r/communism101 • u/Mad_Dog3 • 2d ago
Can profits be explained by improvements in the means of production?
I’m having difficulty reconciling the labour theory of value with the reality of prices. When technological development improves the instruments of production, Das Kapital seems to claim that the value of commodities will decrease, due to less SNLT being required to produce them. However, this does not seem to be the case, with inflation being positive almost every year, demonstrating an increase in prices.
To me, it would appear that technological development is lowering the value of commodities, but not the prices, and capitalists derive profits by pocketing the difference. This would allow for further expansion of capital without having to derive it from workers surplus-value.
Is this accurate? That capital can be developed by an increase in the capitalist’s money, without a corresponding increase in their stored value. After all, we use money to trade non-commodities constantly- such as real estate. Often money ≠ value, as we know, and it looks to me as if capital derives from the difference between the two.
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u/Turtle_Green Maoist 2d ago
Science consists precisely in demonstrating how the law of value asserts itself. So that if one wanted at the very beginning to "explain" all the phenomenon which seemingly contradict that law, one would have to present science before science... the vulgar economist thinks he has made a great discovery when, as against the revelation of the inner interconnection, he proudly claims that in appearance things look different. In fact, he boasts that he holds fast to appearance, and takes it for the ultimate. Why, then, have any science at all?
You glance at the internal process of a cell and flee from there to explain the motion of the organism as a whole. Your use of terminology is severely confused. In order to understand what "labor," "value", "money," "price," and "capital" are and their interconnection, you must read and understand Capital.
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u/Sea_Till9977 2d ago
Could I know how far into Capital Vol 1 have you read? I think you have misunderstood the basis of the commodity and the basis of surplus value.
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u/Mad_Dog3 2d ago edited 2d ago
Eight chapters in so far. I think I understand the point Marx is making about surplus value, I just can’t see how to prove his statement that (value of labor minus value of labor power) is the only way it could possibly be produced.
I do recognise this may be explained later on, but as of right now, he seems to be skimming over a lot of axioms without addressing apparent flaws within them.
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u/Sea_Till9977 22h ago
How do you think surplus value is produced? And what other ways can surplus value be produced without the exploitation of labour?
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u/StrawBicycleThief Marxist 2d ago
Aside from what others have said, I don’t know where this idea that prices don’t fall as labour content does comes from. Covid inflation was a result of supply chain breakdown, generally requiring more labour content per use value across the production process. For example, when the Suez Canal went down, the transportation production process took longer. CPI includes many services where the relative labour content has not fallen and actually, often done the opposite, so I don’t even really get the starting point. If you have journal access (or know how to use the alternative), this chapter is pretty clear.
Or alternatively, just think about how much it cost for a 240gb solid state drive 10 years ago compared to now.
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u/Mad_Dog3 2d ago
Thanks for the article, I’ll check it out. Not sure what you mean about nominal prices falling though. Inflation in the US (to use a random example) has been positive 91 of the last 100 years. Items like SSDs are the exception, not the norm.
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u/StrawBicycleThief Marxist 1d ago edited 1d ago
Nominal prices in terms of fiat currency is not the same thing Marx is talking about when he predicts falling prices of reproducible commodities under conditions of real competiton over time. Any metric looking to measure this will include inflation adjusted prices over time or pegged to a commodity like gold. Are you sure you have your head around the concepts of price, exchange value and value?
Edit: price not relative price
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u/Mad_Dog3 1d ago
I agree with you, nominal prices tend to rise while real prices tend to fall. My question is, if neither the value of a given commodity or the value of fiat currency is constant, what metric can be used to accurately measure the accumulation of value by capitalists? How can one be certain that they are actually accumulating surplus-value? This is something that’s genuinely confused me.
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u/StrawBicycleThief Marxist 22h ago edited 22h ago
How can one be certain that they are actually accumulating surplus-value?
Net income on assets is multiplicative whereas wages are additive. It doesn't matter if you determine the price of someone's assets and income in terms of ounces of gold or dollars, income growth for the capitalist class would still be exponential. What are the best theories for explaining this empirically measurable difference in incomes?
This is connected to your original question which is really one about the possibility that profit comes profit on alienation:
Before the Physiocrats, surplus-value — that is, profit in the form of profit — was explained purely from exchange, the sale of the commodity above its value. Sir James Steuart on the whole did not get beyond this restricted view; he must rather be regarded as the man who reproduced it in scientific form. I say “in scientific form”. For Steuart does not share the illusion that the surplus-value which accrues to the individual capitalist from selling the commodity above its value is a creation of new wealth. He distinguishes therefore between positive profit and relative profit.
…
The price of goods therefore comprises two elements that are completely different from each other; firstly their real value, secondly, the profit upon alienation, the profit realised through their transfer to another person, their sale.
…
This profit upon alienation therefore arises from the price of the goods being greater than their real value, or from the goods being sold above their value. Gain on the one side therefore always involves loss on the other. No addition to the general stock is created. Profit, that is, surplus-value, is relative and resolves itself into “a vibration of the balance of wealth between parties”. Steuart himself rejects the idea that surplus-value can be explained in this way. His theory of “vibration of the balance of wealth between parties”, however little it touches the nature and origin of surplus-value itself, remains important in considering the distribution of surplus-value among different classes and among different categories such as profit, interest and rent
My emphasis in bold.
https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch01.htm#ch01
Prices =/= values, so some goods can be sold above their value, some below. Entire jobs and industries exist around exploiting this. It does not actually contribute to the growth of general stock. I'm not sure why this is throwing you off because everybody already assumes capitalists are profiting in this way. The whole point of Capital is to show that even if prices did equal values and nobody could scam anybody into buying things in difference to their value, profit would still exist and the economy would grow - because the accumulation process is only made possible through the systematic exploitation of labour. How does your theory about profit on alienation explain the fact that the economy is still growing (or even better, does your theory explain why it's slowing down? Because Marx's does)?.
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u/RNagant 2d ago
Marx would agree that value and price aren't the same, this is a point he makes repeatedly. But another point he makes repeatedly is that profit is not derived by setting prices above a commodity's value, and that when prices rise above value we call the difference superprofits, which are in general temporary, happy coincidences for the capitalist. Full argument is laid out in value, price, and profit, which I encourage you to read. Imperialist monopolies do frequently rake in superprofits but this is not in general the source of profit.
Moreover, an increase in the price-form says nothing per se about the value of the commodity to be exchanged. Inflation only means that the value of the universal equivalent, money, is increasing, but this doesn't change the ratios at which any other commodities can be exchanged.
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u/Turtle_Green Maoist 2d ago edited 2d ago
Inflation only means that the value of the universal equivalent, money, is increasing,
Do you happen to mean decreasing? Though I wouldn't say "only."
The more essential answer to the title question is that the drive towards the generation of relative surplus-value spurs advancement of the productive forces.
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u/RNagant 2d ago
To answer your titular question directly, Can profits be explained by improvements in the means of production? -- yes they can. If and when an industry is unable to fulfill the demand for their product, then expanding their capacity to produce, even if it reduces the value of each commodity, and thereby the rate of profit, total profit, revenue, would rise in that case.
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u/Orangebite Marxist 1d ago
Producing some commodities more efficiently lowers the value of those commodities effected, it does not lower the value of every commodity on the market... You're also measuring total inflation against particular commodities as if with inflation, all commodities rise uniformly in price, as if the market isn't anarchistic, every capitalist competing to 'supply the demand', and beat out the others. Because of this competition, at a given time, some commodities are 'under-supplied' relative to market demand, and others are 'over-supplied'. The 'under-supplied' commodity will have a higher value during this time because the supply does not meet demand, thus the capitalist will raise the price too. Sometimes supply exceeds demand, this is when the commodities' value drops, now prices will be lowered too because people won't buy for as much as they had before when the market wasn't 'saturated'. Since all these various values and prices are changing at the same time, you are transfixed on the whole appearance, and unable to see that the values (and prices) of particular commodities rise or fall.
In any case where there are numerous competing capitalists - if one tried to sell a commodity for, say, $5 over the value of the commodity, the comparable commodities sold by competing capitalists, which are selling for ~the value of the commodity, will usually outsell that more expensive option.
On the other hand, there is such a thing called 'price-fixing', but that is nominally 'illegal' and tends to be an exception, not the rule.
I'm writing in broad strokes, but this is my understanding.
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