Re: [OPE-L] workers' consumption and capitalists' consumption

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Thu Jun 15 2006 - 18:13:36 EDT

>Hi Rakesh
>>1. Does your accounting
>>conflate juridical and real-productive categories:
>>to quote more or less from the critique of Adolph Wagner,
>>  profit on capital is not a constitutive element,
>>yet the value not constituted by the labour of the capitalist
>>conceals a portion which he can appropriate legally
>I'm not exactly sure what you mean, but I look at it this way. Profit
>on capital is not technically necessary to produce the net output. But
>the presence of profit on capital is socially necessary in capitalism.

Yes, Paul C's note about the double meaning of socially necessary
proves to have been quite useful.

>It is an empirical fact that it does occur. This results in a
>different method of production compared to simple commodity
>production. Under capitalist conditions it is not possible to
>technically produce any output without also producing capitalist
>consumption goods in the same period.

By the way, Grossman agreed with you about
the social necessity of the the consumption fund for the capitalist class
(called "k" in the following analysis).

This bit may prove helpful though it deals with the problem of
expanded reproduction:

For accumulation to occur, surplus value must be deployable in a
threefold direction and must be divided into three corresponding
i)         additional constant capital (ac)
ii)        additional variable capital (av) or additional means of
subsistence for workers
iii)       a consumption fund for the capitalists (k)
Each of these three fractions is equally essential to the further
expansion of production on a capitalist basis. If the available
surplus value could cover only the first two, accumulation would be
impossible. For the question necessarily arises - why do capitalists
accumulate? To provide additional employment to workers? From the
point of view of capitalists that would make no sense once they
themselves get nothing out of employing more workers.
 From the point of view of the distribution of income, such a mode of
production would end up losing its private capitalist character. Once
the k portion of surplus value vanishes, surplus value in the
specific sense of an income obtained without labour would have
disappeared. The other two fractions of surplus value, the additional
constant capital (ac) and the additional variable capital (av),
retain their character of surplus value only so long as they are
means for the production of the consumption fund of the capitalist
class. Once this portion disappears, not an atom of unpaid labour
falls to the share of the capitalists. For the entire variable
capital falls to the share of the working class, once the means of
production have been replaced out of it. Surplus value in the sense
of unpaid labour, of surplus labour over and above the time required
to produce essential means of subsistence, would have vanished. All
means of consumption would now form necessary means of consumption.
So it follows that the k portion is an essential characteristic
condition of the accumulation of capital.
The vacuous and scholastic manner in which Luxemburg argues is
apparent now. Contemptuously she dismisses this element from her
And yet, the growing consumption of the capitalists can certainly not
be regarded as the ultimate purpose of accumulation; on the contrary,
there is no accumulation in as much as this consumption takes place
and increases; the personal consumption of the capitalists must be
regarded as simple reproduction. (1968, p. 334)
Luxemburg does not bother to explain how under simple reproduction
the consumption of the capitalists can actually grow in the long run.
Regarding the purpose of accumulation Marx tells us that the aim of
the entire process 'does not by any means exclude increasing
consumption on the part of the capitalist as his surplus value ...
increases; on the contrary, it emphatically includes it' (1956, p.
70). But to Luxemburg accumulation only seems to make sense if the
consumption of capitalist commodities is left to the non-capitalist
countries. This belongs completely in the tradition of mercantilism:
we find that certain exponents of the mercantile system ... deliver
lengthy sermons to the effect that the individual capitalist should
consume only as much as the labourer, that the nation of capitalists
should leave the consumption of their own commodities, and the
consumption process in general, to the other, less intelligent
nations. (Marx, 1956, p. 60)
Obviously Marx had anticipated the whole of Luxemburg's theory.
We should not suppose, however, that the capitalist simply waits
passively until the entire k portion has been swallowed up. Long
before any such time (at latest from in the scheme when the k portion
begins to decline absolutely) he will do his utmost to halt the
tendency. In order to do this he must either cut the wages of the
working class or cease to observe the conditions postulated for
accumulation, that is, the condition that constant capital must
expand by 10 per cent annually to absorb the annual increase in the
working population at the given technological level. This would mean
that from now on accumulation would proceed at a slower rate, say 9.5
or 8 per cent. The tempo of accumulation would have to be slowed
down, and that, too, permanently and to an increasing degree. In that
case accumulation would fail to keep step with the growth of the
population. Fewer machines and so on would be required or installed,
and this only means that the productive forces would be constrained
from developing.
It also follows that from this point in time on a growing reserve
army would necessarily form. The slowing down of accumulation and the
formation of the industrial reserve army must necessarily follow even
if wages are assumed to be constant throughout this period. At any
rate, it would not be the result of an increase in wages, as Bauer

>The replacement costs, measured
>in terms of labour-time, are therefore higher.

Ok this is a very interesting argument. I am beginning to see
what can be accomplished through an analysis of
the ideal state of simple reproduction.

>Sraffa's objectivism
>doesn't extend to counting money-capital as a commodity that is a
>socially necessary input to the production process, and therefore
>misses the objective social relations that differentiate capitalism
>from simple commodity production.

It seems that just this error vitiates what Marx calls mercantilism,
and I wonder
whether any present school is a descendent thereof.

Yours, Rakesh

>Best wishes,

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