Monday, April 4, 2016

Marx’s Capital, Volume 1, Chapter 22: A Critical Summary

Chapter 22 of volume 1 of Capital is called “National Differences in Wages” and deals with the various factors that cause differences between national wage rates. For Marx’s views on how the value of labour-power is determined as a subsistence wage, see his analysis in Chapter 6 of volume 1.

Marx reminds his readers of the discussion in Chapter 17 and the issue of how the subsistence wage may vary:
“ … the quantum of the means of subsistence in which the price of labour is realised might again undergo fluctuations independent of, or different from, the changes of this price. As has been already said, the simple translation of the value or respectively of the price of labour-power into the exoteric form of wages transforms all these laws into laws of the fluctuations of wages. That which appears in these fluctuations of wages within a single country as a series of varying combinations, may appear in different countries as contemporaneous difference of national wages. In the comparison of the wages in different nations, we must therefore take into account all the factors that determine changes in the amount of the value of labour-power; the price and the extent of the prime necessaries of life as naturally and historically developed, the cost of training the labourers, the part played by the labour of women and children, the productiveness of labour, its extensive and intensive magnitude. Even the most superficial comparison requires the reduction first of the average day-wage for the same trades, in different countries, to a uniform working day. After this reduction to the same terms of the day-wages, time-wage must again be translated into piece-wage, as the latter only can be a measure both of the productivity and the intensity of labour.” (Marx 1906: 611–612).
Because of these different factors the value of labour-power varies in different nations (Harvey 2010: 242).

The factors are as follows:
– the price and the extent of the prime necessaries of life as naturally and historically developed
– the cost of training the labourers
– the part played by the labour of women and children
– the productiveness of labour
– its extensive and intensive magnitude.
– the reduction of the average daily wage for the same trades to a uniform working day.
In each nation there is “certain average intensity of labour” which is the normal level and so determines the socially necessary time needed for the production of commodities (Marx 1990: 701–702).

In an hour, a more productive worker can create more output and hence a greater total value (as a total of each value per unit he creates) than a less productive worker in a less developed capitalist country (Brewer 1984: 65). We must recall here that Marx thinks that as more machines are used in production the intensity of work increases for workers, though this as a general principle is nonsense.

Marx’s extended discussion in this passage is rather difficult to interpret:
“Only a degree of intensity above the national average affects, in a given country, the measure of value of the mere duration of the working time. This is not the case on the universal market, whose integral parts are the individual countries. The average intensity of labour changes from country to country; here it is greater, there less. These national averages form a scale, whose unit of measure is the average unit of universal labour. The more intense national labour, therefore, as compared with the less intense, produces in the same time more value, which expresses itself in more money.

But the law of value in its international application is yet more modified by this, that on the world-market the more productive national labour reckons also as the more intense, so long as the more productive nation is not compelled by competition to lower the selling price of its commodities to the level of their value.

In proportion as capitalist production is developed in a country, in the same proportion do the national intensity and productivity of labour there rise above the international level. The different quantities of commodities of the same kind, produced in different countries in the same working time, have, therefore, unequal international values, which, are expressed in different prices, i.e., in sums of money varying according to international values. The relative value of money will, therefore, be less in the nation with more developed capitalist mode of production than in the nation with less developed. It follows, then, that the nominal wages, the equivalent of labour-power expressed in money, will also be higher in the first nation than in the second; which does not at all prove that this holds also for the real wages, i.e., for the means of subsistence placed at the disposal of the labourer.” (Marx 1906: 612–613).
This passage is somewhat confused.

First, Marx says that given the same working day in two different countries with different average intensities of labour, the higher intensity nation produces more value per hour, because of greater intensity of work in that hour.

Secondly, highly productive labour in developed nations is more intense labour and creates more value before competition drives down the selling price of the produced goods to their true values.

Thirdly, Marx seems to saying that in highly productive advanced capitalist economies (where labour is more intensive) the nominal (or money) wage will be higher than in less productive capitalist nations, though it does not follow that the real wages will be any higher. Why the nominal wage will tend to be higher is not immediately clear, for Marx thinks that machines and productivity gains will actually decrease the value per unit and price of the necessary commodities making up the subsistence wage.

If prices are higher within a nation, than the relative value of money there will be lower. So one interpretation is that Marx thinks that general prices are higher in developed capitalist countries, so that money wages must be higher to allow the subsistence wage.

But it is not at all clear why this should be so, as we have seen, because Marx thinks that the value and price of the necessary commodities are lower in advanced capitalist nations because of greater use of machines and greater productivity.

Harry Cleaver interprets Marx’s views as follows:
“At any rate, the higher productivity and presumed higher intensity of labor in the English factories is presumed to follow from a higher organic composition of capital (more machinery per worker) and to allow for higher wages in England than on the continent. As we have seen above, this would be at least the tendency although other factors would have to be taken into account in a concrete historical analysis.”
Harry Cleaver, Study Guide to Capital Volume I, “Chapter 22: National Differences in Wages”
http://la.utexas.edu/users/hcleaver/357k/357ksg.html
But the higher wages here would seem to be a result of the need for a higher subsistence wage given much greater intensity of labour per hour of the working day, not a rising real wage in line with productivity growth, for, as Marx says, although “nominal wages, the equivalent of labour-power expressed in money, will also be higher in the first nation than in the second … [sc. it] does not at all prove that this holds also for the real wages, i.e., for the means of subsistence placed at the disposal of the labourer.”

Marx in the passage above is also here assuming his “law of value”: that commodities tend to exchange at true labour values. This can be applied at an international level to international trade. It is quite absurd to try and claim, as Engels later did, that in volume 1 Marx only meant to apply his “law of value” to the pre-modern world of commodity exchange, for here in Chapter 22 it is clearly applied to the developed world of 19th century capitalism.

So, in international trade, a commodity produced in a highly advanced capitalist country will not exchange for the same commodity in a less developed capitalist country, because the commodities have different labour values (Brewer 1984: 65–66).

Marx proceeds to give statistics on the number of spindles per worker in the British spinning industry as compared with other Continental nations (Marx 1990: 704). But it is not at all clear what this is supposed to prove; possibly it is meant to show that there would be a much greater intensity of labour per worker in the UK, though this doesn’t follow at all, given that many of the spindles were being automated with use of water and then steam power to drive them.

Finally, Marx rejects the idea of Henry Charles Carey (1793–1879) that national wage levels are related directly to the differing levels of productivity, and real wage rates rise with increasing productivity:
“In an ‘Essay on the Rate of Wages,’ one of his first economic writings, H. Carey tries to prove that the wages of the different nations are directly proportional to the degree of productiveness of the national working days, in order to draw from this international relation, the conclusion that wages everywhere rise and fall in proportion to the productiveness of labour. The whole of our analysis of the production of surplus value shows the absurdity of this conclusion, even if Carey himself had proved his premises, instead of, after his usual uncritical and superficial fashion, shuffling to and fro a confused mass of statistical materials.” (Marx 1906: 616).
So it cannot be that Marx thought that the real wage would rise in line with productivity growth, for this was the view that Carey held and that Marx rejected.

BIBLIOGRAPHY
Brewer, Anthony. 1984. A Guide to Marx’s Capital. Cambridge University Press, Cambridge.

Cleaver, Harry. Study Guide to Capital Volume I, “Chapter 22: National Differences in Wages”
http://la.utexas.edu/users/hcleaver/357k/357ksg.html

Harvey, David. 2010. A Companion to Marx’s Capital. Verso, London and New York.

Marx, Karl. 1906. Capital. A Critique of Political Economy (vol. 1; rev. trans. by Ernest Untermann from 4th German edn.). The Modern Library, New York.

Marx, Karl. 1990. Capital. A Critique of Political Economy. Volume One (trans. Ben Fowkes). Penguin Books, London.

4 comments:

  1. "So it cannot be that Marx thought that the real wage would rise in line with productivity growth"

    However, higher productivity makes it possible for real wages to rise even as the rate of surplus value remains the same or increases. Whether real wages do actually rise or not depends on other factors which determine the bargaining power of labour. Marx appears to think that normally, if real wages do rise, it will be by less than the increase in productivity.

    "But hand-in-hand with the increasing productivity of labour, goes, as we have seen, the cheapening of the labourer, therefore a higher rate of surplus-value, even when the real wages are rising. The latter never rise proportionally to the productive power of labour."

    https://www.marxists.org/archive/marx/works/1867-c1/ch24.htm#S4

    However it's not impossible, under conditions favourable to labour, for wages to rise in line with productivity. How long this can go on for is another question (it might imply a falling rate of profit even if the rate of surplus value is constant). The long quote I posted previously from chapter 25 discusses some of these issues.

    Also he seems to think that real wages would actually be higher in countries with higher productivity.

    "But even apart from these relative differences of the value of money in different countries, it will be found, frequently, that the daily or weekly, &tc., wage in the first nation [more productive nation] is higher than in the second [less productive nation]"

    https://www.marxists.org/archive/marx/works/1867-c1/ch22.htm

    “because in a given country the value of labour is falling relatively to its productivity, it must not be imagined that wages in different countries are inversely proportional to the productivity of labour.  In fact exactly the opposite is the case.  The more productive one country is relative to another in the world market, the higher will be its wages as compared with the other.  In England, not only nominal wages but [also] real wages are higher than on the continent.  The worker eats more meat; he satisfies more needs.”

    https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch08.htm

    ReplyDelete
    Replies
    1. "Marx appears to think that normally, if real wages do rise, it will be by less than the increase in productivity. "

      More than that, his theory requires that most wages tend towards the subsistence level:

      http://socialdemocracy21stcentury.blogspot.com/2016/03/marx-on-wage-determination-and.html

      Delete
    2. The basic subsistence level is the lower limit of the value of labour power. The value of labour power is not necessarily equal to this basic subsistence level.

      Not only can the price of labour power rise above its value, but the value of labour power can also rise.

      Whether a rise in real wages represents a rise in the price of labour power above its value, or a rise in its value, seems to depend on its permanence.

      Delete
  2. “But the law of value in its international application is yet more modified by this, that on the world-market the more productive national labour reckons also as the more intense, so long as the more productive nation is not compelled by competition to lower the selling price of its commodities to the level of their value.”

    Your interpretation:

    “Secondly, highly productive labour in developed nations is more intense labour and creates more value before competition drives down the selling price of the produced goods to their true values."

    That doesn’t really make sense. More intense labour produces more value per hour than less intense labour. More productive labour, on the other hand, produces more goods per hour but reduces the value of each good, as it reduces the labour time needed to produce them.

    I think what he’s saying is that the more productive labour in developed countries is counted on the world market *as if* it was more intense labour (“reckons as the more intense”), i.e. as if more value was being produced per hour, even if it isn’t actually more intense labour. (This is what he means by the law of value in its international application being ‘modified’).

    That’s why commodities produced by the more productive national labour are sold on the world market at prices above their value. That is, until productivity rises in other countries and competition reduces the price of the commodities on the world market to their actual value. This competitive process is delayed in the world market because capital and labour don’t move freely between countries.

    However, he then goes on to say that "In proportion as capitalist production is developed in a country, in the same proportion do the national intensity and productivity of labour there rise above the international level", so it's not clear why he's making this point about the law of value being 'modified' on the world market with respect to productivity and commodities being sold above their value.

    In the footnote to this sentence (footnote 2) he writes: "We shall inquire, in another place, what circumstances in relation to productivity may modify this law for individual branches of industry." Which suggests that productivity and intensity do not necessarily rise in tandem. All in all this passage is quite vague.

    ReplyDelete