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[mim3@mim.org comments: We received the following from Australia to discuss our recent postings on Australia. My comments follow in red.]
[Regarding your argument concerning hiring sales workers to increase profit turnover,] please note that Marx is talking about turnover in the production phase, a necessary precondition for any increased turnover in sales. This is important, when turnover is talked about in everyday conversation; it is usually used in reference to sales turnover.
Indeed it is this sales turnover and the increases of profits at this stage that creates the illusion for the seller that it is circulation time itself that is productive. The source of the bigger profits is the increased realisation of surplus value created by labour in the productive stage.
Marx said:
"The second moment is the space of time running from the completed transformation of capital into the product until when it becomes transformed into money.And elsewhere in "Grundrisse":The frequency, with which capital can repeat the production process, self-realization, in a given amount of time, evidently depends on the speed with which this space of time is run through, or on its duration.
If a capital -- say originally a capital of 100 Thalers -- turns over 4 times in one year; let the gain be 5% of itself each time, if the new value is not capitalized; this is the same as if a capital 4 times as large, say 400, at the same percentage, were to turn over once in one year; each time 20%.
The velocity of turnover therefore -- the remaining conditions of production being held constant -- substitutes for the volume of capital. Or, if a value 4 times smaller realizes itself as capital 4 times in the same period in which a 4 times greater value realizes itself as capital only once, then the smaller capital's gain -- production of surplus value -- is at least as great as the larger's. We say at least. It can be greater, because the surplus value can itself again be employed as surplus capital.
For example, assume that a capital of 100 has a profit (here anticipating this form of surplus value for the calculation's sake) of 10% each time, no matter how often it turns over. Then, at the end of the first 3 months, it would be 110, at the end of the second 121, at the end of the third 133 1/10, and at the end of the last turnover 146 41/100, while a capital of 400 with one annual turnover would be only 440. In the first case the gain = 46 41/100, in the second only = 40. (The fact that the presupposition is wrong, in as much as capital does not bring the same rate of profit with each increase in its size, is beside the point as far as the example is concerned, for the issue here is not how much more than 40 it brings, but the very fact that in the first case it does -- and it does -- bring in more than 40.) We have already encountered the law of the substitution of velocity for mass, and mass for velocity, in money circulation. It holds in production just as in mechanics."
"The total realization of capital is hence determined by the duration of the production phase — which we posit as identical with labour time, for the moment — multiplied by the number of turnovers, or renewals of this production phase in a given period of time. If the turnovers were determined only by the duration of one production phase, then the total realization would be simply determined by the number of production phases contained in a given period of time; or, the turnovers would be absolutely determined by production time itself. This would be the maximum of realization. It is clear, therefore, that circulation time, regarded absolutely, is a deduction from the maximum of realization, is absolute realization. It is therefore impossible for any velocity of circulation or any abbreviation of circulation to create a realization that posited by the production phase itself. The maximum that the velocity of circulation could effect, if it rose to [infinity], would be to posit circulation time = 0, i.e. to abolish itself. It can therefore not be a positive, value-creating moment, since its abolition — circulation without circulation time — would be the maximum of realization; its negation = to the highest position of the productivity of capital The total productivity of capital is = the duration of one production phase multiplied by the number of times it is repeated in a certain period of time. But this number is determined by circulation time." 'Let us assume a capital of 100 turned over 4 times a year; posited the production process 4 times; then, if the surplus value = 5% each time, at the end of the year the surplus value created by the capital of 100 would = 20; then, for a capital of 400, which turned over once a year at the same percentage, would likewise = 20. So that a capital of 100, circulating 4 times, would give a gain of 20% a year, while a 4 times greater capital with a single turnover would give a profit of only 5%. (We shall see shortly, in more detail, that the surplus value is exactly the same.) It seems, therefore, that the magnitude of the capital can be replaced by the velocity of turnover, and the velocity of turnover by the magnitude of the capital. This is how it comes to appear as though circulation time were in itself productive.." 'Circulation time only expresses the velocity of circulation; the velocity of circulation only the barrier to circulation. Circulation without circulation time — i.e. the transition of capital from one phase to the next at the speed of thought — would be the maximum, i.e. the identity of the renewal of the production process with its termination."Or, as Bill Gates says. Borrowing from Marx the capitalists wish to do "business at the speed of thought." Turnover ! Henry Ford had assembly lines; Gates wants to use computers to speed up production and distribution. So, the capitalist class knows this too; if there is one thing they are watching it's the bottom line.
Their task in the whole process is to compete the whole profit creating cycle as many times as possible in order to multiply their profits, within a given amount of time and finish with the maximum amount of surplus value.
mim3@mim.org replies for MIM:
In fact, the main factor in Australian wages is political. Australians dominate the services that cannot be replaced by Chinese or other workers
manufacturing commodities abroad. Because for example, China is currently happy to stockpile Western currencies, what Engels says
determines the general wage level:
Even if China were to start dumping its Western currencies, there is a possibility that as bourgeois dictators, the Chinese rulers
would find other ways to deliver surplus-value to the Australians. Now if for example, China and various Third World compradors wanted
to stockpile Kenyan Shillings, they could make Kenyan service workers as rich as Australian ones. Ask any trader or banker what currency
they want and they will say "hard currency," which translates into imperialist currencies--currencies from places that have the whole
basket of goods available in great supply, partly because they exploit the rest of the world.
That does not mean wealth arises in circulation. It means that politically the bourgeoisie delivers surplus-value to some places and not others.
It is a vicious cycle of wealth attracting wealth, like a terrible centripetal sucking and swirling sound that leaves the international toilers impoverished.
Now, ironically, the above quotes from Marx are actually much more relevant as a reason for why sales workers arise in the imperialist
countries. The surplus-value has already been extracted in production--mostly in China today in 2006--but then the goods get sold somewhere
else. So a sales worker can increase the profits of a capitalist the same way as described above, if we assume a huge reserve army of unemployed
and willing Chinese or other Third World capitalists. If surplus-value extracted is high enough before sales, it will pay to have more than necessary sales workers
to keep commodities moving.
The problem with seeing turnover increasing too much in manufacturing in the imperialist countries is that you then have to find the profits
for that. MIM has shown that the overall profits for a white working class exploitation to be possible do not exist. We believe
that the ratios concerning Australian workers are not quite as lopsided but still generally similar to those in major imperialist countries. Secondly, MIM has shown
that the intensity of capital in manufacturing is not high enough to believe that
imperialist productive sector workers supply the rest of their countries with surplus-value. That surplus-value has to come from outside.
Now I will tell you how to disprove MIM in the future in case you get a notion to try--an open challenge.
Show us capital to labor ratios in the manufacturing sector six times higher than in the service sector of Australia and then get back to us.
What you are going to find is that with England and the United $tates leading the way, "de-industrialization" is true, to the extent that industrial
employment stayed the same and did not keep pace with services. Also true is that industrial employment lightened in many regards. Above all,
it is not true that we found ways to invest billions in our manufacturing workers so that we can supply other workers with surplus-value as Marx
described. Rather, we imperialist countries went abroad to find new sources of surplus-value to transfer home. India and China are obliging us
as we speak.
If you cannot meet the MIM challenge on that point, think about what it means. Capitalists are going to expect their profits for investing. If those
profits are disproportionately in services, then where did the surplus-value come from? There was no capital intensity in manufacturing to justify
thinking that one Australian manufacturing worker could supply six other Australian workers in sales, advertising, guarding etc. surplus-value.
It didn't happen because most of the surplus-value gets delivered politically from abroad.
Your other answer here that the capitalist in manufacturing could have just a speck of capital if the turnover is fast enough is a place where
utopian fantasy enters again to defend white workers. If these super-workers who can extract so much surplus-value with no capital are so great,
they must be so great in other sectors too. Then you are back to the same ratio problem to explain. So it is not usual to argue that workers in industry
are miracle-workers while business at the speed of thought does not occur in services. Capitalists are not going to allow this sort of argument against
MIM in practice or they would all flock to manufacturing.
So imagining you buy the industrial workers a box of paper clips and they work at the "speed of thought" and transform that into cars is not going to fly.
We've shown that when all is said and done, we're not going to find a ratio of fixed and variable capital in the industrial sector six times that
in the service sector, but you can try to show that. In fact, what we are seeing right now is that commercial buildings are the new additional fixed
investments, disproportionately. The reason for that is that the surplus-value extracted abroad allows investment in commercial buildings, malls
etc. to outstrip investment in industry in Australia.
The turnover argument is true, but not good for a comparison of sectors which is what MIM's argument about the ratio of
unproductive versus productive sectors depends on.
Notes:
My first answer, is that with regard to Australia, the impact of this example will be misleading. The vast majority of Australian workers
are not in industrial production. According to the Australian government only 12% of Australian workers are in industry. 74.6% are in services.(1)
So what Marx is saying would be relevant to England at one point in its existence. It is no longer relevant in Australian experience, because the wages
for Australian labor-power are not determined mainly in industry.
"Nowhere, hardly excepting even the Irish domestic industries, are such infamously low wages paid as in the German domestic industries. Competition permits the capitalist to deduct from the price of labour power that which the family earns from its own little garden or field; the workers are compelled to accept any piece wages offered to them, because otherwise they would get nothing at all, and they could not live from the products of their small-scale agriculture alone, and because, on the other hand, it is just this agriculture and landownership which chains them to the spot and prevents them from looking around for other employment. This is the basis which upholds Germany’s capacity to compete on the world market in a whole series of small articles. The whole capital profit is derived from a deduction from normal wages and the whole surplus value can be presented to the purchaser. That is the secret of the extraordinary cheapness of most of the German export articles."
--"1887 Preface to the Second Edition of the Housing Question" by Engels
1. "Australian Social Trends 2004," http://www.abs.gov.au/Ausstats/abs%40.nsf/94713ad445ff1425ca25682000192af2/250F9A33FBCE42C5CA256EA600000061?opendocument