Part 2, laying down the law with Marx
Many ways value changes in capitalist production
[Drawing by April Burke]
Here, I’ll briefly elaborate on the reading of Capital I presented in my previous essay, “Laying down the law with Marx.”
Upon returning recently to some of the early chapters of Capital, I had one passage in particular jump out at me—likely much more so than it did my first time reading the book.
It was a paragraph from Chapter 3 about changes in values: how prices of commodities can rise or fall as a result of changes in the value of money and/or changes in the values of commodities.
Later discussions in Capital involve elements of changes in value, such as the volume 3 topic of “the tendency for the rate of profit to fall” and the counteracting factors against it; as well as the case of changes in the value of constant capital in the textiles industry as the result of a cotton crisis.
My argument is that the passage which jumped out at me from Chapter 3 applies to these later discussions pertaining to changes in value. In a dense single paragraph, Marx presents a highly abstract law of economic possibilities which ultimately and in retrospect apply to much broader questions about changing values, like the falling rate of profit.
In short, in the passage, Marx explains how a relatively slower or faster rise in the value of money in relation to that of commodities would result in a fall or rise in prices, defined by the difference between the two changing values.
The passage is all about changes in value; however, remaining strictly at the level of money, commodities, and prices, this passage is not immediately transferable to the topic of changes in value in the capitalist economy in particular; getting there takes a few more steps, which of course Marx provides.
Change in value is, indeed, a frequent topic throughout Capital, but applying the Chapter 3 passage about money, commodities, and prices to the specific relations of capitalist production, requires understanding how the distinction between money and commodities applies in the relation between capital and labor: capital is a particular use of money, and labor power is a particular form of commodity.
The capital-labor relation: From money and commodities to constant and variable capital
Labor power is a particular kind of commodity, and capital is the use of money to purchase labor power, as well the raw materials and technology needed for the profitable expenditure of that labor power; capital is a social relation between things.
Marx defines the capital invested in labor power as variable capital since its consumption as a commodity through labor creates new value in products. The rest, the raw materials and technology, are constant capital, in the sense that their consumption does not create new value.
At this level, labor confronts capital itself in the form of the means of production.
Through categories like constant and variable capital, Marx’s theory is applicable not only to the particular composition of capital of his own time, of the Industrial Revolution, but also to the more service-industry heavy economy we have today in the U.S.
Though a barista is farther along in what’s commonly referred to as the “value chain” than a factory worker, more distant from the primary sites of production, they are no less a wage-worker; same goes for most of the more bureaucratic roles at the corporate headquarters.
At the level of the most general relations which define the capitalist economy, all of these kinds of producers enter the market and every cycle of production to exchange their labor power for money; they all have the same function in capitalist production, that of variable capital.
It’s my understanding that through the concepts of constant and variable capital in particular the laws from our abstract passage from Chapter 3 of Capital about money, commodities, and prices run to the heart of capitalist production and can be applied throughout its history. However, from there, subsequent levels of mediation are required until you can apply Marx’s theory to a particular empirical case.
For example, in the chapter of Capital Volume 1 wherein Marx defines these two elements of capital, constant and variable, he explains that changes of value can occur even in the constant part, in constant capital. He provides a hypothetical: if a crop failure occurs in the cotton industry, then the value, as well as the price, of cotton as a raw material will immediately rise throughout the textiles industry.
Then, in Volume 3, Marx provides a study which demonstrates these results in an actual case of cotton crisis, the Cotton Crisis of 1861–5, the kind of analysis on which the more abstract theories are based.
From the point of view of the abstract passage on changes in values from Chapter 3, the cotton crisis example demonstrates a way in which the value of money in its use as capital can change and thereby result in a higher price for commodities produced across an entire industry.
What are some of the other ways in which the values of money and commodities change in a capitalist economy?
Changes in constant and variable capital
One of the main factors determining the value of labor power is the rate of productivity, which changes over time through the development of the productive forces, via advances in machinery and division of labor.
Increases in productivity over time, and in one industry relative to another, or even one factory to another, are ways in which the value of labor power as a commodity changes.
This is the scale at which discussions of tendencies like the falling rate of profit come into play; the falling rate is driven by changes in the difference between constant and variable capital which occur as the means and forces of production advance and become more productive.
The counteracting factors which Marx introduces in Volume 3 regarding the topic of the falling rate of profit—banking, finance capital, increased exploitation of labour, and diminution of the cost of constant capital—operate as ways of balancing the differences between the values of constant and variable capital.
The range of possibilities in which values change under capitalism ultimately includes scenarios like the standard of living increasing independently of and simultaneously with increases in exploitation. If, for example, the value of labour power increases (i.e., it becomes more productive) over time at a rate faster than the increases in the price of labor power, then real wages (the amount of goods a worker can buy with wages) may remain relatively stagnant. Alternatively, if real wages manage to increase but at a rate slower than the increase in productivity, then standard of living increases independently of and simultaneously with increases in exploitation.
All of these topics involve hundreds of pages of explication throughout Capital, and there’s much more I have to say about them; however, for now, I wanted to briefly touch on the way in which a range of topics from throughout Capital relates back to the more abstract passage about change in value from Chapter 3.
Hence, it’s worth working through (and returning to) some of those earlier chapters of the book for conceptualizing things that come later.