associating to
consciously run the system their labour reproduces.


Cheers,

Hugh




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