[OPE] devaluation and revaluation of variable capital

From: Jurriaan Bendien (adsl675281@tiscali.nl)
Date: Fri Feb 15 2008 - 06:23:55 EST

Jerry wrote:

"After all, *working class housing* is also an "element of variable capital" which can impact the costs of reproduction of labour-power."

I think that is a mistake. Housing costs are a variable capital cost, only if they are part of the labour costs directly met by capitalists. Variable capital and the reproduction costs of labour power are separate concepts. Not all reproduction costs may be met from wage expenditure. 

The confusion of the two is due to Marxist and Sraffian authors, who viewed variable capital as a "bundle of wage-goods". This has nothing to do with Marx's own argument. Marx argues explicitly:

"The current conception whereby some political economists seek to extricate themselves from the theoretical difficulty, i.e., the understanding of the real interconnections - that what is capital to one is revenue to another, and vice versa - is only partially correct and becomes utterly wrong (harbours therefore a complete misunderstanding of the entire process of exchange taking place in annual reproduction, hence also a misunderstanding of the actual basis of the partially correct) as soon as the character of universality is attributed to it. (...) The variable capital functions as capital in the hands of the capitalist and as revenue in the hands of the wage-worker. The variable capital exists at first in the hands of the capitalist as money-capital; and it performs the function of money-capital, by his buying labour-power with it. So long as it persists in his hands in the form of money, it is nothing but a given value existing in the form of money; hence a constant and not a variable magnitude. It is a variable capital only potentially, owing to its convertibility into labour-power. It becomes real variable capital only after divesting itself of its money-form, after being converted into labour-power functioning as a component part of productive capital in the capitalist process. Money, which first functioned as the money-form of the variable capital for the capitalist, now functions in the hands of the labourer as the money-form of his wages, which he exchanges for means of subsistence; i.e., as the money-form of revenue derived from the constantly repeated sale of his labour-power. We have here but the simple fact that the money of the buyer, in this case the capitalist, passes from his hands into those of the seller, in this case the seller of labour-power, the labourer. It is not a case of the variable capital functioning in a dual capacity, as capital for the capitalist and as revenue for the labourer. It is the same money which exists first in the hands of the capitalist as the money-form of his variable capital, hence as potential variable capital, and which serves in the hands of the labourer as an equivalent for sold labour-power as soon as the capitalist converts it into labour-power. But the fact that the same money serves another useful purpose in the hands of the seller than in those of the buyer is a phenomenon peculiar to the purchase and sale of all commodities. Apologetic economists present the matter in a wrong light..." http://www.marxists.org/archive/marx/works/1885-c2/ch20_02.htm#10

It is true that long-term fluctuations in housing costs affect the value of labour-power, but the value of labour-power is not the same as variable capital. These can vary independently of each other.

Housing purchased by workers themselves for owner-occupation can be viewed as a durable consumer good or a capital asset, but this it has nothing to do with the concept of variable capital costs. Rented housing is per definition a capital asset, but not production capital. Whether or not owner-occupied housing is a durable consumer good or a capital asset, depends also on whether an integrated housing market exists. 

In 19th century Britain, the percentage of home owned by working class people was vastly lower than today. Indeed, Frederick Engels wrote in The Condition of the Working Class in England (1845) that "The great towns are chiefly inhabited by working-people, since in the best case there is one bourgeois for two workers, often for three, here and there for four; these workers have no property whatsoever of their own, and live wholly upon wages, which usually go from hand to mouth." In the USA, things were different - by 1900, fully one-third of US urban dwellers owned their own home (today that fraction has doubled).

As far as I know, the real "take-off" in home ownership in Britain occurred only after world war 1. Around 300,000 houses were built in Britain almost every year during the 1920s and 1930s. Since e.g. between 1921 and 1931, the British population increased by only about 2.1 million, this meant that the housing stock in that era expanded far in excess of population growth. The explanation probably has to do with: 

- wage-levels (the ability to save) relative to the cost of owner-occupied housing and the cost of living.
- the development of mortgage finance and mutual societies (credit unions).
- innovations in building techniques, making it possible to build much faster at a lower cost.
- legal changes in property relations affecting the construction industry
- ideologies of social reform which made decent housing and homeownership desirable.


ope mailing list

This archive was generated by hypermail 2.1.5 : Fri Feb 29 2008 - 00:00:03 EST