Cooking the Books 2
Arising out of our review in February of Aaron Benanav’s Automation and the Future of Work, in which he mentions companies like Tesla ‘pushing toward “lights out” production, in which fully automated work processes, no longer needing human hands, can run in the dark’, a reader has asked:
‘How can a production facility without human labour power (variable capital), as the only commodity capable of adding surplus value in production, possibly be profitable?”
Although in Marx’s day a ‘lights out’ factory was not an issue, it is an extreme case of something that he did consider when, in chapters 8-10 of volume III of Capital, he dealt with the emergence of an average rate of profit which all capital would tend to make.
Our reader is correct. Labour power, when activated, is the only source of surplus value, and so of the profits capitalist enterprises make. Thus Marx called the capital invested in buying it ‘variable’ capital as its value ‘varied’, increased in size, in the course of the production process. The value of the capital invested in plant, machinery, materials, power, etc was transferred unchanged into the value of the product; so Marx called it ‘constant’ capital.
But there was a problem. Assuming that the productivity of all labour power was the same in that any given amount produced the same amount of surplus value, this would mean that industries using more would make a larger profit than those employing less.
To illustrate this point Marx compared five different industries with different average combinations of constant and variable capital. Two will suffice to illustrate his point: one 60 constant and 40 variable; the other 90 constant and 10 variable. The surplus value produced in the first would be 40 and in the second 10, meaning that, if each retained the surplus value produced in it, the rate of profit in the first would be 40 percent and in the second 10 percent.
However, this is not what happens. Industries with a lower proportion of variable capital do not make less profits and, if they did, there would be no incentive for capitalist enterprises to adopt the less labour-intensive, more technologically advanced production methods that is one of capitalism’s observable tendencies.
What happened, Marx explained, was that, as capital flowed into the industries producing more surplus value and out of those producing less, this led to changes in amounts produced and their price that meant in the end that capital of the same size invested in any industry would tend to make the same rate of profit. It was as if all the surplus value produced was pooled and shared out in proportion to the size of the total capital (constant plus variable) invested. In our example, with the total capital invested of 200 and total surplus value produced of 50, the rate of profit in both industries would be 25 percent.
As Marx put it,
‘However an industrial capital may be composed, whether a quarter is dead labour and three-quarters living labour, or whether three-quarters is dead labour and only a quarter sets living labour in motion, so that in the one case three times as much surplus labour is sucked out, or surplus value produced, as in the other, ….in both cases it yields the same profit’. (Chapter 9, Penguin edition, p.270)
The same would apply to capital invested in a ‘lights out’ factory. The fact that it would be composed of 100 percent dead labour would be irrelevant; it would still tend to attract the same rate of profit as any other industrial capital of the same size, despite not contributing anything to the pool of surplus value as it did not use any value-producing, living labour.