From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Thu Jan 10 2008 - 17:59:14 EST
It is true that in the normal situation employers do not advance wages before work is done, but I think that variable capital is a reality, to the extent that a firm must maintain sufficient funds to pay labour costs at any time. It is true though that the average stock of capital that must be reserved for this purpose is usually a fraction of the annual flow value, since labour costs are recouped through revenues from sales during the year (a point missed by most Marxists). The actual amount involved depends on the production cycle involved in producing particular products, and fluctuating sales volumes, but normally there are capital reserves in the account in this sense. This affects the total capital tied up during the year and therefore the calculation of the "real" profit rate. Marx used the concept of variable capital in several related senses: 1 - the actual capital outlay on labour costs, defined either as a stock, asset, input or a flow 2 - living labour functioning as "working capital" producing new capital value, or as the instrument of the valorisation of capital (labour, once hired, functions as capital) 3 - the valuation of that fraction of output value attributable to labour costs. The value and price of variable capital may also diverge. As regards the value, it is not determined by what happens in the individual firm, but is an aggregate social effect of many firms operating in markets and the interrelationship between wages, living standards and the cost-of-living, and more generally the balance of power between social classes. Moreover both the value and the price of variable capital can fluctuate continuously, independently of each other, within certain social limits. The variability of variable capital describes the variations that occur in its valorisation of capital upon use - how much new value is created is uncertain, and can only be estimated in hindsight, and how much of the new value created will be realised through sales is also not exactly predictable. Some complications of the concept are: 1 in addition to wages disbursed, the employer often also has to fund payroll taxes, and various social security contributions. 2 employees both pay tax and receive state benefits in respect of their labour income, just as employers pay taxes and receive subsidies of various kinds (including tax credits). 3. employees often receive both direct payments, and entitlements to deferred payments (such as retirement provisions, retainers and insurance) 4. Strictly speaking, the capital involved in paying "unproductive labour" is in aggregate not variable capital, but constant capital, since it creates no net new value but only redistributes it, yet for the individual employer it functions as variable capital, insofar as surplus labour is performed that enables an appropriation of profit. The German term "Mehrwert" (surplus value) means simply the "value added". In accounting, this refers to the value added in gross output (gross revenue from sales), a measure of the net new wealth created. But in Marx's theory, it is not the value-added to products per se, but the value added to capital assets owned by the employer by labour employed. Essentially, Marx's analysis combines the product account and the capital account in a single system, where inputs and outputs represent quantities of capital assets whose value exists quite independently of the magnitudes of expenditures and sales revenue. That is just because Marx was interested in the value relations of capital assets rather than the sale or purchase prices of inputs and outputs as such. It is certainly not true that there does not exist a net money-capital, unless we confuse doubtle-entry bookkeping of assets and liabilities with capital ownership and effective command of capital resources. Jurriaan
This archive was generated by hypermail 2.1.5 : Thu Jan 31 2008 - 00:00:06 EST