Renato Flores presents an English translation of Brazilian economist and sociologist Ruy Mauro Marini’s Plusvalía extraordinaria y acumulación de capital, originally published in Cuadernos Politicos in 1979. You can find our other translations of Marini’s work here.
Rodrigo Torres, Mundinho (2020)
The special productivity of labor in any particular sphere, or in any individual enterprise of this sphere, is of interest only to those capitalists who are directly engaged in it, since it enables that particular sphere, vis-a-vis the total capital, or that individual capitalist, vis-a-vis his sphere, to make an extra profit.
To this confusion – determining prices through demand and supply, and, at the same time, determining supply and demand through prices – must be added that demand determines supply, just as supply determines demand, and production determines the market, as well as the market determines production.
Marx, Capital, vol. III. Ch. X
In the course of this decade, and in open contrast with the repressive policy that, with rare exceptions, states adopted in the scientific and cultural field, Marxism has had a remarkable diffusion in Latin American intellectual and academic circles. This has meant that, to a greater or lesser degree of orthodoxy, the studies carried out, from the point of view of different disciplines, on the reality of our countries increasingly incorporate the instruments of Marxist analysis. This incorporation is in itself a process, which presents, progressively, a double character: on the one hand, a better knowledge of Marx’s work and of the currents that have been derived from it, and, on the other, an enrichment of the formal representation of Latin American reality, to the extent that, due to its own development, the characteristics and tendencies that are inherent to it become more pronounced. Thus, in economics, after an angry rejection of any concern with the problems of circulation and a productivist bias that corresponded to the partial approach with which Marx tackled the problems in the first book of Capital, Marxists are now making an effort to grasp the economic cycle as a whole, with which the dialectic between production and circulation, which is the subject of the first two books of the work, acquires new interest. This leads to the fact that even non-Marxist studies, accustomed to approach the economic problematic from the angle of demand, tend to introduce in their works aspects of Marxist instruments.
Among other aspects, it highlights the interest that Latin American economists began to awaken in the schemes of reproduction of capital, which Marx exposes in the third section of book II. These schemes became very topical on two occasions in the development of Marxism, giving rise to bitter polemics, which even today cause confusion. In our case, that is, in their application to the dependent economies, their importance comes from a specific reason: the remarkable intersectoral imbalance observed in those economies, expressed in the tendency to disproportionate growth of the production of luxury goods with respect to that of means of production and necessary consumer goods, an imbalance that is combined with the predominance in luxury production of foreign capital and, therefore, of above-average technology, monopolistic structures and price manipulation.
It is undeniable that Marx’s schemes provide an adequate instrument to approach the subject. There is, however, the risk that, as happened on the two occasions mentioned above, they may be taken beyond their possibilities and focus on the solution of problems that they cannot solve by themselves. On the other hand, if used arbitrarily, the schemes may favor the overvaluation of circulation that characterizes neoclassical economics (which has inspired, in its origins, the current Latin American economic science), allowing it to take new breath and bias the analyses based on them to its own benefit.
It is convenient, then, to verify what the schemes of reproduction really are and what role they play in Marx’s theoretical construction, before applying them to the study of our reality. In this paper we propose to carry out, albeit briefly, this task and then examine some attempts to use such systems in Latin America, which have seemed significant to us.
Ⅰ
In undertaking the exposition of the schemes of reproduction, Marx abandons the point of view of individual capital and the formula of the cycle of money-capital and productive capital, which he adopted in the preceding section of Book II, in order to approach the process from the point of view of total capital and according to the formula of commodity-capital.1 This is explained by the fact that, now, the object of investigation is not capital strictu sensu, that is, the mass of commodities destined for valorisation (constant capital + variable capital + accumulated surplus-value), which can be accounted for by both the form M…M’ and the form P…P’, but the whole of the social capital in circulation, which also includes commodities destined for individual consumption; this is particularly important as far as the circulation of surplus-value is concerned. Indeed, although the form C…C’ offers the advantage of considering the working class not only as producers but also as consumers, there is implicit in it only a change in the form of v, already included in the forms M and P, while the non-accumulated surplus value, which is realized through the individual consumption of the capitalists, was excluded in these forms and is only considered when the cycle is analyzed according to C.2
This first peculiarity we find in the reproduction schemes is by no means fortuitous. In his plan of exposition, which contemplates first simple reproduction, in which all surplus-value is consumed, thus no accumulation of capital taking place, and then extended reproduction, in which this does take place, Marx does not lose sight of it. Although, as he points out, simple reproduction is only an abstraction, and can never be understood as a phase, not even as in Rosa Luxemburg’s ‘theoretical fiction’:3 “When there is accumulation, simple reproduction is always part of it; it can therefore be focused on by itself and constitutes a real factor of accumulation.”4 From the strictly economic point of view it is, then, this particularity that leads Marx to establish the two great sectors of production: means of production (I) and means of consumption (II); to distinguish in the latter two subsectors: means of necessary consumption (IIa), which are destined to the workers’ consumption, and means of luxury consumption (IIb), which the capitalist class buys when spending its surplus value as rent and not as capital, that is to say, when attending to its individual consumption.
In analyzing the proportions in which, year by year, the commodities produced in both sectors must be exchanged, Marx establishes certain regularities to assure the normal development of the reproduction process, which Bukharin summarizes as follows:5
- a] in simple reproduction, the sum of the yields of sector I must be equal to the constant capital of sector II or: I (v + p) = IIc
- b] in expanded reproduction, all the new variable capital of sector I and the part of the surplus value of it that is consumed unproductively must equal the new constant capital of sector II or: I (v + β v + α p) = II (c + β c)
- where α expresses the part of the surplus value consumed unproductively and β the accumulated part.
The reasoning that allows us to arrive at these results is developed on the basis of three main assumptions. The first of these, that we are dealing with a pure capitalist economy, is due, first of all, to the fact that the purpose of the diagrams is to analyse the conditions of reproduction of the capitalist mode of production and not its connections with other modes of production; this, which is consistent with Marx’s view of the tendency of the capitalist mode of production to become a universal mode of production,6 leads him, for methodological reasons, to exclude foreign trade: he is working not with a capitalist country, but with the capitalist mode of production, with respect to which any effect of foreign trade can only be considered as neutral.7 This level of abstraction is congruent with Marx’s general methodological premise that:
In a general investigation of this kind, it is always assumed that the actual conditions correspond to their concept or, in other words, the actual conditions are only stated insofar as they correspond to their own general type and express it.8
The second assumption, which follows from the first, consists in considering the existence of only two classes: capitalists and workers, and consequently of two kinds of income: surplus value and wages. In fact, when it comes to the realization of the commodities which reach the market, there are only two starting points [of the mass of circulating money]: the capitalist and the worker. All other categories of people have to obtain money for the services they render from these two classes or are, in so far as they receive it without any consideration, co-possessors of surplus value in the form of rent, interest, and so on.9
It is true that “the money which the workers invest in buying and paying for their means of subsistence exists previously under the form of money of variable capital and, therefore, it is put primitively into circulation by the capitalist, as a means of purchase or payment of labor power”; therefore, “the capitalist class constitutes […] the unique starting point of the monetary circulation”.10 However, the distinction of this monetary circulation in two great categories is necessary precisely because it is in this way that the reproduction of the two antagonistic classes is ensured; the problems of the distribution of the product find there their simplest and most decisive form. On the other hand, by the very fact that the circulation of money has only one origin: the capitalists, and that it is up to them to circulate the totality of surplus value, the problems of accumulation begin precisely in the way it is distributed between investment and consumption, that is to say, by the rate of accumulation. Hence the importance of the subdivision of sector II into subsectors a and b, to which we will return later.
As a third assumption, Marx establishes a scale of reproduction on the basis of the same productivity, the same duration and the same intensity of labor. Consequently, neither the organic composition of capital, nor the degree of exploitation, nor the basic relation of distribution varies. As it has become the unanimously questioned assumption in the polemics that gave rise to Marx’s schemes, we will examine it in more detail.
The common point to all those who intervened in the discussion raised by the reproduction schemes was the problem of their application to the study of the real movement of the capitalist system. As the debate was initially situated, it returned to the central question raised by classical economics regarding the “future of capitalism”.11 However, while in classical economics this question was framed in a dichotomy, based on a congenital impossibility of capitalism to realize itself as a historical mode of production or on a limit to its development that did not question its validity as a mode of production,12 in Marxism, and with the sole exception of Lenin, the discussion took another turn. Thus, in their confrontation with the Russian populists, both Bulgakov and Tugan Baranovsky relied on the schemas to sustain the possibility of capitalism’s development without any kind of limitation, which, with nuances, reappeared in the argumentation later developed by Kautsky, Hilferding and Otto Bauer; the problem of overcoming capitalism, by whatever means, was thus left to the action of the class struggle, which, even if it took root in the contradictions inherent to the capitalist mode of production, would have to answer alone for its liquidation or its permanence.13 On the contrary, Rosa Luxemburg, although dividing camps with the Russian populists, as well as with Sismondi himself, ended up joining them at the end of the road when she argued that, although determined by a fundamental internal contradiction, the fate of the system was sealed by its impossibility of realizing itself historically as a universal system, as the schemes supposed; this, which denied Marx’s first two assumptions, was established precisely by the rejection of the third assumption.14
Now, however important the contribution that the debate on the schemes of reproduction made to the deepening of Marxist theory, it is evident that this debate suffers, at its root, from a basic vice, which, in the Russian polemic, Lenin had already made evident: the confusion between the logical and the historical, between the abstract and the concrete.15
Lenin wrote:16
The problem of realization is an abstract problem that is related to the general theory of capitalism. Whether we take one country or the whole world, the basic laws of realization, revealed by Marx, remain the same. The problem of foreign trade or of the foreign market is an historical problem, a problem of the concrete conditions of the development of capitalism in some one country and in some one epoch.
[…]
It follows from the theory [of realization] that, even with an ideally smooth and proportional reproduction and circulation of the aggregate social capital, the contradiction between the growth of production and the narrow limits of consumption is inevitable. But in reality, apart from this, realization does not proceed in ideally smooth proportions, but only amidst ‘difficulties,’ ‘fluctuations,’ ‘crises,’ etc..
This passage sufficiently clarifies many of the apparent contradictions that Rosdolsky thinks he identifies in Lenin’s texts with respect to the problem.17 There remains, however, the doubt, raised by Rosdolsky, as to whether the schemes of reproduction, rather than a theory, which is indisputable, represent Marx’s theory of realization. If this were so, the position that Tyrians and Trojans established between them and the approaches to the problems of realization that Marx presents in Book III (in particular, in the third section), as well as in his Theories of surplus value, would evidently have reason to exist. But the very existence of the third assumption of the schemas and the importance Marx attributes both to the degree of exploitation and to technical progress, in Book I as in Book III (to the point of identifying capitalism itself as a historical means for the development of productivity),18 as well as to the distribution of the social product, etc., indicate that this cannot be an accidental contradiction or a new ‘epistemological break’, as if the Marx of the last draft of Book II were reneging on his entire theoretical construction.19 On the other hand, the existence of the third assumption cannot be attributed to a mere operation of simplification, because of the very importance it has in the elaboration of the schemes, as well as for the fact that there is no difficulty of calculation that cannot be solved in schemes of that nature by means of suitable artifices; however, however sophisticated these would then become and however much they would want to prove, they would not go beyond being mere simulation models, which do not prove, for this very reason, absolutely nothing.
Thus, in order not to make the mistake of confusing the schemes with a formal representation of reality, as it was done in the course of the mentioned debate, it is necessary to consider them at the level of abstraction in which Marx formulated them, to ask then the reason for the introduction of the third assumption (the other two stand by themselves, as already indicated).
2. The starting point for the correct location of the schemes of reproduction in Marx’s theoretical construction is given by Rosdolsky, when he points out that the aim of these schemes is to analyze and resolve the contradiction existing in the process of reproduction of capital between use-value and value:
“In order to reproduce its capital,” writes Rosdolsky, “society,” that is, the “total capitalist,” must not only have at its disposal a fund of values, but must also find these values in a given form of use – in the form of machines, raw materials, means of life – and all this in the proportions determined by the technical requirements of production. The formation of value and surplus-value is thus already linked here, for technical reasons, to ‘social metabolism’, even if we disregard the need to sell the commodities produced, to find buyers for them.20
This is a problem that had not presented itself to Quesnay, when he carried out the analysis of reproduction as a whole, due to the very fact that, in agriculture, the economic process of reproduction, that is, the reproduction of value ‘is always intertwined […] with a natural process of reproduction’,21 but which arose from Adam Smith, due to the basic error that, under his influence, classical economics committed: to confuse the value of the product with the product of value.22 For this reason, Marx is concerned, from the beginning, with the fact that “the cycle of individual capitals, included in the social capital, that is, considered in its totality, embraces […] not only the circulation of capital, but also the general circulation of commodities”, establishing:
This [the circulation of commodities], primitively, can only be found to consist of two elements: 1st the cycle of capital itself, and 2nd the cycle of the commodities absorbed by individual consumption; that is, of the commodities in which the worker invests his wages and the capitalist his surplus value (or a part of it).23
In other words, it will be necessary to contemplate “the circulation of those goods that do not constitute capital”, although they do integrate the cycle of the social capital as a whole.24
That apparent contradiction between both movements of circulation explains why Marx, before going on to his exposition properly speaking, stops to analyze Smith’s error, with respect to his appreciation of constant capital (“fixed capital”, for Smith), which would constitute a capital-value that does not give rise to rents. Marx indicates that Smith is approaching the correct resolution of the problem he poses: for he had already observed that certain parts of the value of one category of commodity-capitals (that of the means of production) which form the total annual product of society, while constituting rent for the individual workers and capitalists engaged in their production, do not, however, form an integral part of the rent of society, while a part of the value of the other category (that of the means of consumption) constitutes capital-value for those who appropriate it individually, for the capitalists acting in this sphere of investment, but only a part of the social rent.25
The problem, therefore, that Marx will try to solve is: “how is the value of capital absorbed by production replenished on the basis of the annual product and how is the movement of this replenishment intertwined with the consumption of surplus value by the capitalists and of wages by the workers.26 His solution involves the consideration of value in its natural form of means of production and means of consumption (consequently, the division of the productive apparatus into its two great sectors, I and II), that is, the consideration of value in intimate connection with use-value.27 Here we return to the problem raised in Chapter I of Book I, which derives from the ‘double character of labor itself: labor which, as an investment of labor-power, creates value, and labor which, as concrete, useful labor, creates useful objects (use-value)’.28
This has a first consequence, which is pointed out by Rosdolsky: in the process of reproduction, “each of the two sectors must take special care to substitute the value of its elements of production: but it can only do so if it takes a part of those elements of production from the other sector, in a materially appropriate form. But, on the other hand, each sector can only achieve possession of the use-values it needs if it obtains them from the other through the exchange of value equivalents”. And he stresses, Rosdolsky:
This reciprocal dependence of social “value substitution” and “matter substitution” is clearly expressed in the schemes of reproduction; but such schemes can only exhibit this dependence by strictly separating the two sectors from each other and severely limiting their mutual relations exclusively to the exchange of commodity equivalents.29
In this plane of analysis, Rosa Luxemburg’s assumption that surplus value accumulates, according to the established rate, in the same sector where it was produced, is valid, and Napoleoni’s criticism of her in this sense is not justified.30 On the other hand, under the assumption of a constant rate of accumulation, it will also be necessary to keep the degree of exploitation constant, that is, to rule out any variation in the intensive or extensive magnitude of labor that alters the proportions of basic distribution between surplus value and wages, since a different procedure would immediately provoke an imbalance between the quota of surplus value and the rate of accumulation, and therefore between its masses; this is a point that should be retained, since it will be useful for us later on.
The second consequence of the existing identity, on this plane, between value and use-value is even more decisive and, to a certain extent, easy to understand; however, it has been the workhorse par excellence of the debates motivated by the schemes. It is the constant rate of productivity. In fact, the nourishment of labor productivity acts on the relation between the value and the use-value of commodities in a contradictory way, since it reduces the former while keeping the latter invariable; this is also true for the intensity of labor, as long as its increase is general and uniform. Marx exposes this contradiction in the following law: ‘A day’s work of a given magnitude always results in the same product of value, no matter how much the productivity of labor varies, and with it the mass of products […]’,31 which is complemented by the fact that ‘if the intensity of labor were to increase simultaneously and equally in all branches of industry, the new, higher degree of intensity would become the average or normal social degree and would therefore cease to count as an extensive magnitude’.32
This apparent similarity between productivity and the intensity of labor, as regards its effect on the value and use-value of commodities, conceals differences which it is useful to bring out. Thus, in general terms, i.e., for the social product as a whole, the law of productivity applies to the branches of production but not to individual capitals; In effect, by raising his productivity above the normal level established by socially necessary labor-time,33 that is, above that which determines the social value of the commodity, the individual capitalist achieves a greater product of value for the same day, precisely because, although the individual value of the commodity has fallen in real terms, it continues to have the same social value, but is now produced in greater quantity; In short, since value is a social relation, it is the social value which counts, and affirming that the individual capitalist has reduced the unitary value of his merchandise is just a way of saying that his production costs have been reduced, with respect to the other capitalists of the branch. It is through this mechanism that individual capital obtains extraordinary surplus value, which becomes, in inter-capitalist competition, the factor par excellence for the introduction of technical progress.
But this is not all, as far as the law of productivity is concerned. Insofar as productivity allows the individual capitalist to reduce costs, and variable capital being an integral element of these, the increase in productivity implies the reduction of the participation of wages in the mass of value created; even if the price of labor power remains unchanged (that is, the relation between its value and the number of hours worked, on the basis of a given intensity) and the wage does not change either, in nominal or real terms, the degree of exploitation (the relation between necessary labor and surplus labor) and the share of surplus value (that relation expressed in value) do rise. Extraordinary surplus value is not, then, a transfer mechanism that acts only in inter-capitalist competition, but it is also a factor that affects the relation of distribution between surplus value and wage, from the point of view of the individual capitalist.
For the effect to be similar in the whole branch, it is necessary that the productivity of labor rises in the whole branch, and stabilises at a higher level. This implies, immediately, the suppression of extraordinary surplus value, as a mechanism of transfer between capitalists, that is, a mechanism of transfer of surplus value within the branch. However, for the economy as a whole, the effect is only generalized if that branch produces, directly or indirectly, means of subsistence for the workers and thus determines the value of labor power;34 in other words, this only occurs if it is a branch of sub-sector IIa or a branch of sector I which produces for it, and only then can we speak of relative surplus value.35 If this is not the case, the rise in productivity in the branch, even if it cancels out the extraordinary surplus value obtained by the individual capitalist, will still translate into a higher level of productivity than in the rest of the economy; in other words, as the value of labor power remained unchanged, and, in principle, its price, the higher productivity of labor will translate into a higher degree of exploitation and a higher share of surplus value in the branch in question, which can affect both the basic distribution (wage-surplus value) in the branch, and the distribution of surplus value in the economy as a whole. In other words, if the increase in productivity is confined to sub-sector IIb or to the branches of sector I which produce only for it, extraordinary surplus value ceases to be a factor of transfer and increased exploitation of labor operating at the level of individual capitalists, to be situated at the level of inter-sectoral transfers of value and of the relations of distribution in the economy as a whole. As we shall see, this is only true if we consider the problem in the light of the theory of surplus value, i.e. if we take capitalist production as an immediate process of production.
The increase of intensity configures a different situation. As far as the individual capitalist is concerned, it changes neither the value nor the use-value of commodities; it is therefore expressed in the production of a greater mass of commodities whose unit value remains unchanged, which translates into a mass of value and hence of surplus value. There is, however, no reason for the share of surplus value to be altered,36 since the greater intensity of labor also brings with it a rise in the value of labor-power, which means that both its price and wages must rise. Thus, for the share of surplus value to rise, or at least for it to rise more than proportionally to the increase in the intensity of labor, it will be necessary that – independently of the increase in the price and wage of labor-power – it should be remunerated below its value, i.e. be the object of super-exploitation.37 Under these conditions, just as if the working day were prolonged in a given branch beyond its normal duration in the others, the increase of intensity in any given branch will produce in it an extraordinary surplus value in relation to the rest of the economy (as we have seen, this only does not happen if intensity increases evenly throughout the economy). The peculiarity of labor intensity lies in the possibility it has of generating extraordinary surplus value in all branches of the economy, be it in the two sub-sectors of sector II or in sector I.38 As with productivity, this is true if we adhere exclusively to the theory of surplus value.
Thus, without going beyond the theory of surplus value, we can understand why, in seeking to establish the proportions in which commodities are exchanged, taken as a unit of value and use value, Marx must necessarily discard changes in productivity or in the intensive magnitude of labor, as well as, in general, in the degree of exploitation. The reproduction schemes of book II solve the problem Marx posed, that is, to know how the reproduction of capital is articulated with the individual consumption of the agents of production, in the framework of the general circulation of commodities, but on condition of taking these as a unit of value and use value, that is, without resorting to those factors which, by exacerbating in the immediate process of production the latent contradiction between both, would nip in the bud the possibility of abstracting its movement in the process of reproduction. It is evident that this is pointing out the specific -and for this very reason limited- role played by the schemes in Marx’s theoretical construction, whose guiding thread is precisely the transformation of the productive capacity of labor, which, in the capitalist regime of production, is expressed in the contradiction between the valorization of capital and its devalorization, The first manifestation of which is at the level of the commodity, by force of the contradictory effect exerted on it by the productive capacity of labor, and which forms the basis for the great laws that govern the system, in particular the general law of capitalist accumulation and that of the tendential fall in the rate of profit.
But, for the same reason, the use of the schemes of reproduction for the analysis of the concrete reality of capitalism cannot be carried out without modifying the three assumptions on which Marx founded them, especially that of constant productivity. There is every reason to suppose that, had he concluded his research, Marx himself would have done so, by advancing towards the theory of the world market and, consequently, of imperialism,39 the state and crises. For this reason, the criticism that can be leveled at those who have attempted to use the schemas for concrete analysis is not precisely that of having discarded the assumptions adopted by Marx in the third section of Book II, but rather, by failing to establish precisely the plane of analysis on which they were moving, that of having confused the cloud with Juno. This has led to a series of misunderstandings, which have not only made it impossible to modify the schemes sufficiently to account for the real movement of capital (as happens when, for example, Rosa Luxemburg maintains the assumption that surplus value accumulates in the same sector in which it was generated, which is only valid on the plane of analysis in which it was generated, which is only valid in the plane of abstraction in which Marx situates his analysis), but led to the attempt to contrast them with other elements of Marx’s work, without perceiving that the schemas were only one of the elements he used in his global theoretical construction.
3. The examination of the reproduction of capital in the light of the theory of surplus value has allowed us to reach some conclusions which we can take up again here from another angle. The main one is that, from the moment we make changes in productivity and labor intensity, the share of surplus value is modified, a modification which operates differently depending on whether we are dealing with individual capital or with branches of production.
In the first case, that of individual capital, both methods of surplus-value production result in extraordinary surplus-value and thus imply a change in the basic relation of distribution; However, this change in the distribution of the surplus product between wage and surplus-value (or, in other words, in the degree of exploitation) takes place, in the case of productivity, without necessarily super-exploiting labor-power, whereas, in the case of increased intensity, super-exploitation tends to take place, since such an increase also raises the value of labor-power.
In the second case, that of the branches of production, we find that the increase in the share of surplus-value is only expressed in extraordinary surplus-value if these branches belong to subsector IIb (as well as to the branches of sector I which produce exclusively for it), if this increase derives from a higher productivity; whereas, if the increase in the share of surplus-value is due to the intensification of labor, the possibility of extraordinary surplus-value exists for any branch in any sector. In turn, the basic relation of distribution (and, therefore, the degree of exploitation) is modified in the whole economy, if, in both cases (productivity and intensity) the affected branches correspond to sector I and subsector IIa (generalization of the change in the share of surplus-value or, in other terms, the passage from extraordinary surplus-value to extraordinary surplus-value), the change from extraordinary surplus value to relative surplus value) or it is modified only in the branch in question, if this belongs to subsector IIb, leaving unchanged the basic relation of distribution in the whole economy, although it can alter there the distribution of surplus value (fixation of the extraordinary surplus value).
Now then, extraordinary surplus value is nothing but a supposition for the appropriation of extraordinary profit, and whether or not this appropriation takes place or not depends on concurrence. This is because the variation of the share of surplus value according to changes in production makes the mass of use-values produced vary in the same sense, but its expression in social value is subject to the validation that demand (solvent social needs) operates on this mass.40 Thus, according to the position of demand with respect to supply, the magnitude of value will be established at the level, above or below the average conditions of production,41 although, in all cases, the mass of use-values produced is being realized. The market operates in this way in the sense of correcting or amplifying the deviation between value and use value implicit in the development of mercantile production.
Let us establish some essential premises. Demand is directly structured by the relations of distribution,42 which, although determined by production, as we have seen, have repercussions on it, from the moment they are transformed into determinations of demand, thus overdetermining the production of value and surplus value. At its basic level, demand depends on how the surplus product is distributed between surplus value and wages; at its derived level, demand revolves around the way surplus value is distributed, as well as the way it is resolved in accumulation and consumption.
Let us now verify how changes in production affect intersectoral relations at the market level, starting from a situation of equilibrium. The increase of surplus-value in sector I (due to changes in productivity and/or intensity) implies that the mass of use-values produced increases. If, when goods appear in the market, their value is not modified, the increased mass of use values is expressed in a proportionally higher mass of value. When intersectoral exchange takes place, this results in the enlargement of the scale of accumulation and the consequent increase in the value of constant capital in IIa and IIb, as well as of variable capital (though not necessarily in the same proportion), and, consequently, in the increase in value of the mass of commodities they bring to the market. Therefore, the market for sector II has to expand, at the risk of the mass of value realized being less than that produced (either because part of the goods are not sold, or because they fall in price); if this were to happen, the greater mass of surplus value created in the two sub-sectors would translate into a smaller mass of profit and, even if this were equal to that which previously accrued to sector II, its share of profit would fall as its costs of production would have risen. Consequently, either a] the demand created by IIa and IIb would be reduced, which would force the reduction of the prices of c produced by I (this reduction corresponding to a reduction of value), or b] capitals of both sub-sectors would migrate to I, either because they would have become surplus due to the limitations of the market, or because of the higher profit share of sector I, or both; in both cases, the leveling of the profit share in I and II would be imposed, and the extraordinary profit of I would disappear. For this not to happen, it is necessary that the market for II increases; but, since v has remained, in the best case, constant in I, the expansion of the market could only be really important for IIb, thanks to the conversion of the extraordinary surplus value of I, or part of it, into individual consumption of the capitalists. Thus, by the conditioning of the market, the extraordinary profit of I would be translated into an increase of the profit share in IIb and in the branches of I that produce for it. Only as the greater profits of I and IIb would give rise to the enlargement of the scale of accumulation, could IIa and the branches of I directed to it, with delay and in a subordinate way, be integrated to the expansive movement initiated in I, with which the elimination of the extraordinary profit of the first ones, besides random, would be done slowly.
An observation: it is evident that, since surplus value accumulates in any sector, the increase of surplus value in I can be destined to accumulation in II, which assures not only the realization of the product c, but could also theoretically compensate, by the increase of v in II, the relative reduction of v in I. But this will only happen if the increased surplus value, on becoming surplus capital in sector I, presses downwards the share of profit (in the same way as it would happen with the one that migrates from II) and tends to level it with that of sector II. If this migration of capitals takes place, we would have that the change in the basic relation of distribution in I forces the scale of accumulation to be extended in the whole economy to assure the expansion of the market and, therefore, the realization of the mass of produced goods, as well as, with it, of the increase of surplus value. This, we repeat, can only happen to the extent that the tendency to the leveling of the profit share operates and the extraordinary surplus value in I is eliminated, which supposes the previous emigration of capitals from II to I or a crisis of overproduction in the latter.
Let us consider sector IIa. The increase of surplus-value verified there is accompanied, as we know, by a greater mass of commodities. If the individual value of these is not modified, their demand by I and IIb cannot increase, since v remains constant there, but the own demand created by IIa is relatively reduced, given the reduction of the participation of v in its product (although it maintains its absolute value). The impasse will have to be resolved, as in the case of I, either by the fall of the individual value (and price) of IIa’s goods, or by the emigration of capital from I and IIb to IIa, or from the latter to the other two, with the consequent leveling of the profit share. The displacement of surplus value between IIa and I or IIb is subject to the conditions described above. Thus, from the point of view of the market, IIa, even less than I, is not in a position to sustainably realize an extraordinary surplus value.
Let us suppose now that surplus value and the commodity product increase in IIb. The latter can in principle maintain the individual value of its commodities, because the demand for them derives exclusively from surplus value, which is increased by the change of the basic distribution relation in the sector itself; this confers a higher elasticity of demand for IIb’s products, which is even better understood if we consider that surplus value increases in the other sectors, even if they translate into a higher scale of accumulation, tend to translate also into the relative and absolute increase of the non accumulated surplus value.43 Consequently, the possibility of IIb’s extraordinary surplus value translating into extraordinary profit is in principle not limited by the market, but only by competition between capitals and their migration from branch to branch. However, since the migrant capitals do not move from one branch to another with the aim of eliminating the extraordinary profit, but rather to take advantage of it, only the pressures exerted on the market (a scale of accumulation so rapidly rising that it slows down the expansion of individual consumption created by the surplus value; exceptional attractions to saving; sectoral crises in I or IIa; etc.) can eliminate the extraordinary profit in IIb, regardless of whether it is reduced by the competition between capitals with respect to the extraordinary surplus value actually created. In this plane of analysis, then, the explanation of the extraordinary profit in IIb must be sought in the dynamics of the market itself, rather than in other factors, such as, for example, the monopolistic structures that may be present there, since these are equally present in I and even in II, without producing the same effect.
For the sake of completeness, let us point out that the demand created by non-accumulated surplus value is made outside the cycle of productive capital and, therefore, the determination of social value in that sphere of circulation does not affect the valorisation of capital in I and IIa, but only the rate of accumulation (insofar as it influences how surplus value is distributed into accumulated and non-accumulated surplus value). It is therefore understandable that the more surplus-value increases in the economy, the higher the elasticity of that demand. On the other hand, since this demand does not enter into the circulation of capital, but forms a case of general commodity circulation, it is natural that use-value acquires a more decisive importance there in the realization of the product; hence the greater differentiation of the articles produced by subsector IIb, the more frequent deviations there from the law of value (such as the overestimation of handicraft production compared to factory production), and so on.
It is worth bearing in mind that, by transferring productivity increases to prices to a lesser extent than I and IIa, sub-sector IIb establishes with the others a relation that implies an intersectoral transfer of surplus value, via prices, that goes beyond what would strictly correspond to the mechanisms of leveling the profit share and rather violates them; in other words, a situation similar to the one referred to in the notion of unequal exchange in the international economy is configured. This reduces, then, the mass of profit that touches I and IIa (although the branches of I that produce fundamentally for IIb can compensate themselves, resorting also to extraordinary surplus value) and presses down their share of profit. In other words: sector IIb exerts a depressive effect on the general share of profit, which is strictly the counterpart of the extraordinary profit that takes place in it.44
Let us observe, finally, that the specificity of IIb, in terms of the production of extraordinary surplus value and its conversion into extraordinary profit, is necessarily accentuated where the super-exploitation of labor prevails, configuring a situation in which low wages and high profits prevail. In effect, this implies that, at the same time that the low sphere of circulation, created by the former, presents itself with little dynamism, the high sphere, generated by the latter, tends to inflate. In such circumstances, it is perfectly understandable that sub-sector IIb tends constantly to grow disproportionately with respect to the others, as well as that the subordination of sector I to sub-sector IIb, more than to sub-sector IIa, is accentuated at the market level. As in any other observed field, also here the dependent economy, based on the super-exploitation of labor, suffers in an amplified way the general laws of the capitalist regime of production.
II
Having cleared up some of the problems posed by the use of the schemes as a representation of a concrete capitalist economy, we will now deal with the works of Maria da Conceição Tavares and Francisco de Oliveira,45 who make use of them. It is worth clarifying that, although both, via Kalecki,46 refer to Marx’s schemes of reproduction as a point of reference for the analysis of the problematic they want to solve, they do not proceed to the elaboration of their own schemes and rather ignore the controversies to which attempts of this nature have given rise. The two works have in common the concern about the weight and role of the sub-sector producing luxury consumer goods (which the two authors identify, roughly speaking, with durable consumer goods) in the current Brazilian economy, that is, in the post-war period; While Oliveira explicitly focuses his attention there, with the aim of examining the relationship between this subsector and the economic crisis that the country is going through at the moment, Tavares attempts a broader theorization, which not only contemplates the problem of the development of this subsector in advanced capitalist countries, but, above all, aims to establish a framework for the analysis of this subsector in the post-war period, Tavares attempts to establish a framework of analysis for this question in the economies that he calls semi-industrialized, that is, the dependent capitalist economies of greater relative development, to finally approach the Brazilian case, considered mainly in the light of the post-war industrialization and the economic crisis it went through in the 1960s; However, throughout the work, Tavares’ underlying concern, like Oliveira’s, is oriented towards the current crisis of Brazilian capitalism. In the analysis of both papers, my purpose is not to examine all their theoretical assumptions or the explanatory picture they present for the dynamics of the Brazilian economy, but only to verify their use of schemas and the role they play in the conclusions they reach.
The task is not easy, particularly with Tavares’ work. In fact, a progressive modification of the analytical apparatus is observed there: the tripartite sectoral structure, which is established in chapter I (and which, as we discover at the end of the chapter, on p. 32, only applies to the industrial manufacturing sector, reserving for the others the Cepalian industry-agriculture scheme, augmented by services and the State), is combined, in chapter II, with the differentiated organization of the firm in the different sectors (competitive oligopoly, differentiated oligopoly and concentrated oligopoly, which, more or less, correspond to the succession sector II, III and I), to almost disappear in chapter III; Here, the complex categories of production sectors-business forms of organization replace the sectoral scheme of chapter I, with emphasis on business organization and its competitive dynamics, and are applied exclusively to industry, with the Cepalian analytical tools applying to the other spheres of production.47
The very justification of the tripartite sectoral scheme is debatable. Thus, Tavares introduces sector III on the assumption that in Marx capitalists’ consumption is treated “only as an appropriation and production of ‘surplus value’, not being necessary to introduce it as a specific sector of production, with its own problems of production and realization” (p. 12), which he reiterates when he adds that “the unproductive expenditure of surplus reduces the rate of saving and accumulation of the system (classical orthodox view)” (p. 12). Tavares confuses, then, Ricardo’s and especially Malthus’ conception of unproductive consumption with Marx’s, for whom it corresponds to a specific subsector of production (IIb), with its own problems of production and realization, dynamically participating in reproduction, both through the accumulation that takes place there, under the form c + v, and through the circulation of commodities it engenders, which implies the circulation of the surplus value produced there. However, despite the way he proposes a differentiated treatment of sector III, Tavares does not mention the only reason that would justify it: the particularities of the production of surplus value, as the basis for obtaining extraordinary profit in that sector, which affects the tendency of accumulation towards it, as well as the weight it acquires in determining the structures of distribution.
This is not fortuitous, but corresponds to the way Tavares analyses the development of sector III and, closely linked to this, the passage to oligopolistic competition and its structures of production. His central thesis on sector III is that it corresponds to advanced industrialization, in which the differentiation of capitalists’ consumption with respect to workers’ consumption contributes to solving the problems of capital reproduction (p. 13). Such problems arise from the fact that technical progress, by reducing the overall costs of production (i.e. by increasing the technical composition of capital without increasing its value composition), creates a mass of profit, and hence a potential for accumulation, greater than the effective rate of productive capacity utilised (pp. 14-15). Although this allows, in principle, the analysis to be oriented towards the foreign market, as an outlet for surplus capital, and to go from there to the modifications that this entails for the world economy, Tavares chooses to focus his analysis, “from a ‘logical’ point of view, only within the endogenous patterns of accumulation” (ibid.); he goes on, then, to consider the forms of organization that arise, when oligopolistic competition is established, and only in passing he will refer to its effects on the world economy, when dealing with the forms that correspond to the differentiated oligopoly and the financial conglomerate, at the end of his chapter I.
Still following Tavares, the over-accumulation of capital, which derives from the general reduction of costs, leads to a situation in which ‘the limit of accumulation comes to be given not by the conditions of ‘production of surplus value’, but by the conditions of its dynamic realization on an enlarged scale. That is to say, the problems shift to the orbit of ‘insufficient effective demand’, posed, however, in dynamic terms and not in static terms, as in Keynesian schemes” (pp. 21-22). Sector III is thus introduced, in this analytical framework, to absorb the surplus profits, i.e., it is explained on the realization side, coming to function in terms of a ‘third demand’ endogenous to the reproduction of capital.
In fact, by transferring the ‘limit’ of accumulation to realization, not only are we assuming, albeit in a different context, the Malthusian thesis on unproductive consumption,48 but we are starting from a view of productivity that does not distinguish its effects on the value-use-value antinomy. The general increase of productivity in the system (or, what is the same, the reduction of general costs), although it produces an increased mass of use values, does not alter in itself, the mass of value created, if the extensive and intensive magnitude of the working day is maintained. However, it reduces in this value the part that corresponds to constant and variable capital, and this is what is expressed in lower costs (a unit of constant capital now represents a smaller magnitude of value, and the same happens with the labor force). To this case corresponds Tavares’ hypothesis regarding the increase of profits independent of the behavior of surplus value.
Let us consider this hypothesis more closely. The increase in productivity raises the technical composition of capital, i.e. the physical relation between living and dead labor, and affects the mass of commodities produced, but understood only as use-values. In order to know whether the increase of use-values corresponds to an increase of value, it is necessary to refer to the organic composition of capital, that is to say, to the existing relation between constant capital and variable capital, taken as an expression of value. Let us suppose that the organic composition has not altered: as the mass of commodities produced has risen, the value of the capital employed in their production (variable and constant) is spread over a greater quantity of products, thus reducing the unit cost of production, but maintaining the overall cost of production; in other words, the greater quantity of products incorporates, in terms of cost, the same mass of value. At this level, then, there is no variation in the total value of production; for this value to be modified, that is, to rise, which would imply the relative reduction of the cost of production, the new value (surplus value), created by the effect of greater productivity must be validated at the level of the market, with which there will be an elevation, not necessarily proportional, of the profit obtained by capital in each individual commodity and, therefore, of the total profit with respect to the global mass of commodities. For the individual capitalist, who raises his productivity above the average of the branch, this effect is automatic, insofar as the reduction of the individual value of the commodities he produces has not altered their social value; in other words, this capitalist will have produced an extraordinary surplus value and managed to convert it into extraordinary profit. If we look at it from the perspective of the branch, the effect is temporary, once the increase in average productivity must in the long run reduce the social value of production to its individual value; if this does not happen, and the branch belongs to sector I or sector II, there will be no reduction of costs in the other branches, which will hinder further cost reductions in the branch in question; whereas, if it belongs to sector III, capitalists in all sectors would be forced to allocate a larger part of their surplus value to unproductive consumption, thus limiting the scale of capital accumulation. In any case, and independently of the sector to which it belongs, the branch which manages to maintain the social value of its commodities above their individual value would be converting part or all of its extraordinary surplus value into extraordinary profit, which, as we have already shown before, and making abstraction of foreign trade, would imply not a general reduction of costs, but the maintenance or elevation of the costs of the others, if it is about extraordinary profits which benefit sector I and II, or a reduction of profits in all sectors, if it is about a branch of sector III. In the first case, the organic composition will not have fallen, but will have remained stable or risen; in the second, the mass of profits susceptible of being appropriated by the other branches will have been reduced. Thus, in order to observe a general reduction of costs in the whole economy, and the elevation of the average share of profit, it is necessary that individual and special profits have been reduced in value, independently of the fact that they increase in terms of their capacity to dispose of use values; in other words, the tendency must operate towards the leveling of the general share of profit, with the consequent disappearance of extraordinary profits. Let us point out, in passing, that therein lies the negative aspect of monopolies, when these, acting on circulation, establish and maintain overprofits, above the average profit in force.
Put this way, it cannot be argued that the increase in productivity and the general lowering of costs in the economy produce a growing mass of value, which transforms the problems of the reproduction of capital into problems of realization and shifts the determination of the dynamics of the system from the sphere of the production and realization of surplus value to that of the behavior of ‘effective demand’. In the interplay between individual capitals and between branches among themselves, as well as between sectors of production, increased productivity and lower costs cause transfers of surplus value and alterations in the basic relations of distribution precisely because they derive from modifications in the proportion of value produced and appropriated by those branches and capitals which do not correspond to modifications in the overall mass of value produced in the economy as a whole; At the level of the latter, higher productivity and lower costs operate, not in the sense of increasing the mass of value created, with the consequent problems of realization that would arise therefrom, but by maintaining this mass simultaneously with its expression in a greater quantity and differentiation of use values.
Insofar as it is now necessary to circulate a greater mass of use-values corresponding to the same mass of value, the problems of circulation arise as soon as the distribution of this mass of value between the different sectors is modified. They are thus the consequence, not the cause, of tendencies inherent in the production of surplus-value, which are expressed, at an apparent level, in the phenomenon of extraordinary profit. The fact that this can derive from manipulations operated by capital in the sphere of circulation should not make us forget that, except in exceptional situations, such as crises, these manipulations only result if they accompany the tendencies of production. Monopoly profits are not, in this sense, an exception.
If Tavares can hold different views, it is because she confuses the effect of productivity on the creation of use-values and value, while failing to distinguish the dynamics proper to individual capitals, to special branches of production and to the economy as a whole. This is what leads it to try to explain the disproportionate growth of sector III through realization, instead of starting from the conditions of production and circulation of surplus value. In this way, it does not perceive that the increase in the productivity of the system continues to depend on the production of surplus value and, moreover, only makes sense if it is expressed in an increase of the latter, on the basis of the reduction of the value of labor power, which translates into a reduction of variable capital, relative, of course, independently of the increase in the wage of the individual worker. It is productivity increases which are not channeled in this direction which, by affecting the sphere of circulation, lead to sectoral imbalance, with the hypertrophy of sector III and of the branches which produce for it.
In dependent economies, the disproportionate growth of sector III, which worries Tavares, is explained in the same way and leads to the same point of arrival, although its movement is more exacerbated, as happens with economic phenomena in this type of capitalist economy. On the one hand, the increase in productivity in sector III can be more easily translated into overprofits, because the average productivity in the other two sectors is low (and even when it is high in certain branches of sector I, part of it is transferred to the others, in which the State plays an important role). On the other hand, given the super-exploitation of labor, that is, the fact that labor power is remunerated below its value, the need to devalue it does not impose itself with the same force as in the advanced capitalist countries; the economic mechanisms which generate super-exploitation and which reinforce it, in particular the growth of the industrial reserve army, act naturally in the sense of raising the share of surplus value and also create, at the political level, conditions for the workers to suffer pressures which go in the same direction. Consequently, the increase in productivity, which normally translates into surplus profits in sector III, tends to be oriented even more decisively in its direction (and, with it, accumulation), provoking its hypertrophy. The production of surplus profits in sector III, in the face of a sector II that offers no significant stimulus to productivity growth, and the differences in organic composition that mediate between them, accentuate the drain of surplus value towards it and skew the whole productive structure, translating, at the level of circulation, into the growing differentiation between its upper and lower spheres, that is, the one that corresponds to the consumption of surplus value and the one that corresponds to the consumption of wages. Once again, what is only understood in the light of the mechanisms of production is expressed as a problem of realization.
When analyzing oligopolistic accumulation, Tavares does so on the basis of what he established for competitive accumulation. But she will be confronted, starting from her premise that the limit of accumulation is given by the market, with the fact that new markets will always be necessary. Sector III is no longer enough: on pp. 32-33, he introduces new sectors, outside his tripartite scheme (whose validity is limited to manufacturing industry), such as agriculture and services, as well as the state (or, more precisely, public spending on infrastructure). Not only is the effort to examine the problem posed in the light of the reproduction schemes broken, but the “logical” thread of the exposition is lost, since we have to deal with a “third demand” exogenous to these schemes. In this perspective, it is hard to understand why, when dealing with dependent economies, in Chapter II, Tavares looks at the problem of their relationship with the world economy (and the market) with a certain disdain, and why he frankly puts it “in parentheses” in Chapter III, which deals with the Brazilian economy.
2. Oliveira, although more orthodox in the application of a tripartite scheme of reproduction, also emphasizes the disproportionality of sector III, which constitutes the defining element par excellence of the current pattern of accumulation in Brazil (p. 86), and does not differ much from Tavares in identifying the origin of this hypertrophy: the concentration of income, which gave rise to a demand profile that made possible the development of sector III, at a time when the international division of labor offered certain dependent economies the possibility of ceasing to base themselves on the distinction between producers of raw materials and producers of manufactured goods and instead establishing themselves around that of producers of consumer manufactures and producers of manufactures of production goods (p. 83). Although Oliveira does not make it explicit, it seems that the basic problem lies in the fact that this division of labor does not transcend the productive level to project itself onto the market level, which would lead to the problems faced by this pattern of growth; In effect, this causes a recurrent crisis of the balance of payments, which “is expressed in the contradiction between an industrialization turned towards the internal market but financed or controlled by foreign capital and the insufficiency of generation of international means of payment to return to the international circulation of capital the part of the surplus that belongs to the international market” (p. 87). On the other hand, the predominance of sector III, with its oligopolistic control over the economy, leads to the transfer of productivity gains in any sector to it and to sector I of the central economies, with which it is articulated (Ibid.), although the mechanisms for these transfers are not indicated. This implies an extreme concentration of income, which was the basis for the development of sector III.
According to Oliveira, this pattern of growth led to the 1962-1967 crisis, which was overcome by deepening it, thus aggravating the problems. The current crisis opens, therefore, the possibility of two strategies: one of effective overcoming of the problem, through the internalization of the reproduction pattern, which implies the development of the I sector; the other, of simple cushioning, through the growth of the debt, sustained by the increase of exports (pp. 92 ff.).
We will not reiterate here the criticism already made of Tavares, in the sense that the reasons for the disproportionate development of sector III should not be sought in circulation (concentration of income, demand profile); we will only add that the recourse to the trends of foreign investment in Brazil, which is increasingly oriented from the fifties onwards towards the industrial sector, besides keeping the question at the level of circulation (movement of capital), does not provide a sufficient explanatory factor: if it is true that this investment has been preferentially directed towards sector III, what needs to be explained is why this happened. If we discard the idea of a conspiracy, the only reason left is the particular behavior of the formation of extraordinary profits in that sector. More interesting, because it is a problem that Tavares preferred to set aside, is to examine how, from Oliveira’s point of view, the sectoral structure of the Brazilian economy and its interdepartmental relations affect its relationship with the international economy.
We have already seen that Oliveira considers crucial the contradiction between the development of sector III under foreign control, but focused on the domestic market, and the need of foreign companies to remit their profits abroad. In this sense, he is emphatic in denying the possibility of a crisis of realization in the domestic market, turning the problem into one of obtaining foreign currency for the repatriation of profits already realized in national currency. We thus find ourselves with a problem of the realization of surplus value that has nothing to do with its change of form from commodity to money, but that unfolds in the change of form that money itself must make, insofar as it is not world money. This is the reason why Oliveira contemplates in passing, as at least a partial solution to the problem, that the Brazilian currency should take on this character, even if only in the regional sphere (pp. 110-11). But, in the immediate term, and for the period under consideration, this solution is not a reality, so the contradiction has been resolved by increasing the debt, on the basis of the growth of exports.
The weakness of Oliveira’s work lies in the fact that, starting from the Brazilian economy-world economy relation, he seeks only in the former the solution of the existing contradictions between them, besides the fact that he only contemplates in one sense the changes of form (money, production, commodities) that capital takes on in its cycle. The two serious problems presented by his analysis are the assumptions, which he never questions, that the profits of foreign capital must return to the international circuit and that they must do so in the form of world money, materialized in currency. For this to be so, it would be necessary that these profits when remitted would be expressed internally as over-accumulation of capital, that is, as capital that cannot be invested in the national economy itself at an attractive rate of profit. But, in this case, the problem would not lie in the realization (even if it were money in money) but in the accumulation itself, the restriction of which would be forcing foreign capital to go abroad, and would have to affect domestic capital as well, which attenuates the importance of whether or not the control of production is foreign. For the rest, the outflow of capital (which has to do with the decisions of individual capitalists, which makes it possible) would only be a problem if it were not compensated by new inflows of foreign capital. In the case of such a situation – outflows without inflows – we would be forced to look again in the dynamics of accumulation itself for the reasons that would be provoking it. In fact, it is not necessary to do so, since this has not been the characteristic of the relations that, in terms of export and import of capital, the Brazilian economy maintained with the world economy in the years of prosperity and – thanks, it is true, to the financial speculation that the State is providing – it is not yet present in the course of the present crisis.
The second assumption: the need for money capital to return to the international circulation of capital in the form of world money expressed in currency deserves to be treated with care. This would only be so if the Brazilian economy, although functioning as a center of capital production, could not also function as a center of circulation of both merchandise and money, and become a simple point of circulation originating in the advanced countries. From the moment Brazil functions as a center of circulation of merchandise, that is, when it diversifies for internal reasons the composition and destination of its exports, the Brazilian currency immediately begins to function as world money, although in a limited framework of bilateral relations; the notable expansion of the Bank of Brazil in the last ten years is only the consequence of this phenomenon. This can assume, as now, perfectly well the form of credits to assure the expansion of merchandise exports; but we can already observe, together with it, how the circulation of money originated in Brazil begins to assume the form of direct and indirect investment abroad (which provides an even more effective basis for the expansion of the circulation of merchandise).
The diversification of circulation is what today can allow Brazil to reproduce its dependence in an expanded manner and represents the basis on which the contradiction between the level of production and that of the market, created by the new international division of labor, will have to be resolved. Marx already pointed out that contradictions can only be resolved by deepening, that is, by widening the sphere in which they can continue to develop; from the moment this ceases to be the case, there remains only the final, definitive crisis. Since the idea that Brazilian capitalism has reached a decisive point of rupture seems to be far from Oliveira’s cogitations, it would not be left to him but to face in a more dialectical way the relation between the circulation of commodities and money and, therefore, to admit that the overcoming of the current Brazilian crisis will only occur through the accentuation of its full integration into the world economy as a center of production and circulation of capital, under the three forms in which it fulfills its cycle: money capital, commodity capital and productive capital.
3. This would seem to justify Gilberto Mathias’ critique of the two authors we have just discussed.49 In fact, this is not exactly so, since Mathias’ critique is based on certain misunderstandings. In the first place, Mathias accepts Tavares’ unfounded assertion that Marx’s schemes of reproduction are established on the basis of two departments (thus excluding the production of luxury goods), while admitting that ‘the introduction of a third sector in these schemes, which produces mainly durable consumer goods, undoubtedly allows the construction of a ‘model’ that better accounts for the evolution of the industrial structure of these [dependent] countries’, etc. (p. 68). But this is a minor error. More serious is the fact that Mathias disregards the convenience of resorting to the schemes for concrete analysis in favor of the reference to the cyclical movement of capital; in other words, he contrasts the study of the cycle of capital, as set out in the first section of book II, with that of the process of reproduction and circulation, as established in the third section, thus committing the methodological error already pointed out of setting elements of Marx’s theoretical construction against each other, instead of making use of it as a whole for concrete analysis. Finally, and even more serious, Mathias makes the mistake of privileging the cycle of productive capital over the others, with which he not only insists in the procedure that consists in opposing Marx to Marx (the correct thing is to consider the unity of the three cycles), but he resorts to the form of capital less apt to account for the valorization process50 and less capable for the analysis of the general circulation of commodities, as I indicated before; let us add that, for this very reason, the form P…P cannot include the “third demand”, in which Mathias believes (p. 74) without realizing that he is not aware that the “third demand” is a “third demand”. 74) without realizing that it is nothing but an expression of individual consumption generated by surplus value; thus -if the method of analysis proposed by Mathias were accepted- the “Ricardian current” would have the advantage of having an explanatory element not included in his own (besides which it would have to exclude the other elements pointed out by Mathias himself on pp. 79-80).
These theoretical claudications and dogmatic positions do not, however, detract from the interest of Mathias’ work for the study of the current Brazilian crisis. His analysis starts from the way in which the development of sector III doubly affects the profit share in Brazil, by hindering the devaluation of labor power and constant capital (pp. 68-69). Regarding the latter, the development of sector III causes the atrophy of sector I, which creates obstacles to the devaluation of constant capital and cannot be compensated either by State action or by the importation of productive goods, since the world market does not favor the translation of productivity gains obtained in sector I in advanced countries into prices; consequently, the organic composition of capital rises, while the profitability of constant capital falls. With respect to the labor force, the hypertrophy of sector III also corresponds to the atrophy of sector II, slowing down the devaluation of the former and, consequently, the generalization of relative surplus value; although this is compensated by the super-exploitation of labor, this has limits which, when manifested, slow down the rate of accumulation and prevent the expansion of the market (pp. 70-71). All this establishes, then, factors of pressure on the rate of profit, starting from the process of accumulation itself.
It is unquestionable that, starting from the profit share, Mathias advances considerably, with respect to the other two authors, in the perception of the problems that characterize the pattern of reproduction of capital in Brazil, currently in crisis; however, in doing so without having clarified his determinations starting from the share of surplus value, he does not draw from it all the consequences and incurs in confusions. Thus, although he perceives that the development of sector III does not directly affect the devaluation of labor power and constant capital, and therefore does not represent a solution to the problems of the share of profit,51 Mathias does not start from this fact to explain this development (which would oblige him to resort to the concept of extraordinary surplus value), which is taken simply as a datum (pp. 68 ff.), and worries about it (pp. 68 ff.), and is concerned only with its negative effects on the mechanisms which, from the point of view of constant and variable capital, counteract the tendential fall of the profit share. In his analysis, these effects are expressed in the atrophy of the other two sectors of production, which, since the behavior of the share of surplus value in the three sectors has not been made evident, does not amount to an explanation and leaves him on an equal footing with Oliveira and in retreat with respect to Tavares.
Mathias’s assumption that productive goods do not suffer significant price reductions in the world market, regardless of whether their cost of production is falling, is, because of the degree of absoluteness with which it is formulated, open to doubt. Theory teaches that productivity increases are transferred or not to prices, in these goods as in any others, according to the conditions of competition; practice shows that, although the reduction in the prices of these goods is generally slower than that of primary and intermediate goods, due to the differences in productivity and labor intensity in the countries that produce them (and therein lies the key to unequal exchange), such a reduction does not fail to take place, particularly in periods when competition for markets is accentuated. The latter is easy to see if one examines the international terms of trade at the beginning of this decade; of course, the rise in oil prices and the subsequent increase in world inflation have changed the situation.
The essential point -and Mathias should have drawn the consequences of his approach regarding the atrophy of sectors I and II- is that, in the dependent economies of greater relative development, the search for surplus profits and the elasticity of demand that corresponds to the high sphere of circulation direct investments, particularly foreign ones, towards sector III, due to the sector’s own characteristics, in terms of surplus value production, and the distribution conditions created by the super-exploitation of labor. This raises the organic composition of this sector at a faster pace than in the other sectors, tilting in its favor the mechanism of the leveling out of the profit share. Both factors -the drain of surplus value resulting from the leveling of profits in a sector with a high organic composition and the one deriving from the extraordinary profit (which, as we saw before, is directly linked to market conditions)- depress the share of profit in the other sectors (with the exception of the branches of sector I which produce fundamentally for sector III): in this sense, and only in this one, is that the atrophy of I and II can be attributed to the development of sector III.
The internationalization of sector I, i.e. import substitution of productive goods, would tend to correct this basic imbalance by raising the organic composition of sector I relative to sector III, but it would not in itself be capable of depreciating constant capital, as Mathias assumes. Indeed, it is unlikely that the prices of domestically produced goods would fall below those prevailing on the world market (just look at the prices of goods produced in sector III). Consequently, the devaluation of constant capital and its effect on the general share of profit in Brazil would continue to depend on the conditions imposed, in this terrain, by the advanced capitalist economies, although this specific dependence would no longer be made viable, as it is now, primarily through the trade balance. In affirming the opposite, Mathias, although by a different route, adds fuel to Oliveira’s autonomist mill and lags behind Tavares, who is much more skeptical about the possibility of overcoming dependence (all the more so since, for her, it no longer exists).
Mathias’ considerations on the devaluation of labor power create even more serious doubts. Leaving aside the influence of sector III in the determination of the profit share in sector II, for which the above is valid, we must be concerned about the way Mathias approaches the problem of the super-exploitation of labor, as a mechanism that ensures this devalorization. Let us not insist on the conceptual imprecision with which he approaches super-exploitation (equal to absolute surplus value and, later on, equal to the prolongation and intensification of labor, without reference, moreover, to the relation between wages and the value of labor-power), nor on the fact that super-exploitation does not devalue labor-power, but only depreciates it; let us go to the essential point: The fact that this is considered as an expression of a phase that Brazilian capitalism is going through, susceptible to give way to another phase in which the introduction of methods aimed at increasing productivity will allow for the generalization of relative surplus value. As he did in relation to the transfer of productivity gains to the prices of productive goods in the world market, Mathias errs here by incurring in ‘abusive simplifications’, both theoretically and historically. The recourse to labor productivity, as a method of extracting surplus value, is not something that is yet to come, when the possibility of extracting it on the basis of super-exploitation is exhausted, but it is precisely because it is already widely used that super-exploitation in Brazil has worsened. This is what I examined elsewhere, when I pointed out how, by influencing a productive structure based on super-exploitation, the increase in labor productivity leads to the acceleration of the growth of the industrial reserve army, thus making the pressure of capital on the working conditions and remuneration of workers viable.52 The fact that, together with this, it is possible to extract it on the basis of super-exploitation. The fact that, along with this, the bourgeoisie resorts to the state to break workers’ resistance and make the action of the reserve army even more effective (eliminating, for example, labor stability, setting wage ceilings, suppressing the right to strike, etc.) does not modify the problem, in its essential terms. Consequently, in order for the Brazilian workers to overcome super-exploitation, they will have to do it -contrary to what Mathias thinks – by overthrowing the dependent economy that exists in Brazil, no matter how great the progress of the capitalist regime of production there may be.
***
Insofar as they constitute a definite moment in the production process of Marx’s theoretical edifice, the schemes of reproduction cannot be isolated from the other components involved in this process, nor can they be opposed to them. It is from the theory of value and in function of the theory of surplus value that its link with the law of the tendential fall of the rate of profit, with which Marx crowns his work, is established. But, because of the level of abstraction at which they are situated, the schemes are only valid on the basis of the assumptions on which they are founded; any change in these necessarily leads to their global questioning. The basic flaw of the polemics they aroused lies in the violation of that rule and in the fact that they confused what is a theoretical abstraction with the historical-formal representation of the capitalist system.
The use of the schemes of reproduction for the analysis of dependent capitalism, which we had the opportunity to examine, does not present this inconvenience. The simple fact that they are taken as one theoretical reference among many, and that they are integrated into a broader categorical framework, is a virtue, since it allows problems to be posed that the schemas themselves cannot account for. However, for the analysis to be successful, the logical thread of Marx’s theoretical construction cannot be broken, at the risk of incurring in an eclecticism that invalidates the explanatory capacity of the schemes and does not make them more useful than any other analytical instrument, such as, for example, that of the Cepaline tradition. Similarly, a correct application of the schemes to the problems of the Latin American reality excludes unidirectional -and therefore unilateral- reasoning and demands the dialectical consideration of its relations with the world economy, as well as of the contradictory movements that, in the abstract as well as in the concrete, characterize the cycle of capital.
However, this use, on the part of the authors that we analyze here, when privileging the specific object of the schemes: the intersectoral relations and, with it, the circulation of the mass of use values and produced value, leads to the mistake of putting circulation above the accumulation and reproduction of capital itself. In Tavares, particularly, this leads to the recovery of approaches that even Ricardo would reject, such as the Malthusian thesis on unproductive consumption, although these have been re-imposed in neoclassical economics; more than being theoretical errors, Tavares’ mistakes are unacceptable insofar as they conceal an apologetic vision of capitalism in general and of Brazilian capitalism in particular. Fundamentally, this view derives from his thesis regarding the expansion of profits on the basis of the general reduction of costs, detached from the production of surplus value, and compatible with the raising of wages beyond any limit that might be imposed by the value of labor power in its commercialisation. In Tavares’ perspective, the increase in profits has as its main cause the devaluation of constant capital, achieved as an effect of the productivity of constant capital itself; The fact that this productivity is, in the last instance, the productivity of labor and that this devaluation is the result of the devaluation of labor power vanishes as if by magic and, with it, the exploitative character of the system, which could continue its development freed from the determinations arising from the production of surplus value, that is, from the exploitation of labor, and concerned only with the problems posed by the realization of the products.
In Oliveira and, more subtly, in Mathias, these questions reappear. It is precisely because, despite his pretension to carry out an endogenous study of accumulation in Brazil, Oliveira does not really take into consideration accumulation itself and its vital spring, the exploitation of labor, that his analysis ends up privileging the relations of the Brazilian economy with the world economy (no matter, here, whether on the basis of a sectoral scheme) and focuses, finally, on the problem of the realization of national money in world money; trapped in this apparent contradiction, all Oliveira’s analysis concludes towards the solution that would represent the search for a more balanced sectoral scheme, thanks to the development of sector I, which poorly disguises the author’s return to the fold of illusions about an autonomous capitalist development in Brazil, which fed the ideological elaborations of developmentalist thought. Mathias’ critique, in turn, by circumscribing itself to the profit share, itself a result of competition, without having clarified the issues proper to accumulation as such, that is, as an immediate factor of production, cannot get to the bottom of the problem. Consequently, Mathias not only plays into Oliveira’s autonomist bias but, by confusing the super-exploitation of labor with the extraction of absolute surplus value and the latter with a given historical period, he feeds illusions in the entry of Brazilian capitalism into a phase in which it would not be essentially distinguished from capitalism as it has developed in the great imperialist centers.
The three authors analyzed meet at the end of the road, by emphasizing the importance of the State to open the way to the progressive tendencies that would raise Brazilian capitalist development to a higher level: reorientation of market tendencies, greater equilibrium between the sectors of production, passage to the stage of relative surplus value, and so on. Mathias’s effort to relocate the problem of the state, by stressing that its action does not escape the general laws that govern Brazilian capitalism, although it represents a step forward with respect to Tavares’s pessimism and constitutes the most interesting and successful part of his work, is not enough to situate it correctly. And it is not because these laws are not clearly established in his analysis, which jumps from questions relative to the theory of value to those relative to the theory of profit, without stopping at those relative to the theory of surplus value and the accumulation of capital. However, this link is indispensable for a proper understanding of Brazilian capitalism and the role of the state in its development.
Marxism is a complex theory, which allows for an extremely rich analysis of the concrete realities to which it is applied. The schematism and aridity that the reader will find in this essay do not invalidate that proposition: our aim, as we pointed out at the beginning, was only to verify the possibility of using the schemes of reproduction in concrete analysis. If, when considered in the light of the production and realization of surplus value, it becomes clear that these schemes have no validity of their own and only constitute a useful analytical instrument if they incorporate the whole of Marxist approaches, our purpose will have been fully achieved.
- When beginning, in the second section, the study of the turnover of capital, Marx warns, with respect to the cycles of money capital and productive capital, that “the former is of service in a study primarily of the influence of the turnover on the formation of surplus-value and the latter in a study of its influence on the creation of the product”. Capital. Fondo de Cultura Económica, Mexico, vol. II, p. 137. A little earlier he will observe, with regard to the formula of commodity capital, that it is ” important for Part III, in which the movements of the individual capitals are discussed in connection with the movement of the aggregate social capital”. Ibid.
- Ibid., pp. 314-16.
- When asking herself about the origin of the money necessary to the circulation of surplus value, Rosa Luxemburg reproaches Marx for the fact that his “answer is based exclusively on the moment of the first transit to accumulation”, pointing out that this transit “is a theoretical fiction no less than the simple reproduction of capital”. La acumulación de capital (The Accumulation of Capital). Grijalbo, México, 1967, p. 119. Besides manifesting her characteristic tendency to reduce the logical to the historical, source of all the errors in her undeniably valuable work, Rosa Luxemburg is mistaken in her appreciation of the concept of simple reproduction, since it is not the same thing an abstraction as a fiction.
- Marx, op. cit., p. 352.
- “El imperialismo y la acumulación del capital”, in Rosa Luxemburg and Nicolai Bukharin, El imperialismo y la acumulación del capital. Ed. Pasado y Presente, Cordoba, 1975, pp. 102, ff. As Roman Rosdolsky notes, this indicates that, on the basis of Marx’s assumptions, the rates of accumulation in both sectors must be inversely proportional to the rates of organic composition. Genesis y estructura de El Capital de Marx (The Making of Marx’s Capital). Siglo XXI, Mexico, p. 494.
- “… the tendency of the capitalist regime is to convert all production, as far as possible, into commodity production; the principal means by which it does this consists precisely in incorporating commodities into its circulatory process. The production of commodities, when it reaches its stage of development, is the capitalist production of commodities. The intervention of industrial capital everywhere stimulates this transformation, which entails the transformation of all direct producers into wage-workers”. Marx, op cit., p. 99.
- “Capitalist production is inseparable from foreign trade. And the assumption of normal production on the basis of a given scale carries with it also the assumption that foreign trade only supplies the articles of the interior of the country by articles of another useful and natural form without thereby affecting the proportions of value…” Ibid. p. 418.
- Op. cit., vol. III, pp. 150-51.
- For this reason, a concept such as that of “third demand”, used by Pierre Salama in his book El proceso de subdesarrollo. Ed. Era, Mexico, 1976, pp. 204 ff., which erases the class origin of the determinations of distribution and, consequently, of demand. On the subject, see my article ‘La acumulación capitalista mundial y el subimperialismo’. Cuadernos Políticos, n. 12, April-June 1977, Mexico, pp. 29-30.
- Op.cit., t. II pp. 298-99.
- The formula is Claudio Napoleoni’s: see his introduction to El futuro del capitalismo, Ed. Siglo XXI, Mexico, 1978.
- Napoleoni, in the aforementioned text, distinguishes the line that, beginning with Smith, continues with Ricardo’s thesis on the fall of the profit share and culminates with Stuart Mill’s stagnation thesis, from the line that, sustaining the tendency of the system to chronic overproduction, is expressed mainly through Sismondi and Malthus. Marx takes up this double problematic, as Napoleoni indicates, but criticizes both positions, which represented, in turn, the point of view of the industrial bourgeoisie (Ricardo), of the petty bourgeoisie (Sismondi) and of the rentiers and other parasitic groups (Malthus). See mainly his Historia crítica de la teoría de la plusvalía (Critical History of the theory of surplus value). Venceremos, Havana, 1965.
- Coletti, who identifies in Marx a ‘theory of collapse’, in his law on the tendential fall of the profit share, correctly points out that the objective tendencies of the system aiming at its destruction ‘by themselves, cannot have a resolutive value’ and ‘only make sense when they appear as real conditions and premises of the class struggle’. However, he tends to consider both approaches incompatible, by demanding a ‘theory of collapse’ that autonomizes the objective factor, which is certainly not present in Marx and neither in the most determined supporters of the ‘collapse’, like Rosa Luxemburg, Grossmann and Bukharin himself. Coletti’s contradiction seems to derive from his impossibility to understand that Marxist economic analysis. This is what leads Coletti to oppose categories such as variable and constant capital (“elements internal to capital”) to that of social classes, forgetting that capital, in Marx, is only understood as a relation between classes. Crazy is that, in the same text, Coletti quotes passages from Schumpeter that point much more accurately in that direction. See his introduction to El marxismo y el “derrumbe” del capitalismo. Siglo XXI, Mexico, 1978.
- See The Accumulation of Capital, cit., pp. 259 ss.
- In Rosa Luxemburg this error appears in an eloquent and reiterated way; for example: “the scheme presupposes a movement of the total capital, which contradicts the effective march of the capitalist evolution. The history of the capitalist form of production is characterized…”, etcetera. Ibid., p. 262, emphasis mine.
- Once More on the Theory of Realisation. Siglo XXI, Madrid, 1974, pp. 234 ff.
- Rosdolsky, op cit., pp. 519-30.
- Capital, cit., vol. III, p. 248.
- Bernstein was already insisting on this ‘rupture’ by pointing to the fact that the draft of Book II used by Engels is later than that of Book III, which is why, ‘in general, the second book contains the later and more mature fruits of Marxian research’. See the excerpt from his book The Preconditions of Socialism and the Tasks of Social Democracy included in Coletti’s anthology, cit. p. 147.
- Op. cit., pp. 500-1.
- Capital, cit., vol. II, p. 321.
- Ibid., pp. 322-49.
- The circulation of surplus value, as part of commodity-capital and variable capital, as payment for labor-power, does not enter into the circulation of capital, although the investment of wages conditions it.
- Ibid., p. 316.
- Ibid., p. 329.
- Ibid., p. 351. The problem is posed here only in terms of the replacement of capital because it is a question of simple reproduction.
- “The reversion of one part of the value of the product to capital and the incorporation of the other part into the individual consumption of the capitalist class and the working class constitutes a movement which takes place within the same value of the product into which the global capital is translated: and this movement is not only a replacement of value, but also a replacement of matter, in which reason it is conditioned as much by the mutual relation between the integral parts of the value of the social product, as by its use value, by its material form.” Ibid. p. 352.
- Ibid., p. 336.
- Op. cit., pp. 501-2.
- Napoleoni, op. cit., p. 45.
- Capital, cit., vol. 1, p. 435.
- Ibid., p. 439.
- This level does not necessarily correspond to the average level of productivity, just as the social value of the commodity is not always the average of the values produced in the branch, but both are also affected by competition. See Capital, cit., vol. III, ch. X.
- “… changes in the productivity of labor only change the magnitude of labor-power, and therefore the magnitude of surplus-value, when the products of the branch of industry they affect enter into the habitual consumption of the worker. As Marx himself points out in other passages, productivity acts in the same sense when it comes to branches which, although they do not produce goods for habitual consumption, determine the conditions of their production.
- “… if we have seen that in the value of labor-power and surplus-value there can be no absolute change of magnitude without a change in their relative magnitudes, it follows that their relative magnitudes of value cannot change without a change in the absolute magnitude of the value of labor-power.” Ibid., p. 436.
- “Every variation in the extensive or intensive magnitude of labor, affects […] the value of labor power to the extent that it accelerates its wear and tear.” Literal translation of Le Capital, t. I, in Marx, Oeuvres Économie, edited by Maximilien Rubel, Ed. Gallimard, Paris, 1965, t. I, p. 1017. Cf. Fondo de Cultura Económica edition, cit., t. I, p. 439.
- “It is evident that if the product of value of a day’s labor varies from 6 to 8 shillings, for example, the two constituent parts of that value, the price of labor-power and surplus-value, may rise together, either to the same degree or to an unequal degree. The price of labor-power and surplus-value may rise equally and at the same time from 3 shillings to 4 shillings, if the product of value experiences an increase from 6 to 8. It may even be accompanied by a decrease in its value, as is always the case when the increase in the price of labor-power does not compensate for the accelerated wear and tear which it undergoes.” Capital, cit., t. I, p. 439. Where we read “decrease in its value” we should read “decrease below its value”, as noted in the edition of Siglo XXI, Mexico, 1975, t. I, vol. 2, p. 637, editor’s note.
- “Whether the magnitude of labor increases extensively or in an intensive way, to its change of magnitude there always corresponds a change in the magnitude of its product of value, independently of the nature of the articles in which this value is embodied.” Capital, cit. t. I, p. 439.
- Thus, in his classic work on the subject, Bukharin, in establishing the notion of world economy, states: “International change rests on the international division of labor. But we must not believe that it takes place only within the limits assigned to it by this division. Countries do not only exchange products of a different nature, but also similar ones. Such a country, for example, can export to such and such another, not only commodities which the latter does not produce or produces in a very small quantity, but even commodities which compete with foreign production. In this case, the international exchange has its basis, not in the international division of labor, which implies the production of merchant values of different nature, but only in the difference of production expenses, in the difference of individual values (for each country), which in the international exchange are summarized in the socially necessary work in the world”. La Economía Mundial y el Imperialismo (The World Economy and Imperialism). Ed. Pasado y Presente, Córdoba, 1973, p. 41.
- “Although both elements, merchandise and money, are units of exchange value and use value, we have already seen above (book I, chapter 1.3, pp. 14 f.) that in buying and selling operations these two functions appear polarized in both extremes, in such a way that merchandise (seller) represents use value and money (buyer) represents exchange value. The merchandise contains use value, it satisfies a social need, and this is precisely one of the requirements of the sale. The other requisite is, as we have seen, that the quantity of labor contained in the commodity represents socially necessary labor, that is to say, that the individual value (and what, under this premise, supposes the same thing: the selling price) of the commodity coincides with its social value.” Capital, cit., t. III. p. 186. And also: “In order that a commodity may be sold for its commercial value, that is, in proportion to the socially necessary labor contained in it, it is necessary that the total quantity of social labor invested in the total mass of this class of commodities should correspond to the volume of the social need felt for them, social need being understood as solvent social need. Competition, the fluctuations of commercial prices corresponding to the fluctuations of the relation between supply and demand, constantly tend to reduce to this measure the total amount of labor invested in any class of commodities.” Ibid., p. 195.
- “The assumption that the commodities of the various spheres of production are sold at their values only means, of course, that their value constitutes the center of gravitation around which their prices revolve and on the basis of which their constant ups and downs are compensated. But, in addition, it will always be necessary to distinguish a commercial value, of which we shall speak later, from the individual value of the different commodities produced by the various producers. The individual value of some of these commodities will be lower than the commercial value (i.e., less labor-time will be required for their production than the commercial value indicates); that of others will be higher than it. The commercial value must be considered, on the one hand, as the average value of the commodities produced in a sphere of production; on the other hand, as the individual value of the commodities produced below the average conditions of their sphere of production and which constitute the great mass of products of that sphere. Extraordinary combinations must take place so that the commodities produced under the worst or the most favorable conditions regulate the commercial value, which in turn constitutes the center of gravitation for market prices, which are always the same for commodities of the same class. If the supply of commodities at the average value, that is, at the average value of the mass oscillating between the two extremes, satisfies the normal demand, commodities whose individual value is lower than the market value realize a surplus value or extraordinary profit, while those whose individual value is higher than the market value cannot realize a part of the surplus value contained in them.” Further on. Marx adds, “And what we say of commercial value is also applicable to the price of production, when this replaces commercial value.” Ibid., pp. 182-83. See also especially pp. 186 ff.
- “Supply and demand, when thoroughly analyzed, presuppose the existence of the various classes and underclasses among whom the total rent of society is distributed to be consumed by them as such rent, and from whom, therefore, the demand formed by the rent starts.” Ibid. p. 197.
- This is what Bukharin forgot, and thus deduced false relations from his equilibrium formula for expanded reproduction. See Rosdolsky, op cit., p. 495.
- This depressive effect does not automatically translate into a fall in the profit share, since it can be counteracted by different mechanisms, among which the super-exploitation of labor, particularly in sub-sector IIa, stands out. But, especially in this case, the consequence of this depressive effect is the atrophy of sub-sector IIa and the hypertrophy of IIb, with the corresponding distortion of sector I.
- María da Conceição Tavares, Acumulação de capital e industrializaçao no Brasil, competition thesis for the Faculty of Economics and Administration, Federal University of Rio de Janeiro, without references to place and date, mimeo, 118 pp.Francisco de Oliveira, “Padrões de acumulação, oligopólios e Estado no Brasil (1950-1976)”, in A economía da dependencia imperfeita, Graal, Rio de Janeiro, 1977, pp. 76-113, of which there is a Spanish version: Investigación Económica, n. 143, sf. Mexico.
- Both authors invoke Kalecki to name the subsector of luxury consumer goods as Department III, maintaining the designation Department I for the means of production and giving the designation Department II to the necessary consumer goods. The fact is that it is not necessary to refer to Kalecki to establish a sector or department III, since it is so presented in Tugan Baranovsky’s work that gave origin to the polemic already treated, which dates from 1894, being accepted by many Marxists, among them Kautsky himself. On the other hand, it is not difficult to bear in mind that, in Kalecki, the sector that produces consumer goods for the capitalists is the II, being the III the one that produces for the workers. Cf. Theory of Economic Dynamics. Fondo de Cultura Económica, Mexico, 1977, p. 48. However, the denomination of the sectors and sub-sectors of production being unimportant, if they are well defined, we will accept here the terminology of Oliveira and Tavares.
- These methodological leaps in Tavares are commonplace. Thus, for example, the author warns, at the beginning of her work, that she will not work with values, but with production prices, but, not even considering the problems of the formation of average profit, she always reasons in terms of market prices.
- Thus, in his correspondence with Ricardo, Malthus argued: “I cannot by any means agree with you when you observe that ‘the desire to accumulate will act on demand with exactly the same efficacy as the desire to consume,’ and that ‘consumption and accumulation equally promote demand. I confess that I know of no other cause, indeed, for the fall in profits, which I believe you will generally attribute to accumulation, but that the price of commodities falls as compared with the expenses of production, or, in other words, that the effective demand diminishes.” And he added, in another letter: “I by no means wish to deny that some or other persons have a right to consume all that is produced; but the great question is, whether it is so distributed among the different parties interested, as to occasion the greatest effective demand for future production. And I expressly maintain that an attempt to accumulate very rapidly, which forcibly supposes a considerable diminution of unproductive consumption, must prematurely check the progress of wealth by greatly weakening the usual motives of production.” Quoted by J. M. Keynes, in “Robert Malthus (1766-1834): The First Cambridge Economist,” included as a foreword to T. R. Malthus. First Essay on Population. Ed. Alianza, Madrid, 1970, pp. 35-36.
- “State and capitalist crisis in Latin America”. Criticas de la Economía Política-Edición latinoamericana. n. 2, January-March 1977, Mexico, pp. 61-97.
- See my critique of Pierre Salama, from whom Mathias takes the idea, in ‘La acumulación capitalista mundial y el subimperialismo’, Cuadernos Políticos, n. 12, April-June 1977, Mexico, pp. 30-31, note 39.
- Rather, as I indicated earlier, it acts in the sense of depressing the general rate of profit. It is worth noting that, in studying the counteracting mechanisms of the tendential fall in the rate of profit, Marx points to the development of luxury production as one of them (cf. Capital, cit., t. III, p. 236). However, he is referring to the branches of production, whether sumptuary or not, which are based on the increase of relative overpopulation and thus, thanks to the fall of the wage below the average level, on a low organic composition of capital, “which makes both the share and the mass of surplus value extraordinarily high in these branches”; the leveling out of the profit share ensures that the whole of social capital benefits from this situation. This is still valid today, but on a smaller scale: sector III to which we have referred here is no longer constituted mainly, as in the phase of capitalist development to which Marx alludes, of branches of low organic composition, derived from the overestimation of artisanal or semi-craft production (the “handmade” products of our days, in the industry of hats, shoes, clothing in general, for example), but of branches of high organic composition, whose greater share of surplus value comes from their technological superiority and is translated into extraordinary surplus value. This is particularly true if we look at sector III, as defined by Oliveira, Tavares and Mathias himself, that is, referring to the production of durable consumer goods, such as automobiles and household appliances.
- Cf. Dialectica de la dependencia. Ed. Era, Mexico, 1973, pp. 64 ff. and 91 ff. Polemicizing with me on this point, Mathias makes mistakes that one does not know whether to attribute to misunderstanding or bad faith. Thus he claims that I intend to characterize “Latin American capitalism by the fact that ‘this [sic] dispenses the industrialist from worrying about increasing the productivity of labor in order to […] depreciate the labor force’, etcetera”, on the basis of a quotation from the above-mentioned text. The phrase is indeed found there, but not as a characterization of Latin American capitalism in general, but of the industrialization carried out up to 1950, that is, the period that Mathias unhappily calls the period of “reinsertion” of the Latin American economy into the world capitalist economy. In the following paragraph, however, my text focuses on the conditions that forced industrial capitalists to face the need to resort to the increase of labor productivity and indicates how this happened, that is, how the transition from a mode of accumulation based essentially on the super-exploitation of labor to another, in which super-exploitation is the basis on which the increase of labor productivity has an impact; cf. in particular p. 66 and the following section, the last one of the text in question.