1. WHAT IS A COMMODITY?
Something produced for
exchange,
not for the personal use of the producer. A peasant who grows vegetables
for his family is not engaged in commodity production, but in production
for use. But if he grows them in order to exchange them with the landlord
of the local inn for ale, he is engaged in production for exchange, in
commodity production.
2. WHAT IS SIMPLE COMMODITY PRODUCTION?
The production of commodities
by producers who own their own means of production, like that carried on
by artisans under the feudal system.
3. WHAT IS CAPITALIST COMMODITY
PRODUCTION?
The production of commodities
by working class producers in a capitalist society, that is, by producers
who do not own their means of production and so are compelled, in order
to live, to seek employment with capitalists who do own means of production.
4. WHAT IS A MARKET?
An area where those who wish
to dispose of a commodity and those who wish to acquire it are in contact.
Thus, we may speak of a local livestock market or a world oil market. A
market where there are a number of separate individuals or firms competing
to dispose of a commodity and a number of individuals or firms competing
to acquire it is called a competitive market.
5. WHAT IS THE RATE OF EXCHANGE
OF A COMMODITY?
The number of commodities of
other kinds for which that commodity can be exchanged in a particular market
at a particular time. If a cow can be exchanged in a town's cattle market
on a particular day for two pigs, the rate of exchange of a cow is equal
to two pigs, while the rate of exchange of a pig is one- half of a cow.
6. WHAT IS THE VALUE OF A COMMODITY?
Clearly, it is not necessarily
equal to its rate of exchange in a particular market, for in the last example
we may speak of a cow being 'worth more' or 'worth less' than its actual
exchange value. At the basis of the exchange rate between two commodities
lies the relative quantity of work required to produce them. In fact, the
value of a commodity is the necessary labour time required to produce it.
So, if it takes 4,000 times more hours to produce a car than to produce
a briar pipe, the value of a car is 4,000 times that of the pipe.
7. WHAT DETERMINES THE RATE OF
EXCHANGE OF A COMMODITY IN A COMPETITIVE MARKET?
Supply and demand, which causes
the rate of exchange to fluctuate above or below its value. If, for example,
there is a shortage of sugar in a particular market, those who wish to
obtain it will tend to offer more than its value in order to obtain it.
On the other hand, if there is a glut of sugar in a particular market,
those who wish to dispose of it will tend to offer it at less than its
value in order not to have it left on their hands. However, if the rate
of exchange of a commodity is above its value as a result of shortage,
the production of sugar will yield exceptionally high returns, Consequently,
more people will go in for producing it, and the production of sugar will
rise until its rate of exchange goes down to its value. The reverse process
operates if the rate of exchange of sugar is below its value as a result
of supply exceeding 'demand'; the production of sugar then yields exceptionally
low returns, so that the production of sugar will decrease until its rate
of exchange rises to its value. Thus, in each competitive market there
is a tendency for the rate of exchange of each commodity to correspond,
in the long run, to its value.
8. WHAT IS BARTER?
The direct exchange of one commodity
for another, e.g., wheat for bricks.
9. WHAT IS MONEY?
A commodity (or token of a commodity,
such as a banknote, which is the token for a certain quantity of gold)
which is generally acceptable within a particular community as a medium
of exchange. The introduction of a monetary system removes many of the
difficulties inherent in a barter system. Under the latter, if a weaver
wishes to obtain a pair of shoes, he must search for a shoemaker who wants
cloth. But when money is in social use, he may sell his cloth to anyone
for money and use this to buy shoes from any shoemaker.
10. WHAT IS PRICE?
The rate of exchange of a commodity
expressed in terms of money.
11. WHY DO PRECIOUS METALS SUCH
AS GOLD AND SILVER COME INTO USE AS MONEY?
For convenience of use and transport.
Being rare, their production involves a very large amount of labour time,
so that a small quantity of them embodies a very large value.
12. WHAT IS LABOUR POWER?
The capacity of a worker to
work for a certain period of time. The worker, owning no means of production
of his own, is compelled in order to live to try to sell his labour power
to a capitalist. Thus, in a capitalist society, labour power is a commodity.
13. WHAT DETERMINES THE VALUE
OF LABOUR POWER?
As in the case of other commodities,
the amount of socially necessary labour time involved in its production,
that is, the value of the commodities required to produce, maintain and
reproduce it. The value of labour power is not, however, that of the bare
subsistence of the worker and his dependents (who form the next generation
of workers) but depends on such additional factors as the subsistence necessary
to train a skilled worker, the degree of 'civilisation' of the country
concerned, and so on.
14. WHAT ARE WAGES?
The price of labour power. In
a competitive market, the price of labour power, like that of other commodities,
may fluctuate above or below its value according to supply and demand,
but in the long run its price tends to correspond to its value.
15. WHAT IS SURPLUS VALUE?
The new value created in the
course of production by a worker's labour over and above the value of his
labour power. If a worker receiving $100 a week in wages were to create
only $100 a week in value, his employer would obtain no benefit from employing
him and would cease to do so. An employer will employ a worker only if
he produces in a week an amount of new value which exceeds what is paid
to him in wages. The difference is the surplus value -- value which is
created by the worker but appropriated by his employer. If a worker creates
$200 of new value in a week but is paid $100 in wages, his employer has
obtained $100 in surplus value from that worker. So, if he employs 1,000
such workers, he obtains a total of $100,000 of surplus value in a week.
This is the mechanism by which the capitalist class exploits the working
class. Clearly, exploitation under capitalism has a more concealed character
than under slavery or feudalism.
16. WHAT IS CAPITAL?
All that is owned or hired by
capitalists in a capitalist society -- land, buildings, machinery, raw
materials, labour power -- enabling them to acquire surplus value, that
is, enabling them to exploit workers. The money expended by capitalists
for this purpose -- a process known as investment -- is also called capital.
17. WHAT IS CONSTANT CAPITAL?
All capital except that used
for the buying of labour power. Land, buildings, machinery and raw materials
do not themselves create new value, but are merely the instruments with
which human labour power creates new value. Since the capital expended
on these items does not change in value in the course of capitalist production,
it is called constant capital.
18. WHAT IS VARIABLE CAPITAL?
Capital expended on the purchase
of labour power. Since the new value created in the course of capitalist
production is created entirely by the worker's labour power, the capital
expended on this item may be regarded as having changed -- increased --
in value in the course of capitalist production. It is, therefore, called
variable capital.
19. WHAT ARE RENT, INTEREST AND
PROFIT?
The portions of surplus value
which are appropriated by different sections of the exploiting class (or
by different exploiting classes) in a capitalist society. Rent may
be paid by the employer (the entrepreneur) to a landlord for the hire of
land and/or buildings where his enterprise is carried on. Interest
may be paid by the entrepreneur to a financier or bank for the hire of
money capital he requires to carry on his enterprise. Profit is
that portion of the surplus value which the entrepreneur retains for himself
after paying any rent or interest. Rent, interest and profit, being portions
of the surplus value produced in the course of capitalist production, all
have their source in the exploitation of the workers. An entrepreneur who
owns his own land, buildings and money capital retains, of course, all
three portions of the surplus value for himself.
20. WHAT IS COMMERCIAL PROFIT?
The profit obtained by a commercial
capitalist, that is, one engaged in the distribution (i.e., selling) of
commodities.
21. WHAT IS THE SOURCE
OF COMMERCIAL PROFIT?
Value is created only by produtive
labour, and surplus value is created only by labour employed in capitalist
production. No value is created in the process of distribution. The source
of commercial profit (as well as the source of the wages of employed distributive
workers) lies in the surplus value created by employed production workers.
The capitalist engaged in production sells his finished commodities to
a capitalist engaged in distribution at a discount, below their value.
The capitalist engaged in distribution realises his commercial profit by
reselling them at their value. In other words, the capitalists engaged
in production pass to the capitalists engaged in distribution a portion
of the surplus value created by their employed production workers in the
course of capitalist production.
22. WHAT IS THE MOTIVE OF PRODUCTION
UNDER CAPITALISM?
Profit. Each capitalist firm
strives to make for itself the maximum possible amount of profit.
23. CRITICISE THE FOLLOWING ANALYSIS:
'BECAUSE OF THE OPERATION OF THE PRINCIPLE OF SUPPLY AND DEMAND IN A CAPITALIST
SOCIETY AS DESCRIBED IN PARAGRAPH 7 ABOVE, THE PROFIT MOTIVE AUTOMATICALLY
GEARS PRODUCTION TO DEMAND'.
The
'demand' which is satisfied as a result of the operation of the
profit motive is not the needs of the masses of the people. It is
what is called 'effective demand', that is, 'demand' measured in
terms of the money which consumers are willing and able to spend on the
satisfaction of their needs.
If the entire population of
a capitalist country were to demonstrate in the streets for bread, there
would be no 'effective demand' for bread unless they had the necessary
money to offer in the bakers' shops. Thus, the profit motive gears production
approximately to the needs of those people with enough money to express
their needs in effective demand. That is why, although there has long been
a housing shortage for working people in capitalist Britain, capitalist
building firms do not use the resources of the building industry to build
houses and flats for working people but, instead, use them to construct
such things as office buildings (which may stand empty for years). They
do so because the latter course is more profitable, although the social
need for it is incomparably smaller. Only when the profit motive has been
abolished and production is consciously planned can it be geared to the
real needs of the people. _________________________________________________________________
SOME ADDITIONAL READING SUGGESTIONS
FROM ALLIANCE:
This class has covered the essential
vocabulary and concepts underlying the "Labour
Theory of Value". Marx declared that he had
not "discovered this"; but that he had "only" put this into its revolutionary
form, that had allowed the working class to become aware of its own destiny.
(2) Marx "Wages, Prices & Profit"; "Selected Works"; Marx & Engels"; Volume 2; Moscow; 1985; pp. 31-71; or as"Value, Prices & Profit"; In Collected Works"; Volume 20; Moscow 1985, p103-149; OR http://gate.cruzio.com/~marx2mao/M&E/WPP65.html
(3) Frederick Engels: "A Review of Marx’s Capital"; In "Selected Works"; Marx & Engels"; Volume 2; Moscow; 1985; pp.146-155 OR in "Collected Works"; Volume 20; Moscow; 1985; p.231-237.
4) For a much more detailed and
thus for the more advanced reader: try Engels : "Synopsis of Marx's Capital";
Volume 20; Moscow 1985; pp265-308. OR:
http://www.marxists.org/archive/marx/works/1867-c1/1868-syn/index.htm
5) Vladimir I. Lenin; Selected
Works"; Volume 1; Moscow 1977; "Karl Marx": section entitled "Marx’s Economic
Doctrine"; pp27-36; or in "Collected Works"; Volume 21; p63-74.
Moscow 1951;
OR: http://gate.cruzio.com/~marx2mao/Lenin/KM14.html#KM2
6) Leontyev L: "A Short Course
of Political Economy"; Moscow; 1968; see section "Labour as the basis of
Value"; p.47-63
FOR INTRODUCTION PAGE OF COURSE
GO TO:
http://ml-review.ca/aml/CLASSES/CourseInt-CL.htm