On Marx's Method 2

One more comment on Hegel before we move on to Marx:

There is a section titled "With What to Begin?" right after Introduction in Science of Logic - a.k.a Larger Logic - and there you can find Hegel's long discussion of the issue of 'starting point' in logic. I think one of the main lessons there is that 'the point of departure in reality' is for Phenomenology, and 'the logical starting point' is for Logic. (Patrick Murray (2000) understands the difference between Phenomenology and Logic in relation to the starting point in this way.)

Now turning to Marx:

As we already know so well, in Grundrisse Marx mentions two conceptual journeys, a descending one from the chaotic concrete to the abstract and a ascending one from the abstract to the concrete with many determinations; and he dubs the latter as an "obviously scientifically correct method," i.e. the abstract as an obviously scientifically correct starting point.

And as we remember, Nicolaus argues in his Preface that Marx changed his mind in Capital. In Grundrisse, the argument goes, Marx begins with an abstract category of 'production', but in Capital he abandons this method and starts with commodity. That is, for Nicolaus the category of commodity is something concrete. Of course, opposing view followed of Marquit (1977) and Carver (1980).

The controversy here is how to understand the nature of commodity as a theoretical category. On this respect, I think Chris Arthur's explanation is very interesting. He gives three criteria for the starting point: it should be i) simple, ii) historically specific, and iii) immediate. And he says that commodity satisfies the latter two but not the first; it is not simple enough since it can be further analyzed into use-value and value. What about 'value'? According to Arthur it satisfies the first two but not the third; it is not something that can be immediately grasped. Then what is the true starting point in Marx? Commodity or value?

Here we have Jairus Banaji (1979)'s wonderful solution to this puzzle: a concept of 'double starting-point' which Arthur accepts. According to Banaji, “the beginning is a movement between two points of departure.” The idea is that the commodity forms the analytic point of departure to arrive at the concept of value; and value as the ground of all further conceptual determinations (money, capital) forms the synthetic point of departure of Capital. I think this solution is also in line with Hegel's method having two distinctive starting-points.

Understood in this way, I think both of the two conceptual journeys described in Grundrisse constitute Marx's method.

Finally, returning to our initial concern with the above discussions in mind, I think Marx's distinction between 'method of inquiry' and 'method of presentation' can be mapped into as follows:

*method of inquiry (Marx of Capital) = descending journey from the concrete to the abstract (Marx of Grundrisse) = analytical method (Hegel) = analytical shift from commodity to value (Banaji & Arthur)

-> commodity as a starting point

*method of presentation (Marx of Capital) = ascending journey from the abstract to the concrete (Marx of Grundrisse) = synthetic method (Hegel) = synthetic shift from value to commodity, money, and capital (Banaji & Arthur)

-> value as a starting point

Sorry for lingering on this topic which concerns only the initial chapters. Let's move on and talk more about later chapters! (But please feel free to raise comments, different ideas, or objections to what I have noted so far.)

On Marx's Method 1

'The starting point' and 'method of inquiry & presentation' theme raised by Hasan and Bilge seem to be ones of the most important methodological issues in the initial chapters of Capital Vol.1 which have troubled Marxian scholarship so long. We could easily agree that questions of 'where to start' and 'how to proceed' are the two most grounding issues when we analyze something scientifically. So was the case with Marx whose object of analysis is capitalism.

I think there are two primary references in dealing with this subject; Hegel's Logic and the chapter on the method of political economy in Grundrisse. I think Marx either consciously borrowed or was heavily influenced by Hegel's method in Logic, and used the example of analyzing a given country starting with its population in showing how to apply Hegel's method in doing social science. (In this respect, I totally agree with Lenin in insisting that without reading Hegel's Logic one barely understands Marx's Capital, and that the latter is the best application of the former.)

Notice that the conceptual proceed of 'Being - Essence -Notion' in Hegel's Logic corresponds that of 'chaotic concrete - thin abstract - concrete with many determinations' in Grundrisse. We could also compare logical developments in Capital such as 'commodity - money - capital' or 'exchange value (immediately perceived) - value (as underlying essence) - exchange value (conceived in thought as form of appearance of value)' ('homology thesis', an argument that there is an one-to-one correspondence between Hegel's system and Marx's system. Of course the concrete correspondence is different from scholars to scholars. For example some argue that the category of 'capital' in Marx corresponds to that of Essence, not of Notion, in Hegel, excluding Notion from homology.)

First on Hegel's Logic: Hegel starts his Shorter Logic with mentioning how difficult it is to begin in doing philosophy. Here's what he says.

"But with the rise of this thinking study of things [i.e. philosophy], it soon becomes evident that thought will be satisfied with nothing short of showing the necessity of its facts, of demonstrating the existence of its objects, as well as their nature and qualities. Our original acquaintance with them is thus discovered to be inadequate. We can assume nothing and assert nothing dogmatically; nor can we accept the assertions and assumptions of others. And yet we must make a beginning: and a beginning, as primary and underived, makes an assumption, or rather is an assumption. It seems as if it were impossible to make a beginning at all." (Hegel's Shorter Logic §1)

Yet, we have to start anyway and the first mode of knowledge we form in our mind is concrete and empirical image established through empirical observation. However, Hegel criticizes empirical science, empirical knowledge for its shallowness and being contained in sense-perception, and argues that knowledge should be pursued beyond. But, he does not reject it all together but incorporates it within the totality of history of philosophy as an element constituting the latter. (This is a superior aspect of Hegel's 'wholistic' systematic philosophy.)

On the other hand, however, Hegel's system of Logic starts not with something empirical, i.e. something concrete-complex but with the category of Being, which is something abstract-simple, and which can be obtained (from the initial empirical perception) through some sort of thought process, i.e. reflection, and proceeds towards more concrete-complex categories, Essence and Notion. Then what is Hegel's true starting point; the concrete-complex empirically given or the abstract-simple?

Before answering this question, notice that there are two movements working in Hegel's system: First from the empirical concrete-complex to abstract-simple, and the second from the abstract-simple to the concrete-complex. Hegel calls the first movement the Analytical Method and the second the Synthetic Method (for definition of each refer to Hegel's Shorter Logic §227and §228).

From this we could easily figure out that there should be two different starting points in Hegelian logic for two different Methods; 'the point of departure in reality' for the Analytical Method and 'logical starting point' for the Synthetic Method.

(will be back with 'On Marx's Method 2'....)

Following Hasan's comments on Marx's money theory

Hasan, thanks for your insightful comments. I largely agree with you. Yes, as you said, "given the development of capitalism, commodity money can be (actually it is!) only burden to capitalist development", when, I want to add, money has emerged as commodity money in its origin. And yes, "fiat system is the most developed and sophisticated system which is in line with the thrust of capitalism for expansion", fiat system which is vulnerable to fluctuation, instability, and even collapse due to the huge departure it, as money, made from its origin i.e. commodity base. I think these observations constitute one of the fatal contradictions inherent in capitalism and specifically in its monetary system. The question I wanted to raise was not whether or not money is commodity only; we know this is not true from our everyday life. Rather my underlying question was whether this, i.e. non-commodity money system which we see everywhere can be sustained indefinitely. I think the apparent inconsistency between Marx's derivation of money as commodity in chapter one and the contemporary capitalism with non-commodity money does not undermine Marx's theory of money, but rather points to the instable and collapse-prone nature of capitalist dynamic.

(will be back with 'commodity as a starting point' soon....)

On the Charechteristics of Commodites and Its Implications

On this note, I would like to play devil’s advocate. The point I made below has been haunting me for a while. I have not reached a conclusion yet. It would be great to hear your ideas.

It is obvious that the treatment of commodities is very crucial for whole Marxian theory. So, Marx spends a lot of time in explaining it. While he investigates the secrets of commodities he also begins laying down the concepts of his grand theory. At the beginning, when he investigates the nature of commodities, he makes an interesting move. He put great emphasize on exchange value and abstract from use value although he brings use-value to the picture later. I feel that this would be more problematic than is seems to be.

He argues that “if then we leave out of consideration the use value of commodities they have only one common property left, that of being products of labour”.
He iterates this position later in the same page:
He goes on saying: “We have seen that when commodities are exchanged, their exchange value manifests itself as something totally independent of their use value”p.46

Indeed, this move seems to be necessary to argue that:
“There is nothing left but what is common to them all are reduced to one and the same sort of labour, human labour in the abstract” which is the foundation of labour theory of value.

But, at the end of the section 1 of Chapter 1 Marx reaches the conclusion that “to become a commodity a product must be transferred to another, whom it will serve as a use value, by means of an exchange.) Lastly nothing can have value, without being an object of utility. If the thing is useless, so is the labor contained in it; the labour does not count as labour , and creates no value.”

In this sense, he closes the circle and argues that “being the object of utility” is the necessary condition for defining commodity. This means that, as he clearly accepts, commodities have two common characteristics: i) they are products of labor and ii) they are subject of utility. Therefore, his earlier move (abstraction) which puts all the emphasis on the fact that a commodity is a product of labour, seems to be a choice rather than a necessity. I feel that this opens a possibility of discussion that the value of a commodity cannot be defined independent of the fact that it is a subject of utility. If one introduces this (utility) at an earlier stage, the theory of value may have different form.

Comment on Inquiry vs. Exposition

I think Marx is consistent on his views in this passage and his method of presentation in Volume 1. In the passage, he seems to argue that one has to inquire in concrete level in great detail how the material exists, develops in historical forms, and how its dialectical inner contradiction manifests itself. I think this is the reason why Marx’s analysis is always so rich in history, institutions, real life examples, etc. Then, he says in the passage, only after one inquires at that level, then one can begin presenting, i.e. exposing, the material to the reader. I think this is the reason why he wrote drafts of volume 2 and 3 earlier than volume 1 (correct me if I am wrong).

Why did he begin with his conception of commodity? Well, after reading Aristotle, Aquinas, Petty, Smith, Ricardo, Malthus, Mill, and so on in the past three weeks, and seeing the development of labor theory of value in the minds of these great thinkers, it seems only logical to me to start with a discussion of what commodity is, how the contradiction between use-value and exchange-value exists, and how this contradiction reaches its highest level under capitalist mode of production.

Aristotle clearly recognized this contradiction, but did not ground it in labor theory of value. Smith achieved this, but his conception was dual: labor commanded vs. labor embodied. It was Ricardo who elaborated on the latter conception, which was then taken by Marx to show how surplus-value was created in the “hidden abodes of production” (which was not there in Ricardo’s labor theory of value). I think by beginning his presentation with the concept of commodity, Marx achieves (at least) two objectives: (1) Distinguish between simple commodity production (C-M-C’) and capitalist production (M-C-M’) since the latter requires the product to be a commodity and therefore express itself as money, and through this expression must go through the process of metamorphosis. (2) Labor-power as a commodity: The consumption of labor power creates more value than its purchase resulting in surplus value.

These two ideas seem simple to the regular Marx reader, but very hard to conceive by those who have very little exposition to Marx. And I have experienced that it is indeed a challenge to try to explain these ideas to people who are used to seeing things in a C-M-C world. When the central function of money is seen as enabling the exchange of one commodity for another and not as a means for exploitation of labor power, “there alone rule Freedom, Equality, Property and Bentham” as Marx famously wrote in Volume 1.

On Preface: Inquiry Versus Exposition

The famous passage from the preface of the German Edition is as follows:
"Of course the method of presentation must differ in form from that of inquiry. The latter has to appropriate the material in detail, to analyse its different forms of development, to trace out their inner connexion. Only after this work is done, can the actual movement be adequately described. If this is done successfully, if the life of the subject-matter is ideally reflected as in a mirror, then it may appear as if we had before us a mere a priori construction." p.28
In light with this passage how can we interpret the way Marx began its exposition in Volume 1. He seems to strangely starts with the discussion about commodity after years of years of reshuffling of Volume 1. Why? Could have been better if he had began the discussion in a different way?

Comment on Park's comment on commodity Money and Gold Standard

Park,
This is an interesting observation. As far as I remember, we had a similar discussion in one of our Grundrisse discussion. Although I partially agree with the idea that during the crisis, demand for commodity money increases, which means that fiat money system may have problems, these may not strongly support some Marxist's position that commodity money is necessary to anchor capitalism or fiat money may not survive. This is a huge topic. I guess, we can discuss this issue further at our face to face meeting.
For now, I would like rise a few points.
1-From a Marxian perspective, the commodity money's value (as a commodity) should come from the socially necessary time embodied in it. However, how can we explain the current price of gold in terms of labor theory of value? I feel that the gold prices are mainly driven by speculative purposes as in the case of the price of any other financial assets. So, for me, it would be better to treat gold as another form of financial asset (though it has a tangible character) due to the fact that there is no relation whatsoever between the price of gold and its underlying fundamental value.
2-Furthermore, during the crisis, the demand for treasury bills and bonds went hand in hand with very high demand for gold . That’s why, although all other interest rates were rising during the crisis, the treasury bills and bond interest rates were at their historical low levels. They are still very low. Under current system, treasury bills or/ bonds can be considered a form of claim in terms of paper money (fiat money). It is not linked to gold or any other commodity money. So, how can this be explained in relation to commodity money? I do not have an exact answer. But, I think, It shows that high gold prices may not always an indication of decrease in appetite for fiat money.
3-Capitalism, to be able to function in a worldwide scale ,needs several different institutional structures. In a Polanyian sense, one of the key institutions is a well established monetary system either based on gold standard or Bretton woods type of mixture, or current fiat money. However, as we know from history, pure gold system restricts the trade and exchanges in a way that total quantity of gold restricts the expansion . That’s why capitalism needs much more flexible worldwide monetary system which is suitable to its main tendency of “nestling everywhere and settling everywhere”. Bretton Wood system partially meets this. However, under strain, it works exactly as a gold standard due to the fact that dollar (main currency) is supported by gold reserves. I can argue that fiat system is the most developed and sophisticated system which is in line with the thrust of capitalism for expansio. However, it is also prone to several other problems. There is no anchor within the system and those countries who have world currency privileges (due to their hegemonic or semi-hegemonic position) have enormous amount of power. And, Fiat money system is much more prone to fluctuations etc.

In this sense, for me, commodity money system, mixed system, fiat money system should be discussed as historical and institutional episodes. So, it is not clear to me, a current developments can support the idea that money can be only in commodity money form. Indeed, I can even argue that given the development of capitalism, commodity money can be only burden to capitalist development. It does not have fluidity to support the functioning of current capitalism though fiat money has all sorts of its own problems..In short, Capitalism cannot return to commodity money.

What other people think….?

Rise in the price of gold and Marx's commodity money theory

Last week all news media were crazy about the gold price skyrocketing over $1,250 per ounce, the highest price ever. Since the collapse of the Bretton Woods system, the connection between money and gold has officially disappeared. However, the demand for gold as a storage of value continued to exist; especially so at the time of crisis. And we have observed the price of gold soaring during the last couple of years marked by consecutive blows of financial crisis and sovereign crisis with tumbling of euro and stagnating dollar. Does this lend support to Marx's commodity money theory, as presented in the first three chapters, to any meaningful extent?

As we know, there are largely two responses to Schumpeterian critique of Marx's money theory as metallist: 1) Entirely reject Marx's money theory as being outdated in the contemporary capitalism where gold does not function as money anymore. 2) Explain that within Marx's theory non-commodity - e.g. fiat money anchored on government credibility not on material, metalic ground - can also function as money.

In this debate of 'commodity vs. non-commodity money theory,' the core controversy would be whether money itself necessarily has to have an intrinsic value or not within Marx's theoretical system. And some implications from the recent soaring of gold price seem to be the following: First, an artificial situation, where valueless non-commodity is assigned an essential function of money such as measure of value and storage of value, cannot be sustained especially during the time of (sovereign) crisis. Second, as commodity money theorists argue, if the circulation of non-commodity money is a transitory and unusual phenomenon relying upon the government credibility, which can possibly be subject to question and finally collapse, then something like the recent rise in the demand for gold at the expense of government-printed money or government bond may be repeated in a much more violent way anytime in the future.

Capital reading group

This blog is home to the online Capital Volume 1 reading group, running through August 2010. More soon!

Circulation labour is both necessary and unproductive

My thoughts on the question Iren posed in her notes below, i.e. "If circulation is socially necessary, a necessary condition for capital’s reproduction, on what grounds does Marx argue that it does not create value? Can his argument about specificity of use-value of commodity labour power be such a criterion? What is the difference between being socially necessary and value positing? Is his argument convincing?" (And at the last meeting we spent most of time on this issue.)

To rephrase the question, why does Marx treat production and circulation asymmetrically, i.e. one adds value while the other doesn't, when he admits that both are necessary for the reproduction of the economy?

I think we already know that Marx is implying 'necessary' in a different sense for production and circulation. As for production, it is necessary in the sense that it creates value through affecting use value; as for circulation, it is necessary in that it changes form of value, or realizes value already produced in production.

(Footnote: When Marx contrasts production and circulation, I think he is referring to circulation in a restricted sense of the word in that it involves only formal changes of value between money and commodity without affecting use-value at all. Thus when I say circulation I mean pure circulation as buying and selling excluding storage and transportation which, as Marx writes, are part of the production process disguised in circulation process, and therefore do add value.)

So, as Marx argues in Volume 2 of Capital, workers employed in circulation process is necessary and at the same time unproductive.

Marx has an interesting analogy in Volume 2:

Labour employed in the circulation process "behaves somewhat like the 'work of combustion' involved in setting light to a material that is used to produce heat. This work does not itself produce any heat, although it is a necessary moment of the combustion process." (208)

Now if our question is one of more fundamental type, i.e. "but still, why production, not circulation, as a site where labour is productive?" then I think the fact that value and use-value constitute dual nature of commodity, that thus there is no value creation without adding or conserving (in case of storage and transportation) use-value, and that (pure) circulation does not add or conserve use-value is enough to ground Marx's argument.

Grundrisse, p. 602-635

Here is my outline of the reading

1. Critique of Malthus, on three grounds (p. 605-607).
- First, an analysis should be historical, i.e. phenomena that can seem ahistorical (overpopulation, in case of Malthus) do have a specificity given to them by a particular mode of production of which they are an element. They are “historically determined relations”.
- Second, the role of social mediations: population needs to be analyzed in its relationship to employment, not agricultural products.
- Third, theory of rent (not discussed).
He also seems to argue (as a part of the 1st argument), that human phenomena are socially determined, hence, have only immanent, inner barriers, whereas natural phenomena have a social, i.e. outer, determination (p. 607).
Q: Is it convincing?

2. Smith’s concept of “work as sacrifice” (p. 610-614).
- Smith correctly captures only a specific historical form of the relationship (that of wage labour, slavery, etc.), but not the property of labour in general. For Marx, the latter is “self-realization, objectification of the subject, hence real freedom”, although at the same time “the most damned seriousness, the most intense exertion” (p. 611).
- He also correctly captures worker’s subjective attitude to work, in this sense, it is a psychological theory.
- For Marx, Smith’s concept of labour is negative, whereas it is indeed “a positive, creative activity”. To create value, labour should be more than just a sacrifice – it requires social mediation (subject-subject relationship) and worker’s relationship to his product (subject-object relationship). Determination of value by labour time can be done only based on the second approach.

3. Role of additional demand (from J. St. Mill): it increases output by 1) realizing the value of inventories that can be reinvested; 2) creating conditions for reconversion of financial assets into productive capital, hence, raising profit mass by the difference between the profit rate and the interest rate, times the volume of capital invested; 3) expanded accumulation by means of borrowing, with the same additional profit (p. 618). Notice, expanded reproduction based on rechanneling own funds and borrowing results in the same increase of profit, i.e. Mill is aware of the cost of capital idea.
Q: Mill implicitly assumes that the return on production is higher than the interest rate, otherwise his second argument would not hold. Does it always have to be the case though?

4. Circulation (p. 624-635).
- Does not create value, hence, circulation costs – costs of realization of value – are a deduction from the created value. Hence, costs of circulation are faux frais.
- Costs of circulation arise not from division of labour and necessity of exchange in general, but from their capitalist form. They stem from a necessary change in form of capital.
- In socialism, communal consumption replaces exchange.
- Circulation is a limit of production, in that sense, “circulation time becomes a determinant moment for labour time, for the creation of value. The independence of labour time is thereby negated, and the production process is itself posited as determined by exchange” (p. 628).
- “Magnitude of the capital can be replaced by the velocity of turnover” (p. 630). An n-time increase in the volume of capital generates the same mass of profit as capital turning over n times faster during the same time period. Nevertheless, if one accounts for a possibility of reinvestment after each turnover period, the smaller capital with higher turnover rate will produce more profit.
- Q1: If circulation is socially necessary, a necessary condition for capital’s reproduction, on what grounds does Marx argue that it does not create value? Can his argument about specificity of use-value of commodity labour power be such a criterion? What is the difference between being socially necessary and value positing? Is his argument convincing?
- Q2: Marx’s criterion of value creation is not whether activity is performed in the sphere of production or exchange, but whether it affects use-value of commodity (e.g., transportation, storage, etc.). Where is the boundary between activities affecting use-value in circulation (hence, productive of value) and those not affecting it? Is there such a boundary?

A few smaller points.

1. One of the reasons making the emergence of credit necessary is a difference in reproduction time of different individual capitals (p. 603). Hodgskin mistakenly takes this condition as a prerequisite for money. But it should be credit, not money.
2. Marx seems to argue that any theory is always written from a class perspective, consciously or not (p. 605).
3. An interesting observation that a mode of suspension of some barriers is their generalization (e.g., money, credit) (p. 623).

Malthus, surplus population, etc.

On reading pages 602-635 of Grundrisse, I found the following points worth emphasizing:

(1) Critique of Malthus' theory of population (which even Ricardo had used): the two main points of Marx's critique being (1) theory of population is not ahistorical as Malthus thinks, every mode of production has its own theory of population, and (2) Malthus' theory implicitly assumes full employment of labour, an assumption that is now ubiquitous in neoclassical economics (here again, the point is to realize that the relationship between the means of subsistence and population is mediated through the relations of production; it is not direct as Malthus assumes). Interesting aside: Malthus's theory is not his own! He borrowed a lot from James Steuart, I think.

(2) Surplus population or the industrial reserve army of labour: the mains idea here, to my mind, which Marx developed more fully in Chapter 25, Vol 1 of Capital, is that capitalism, as a mode of production always needs a substantial body of surplus population of workers (the industrial reserve army of labour) for its stability and continued existence; the process of capital accumulation, in fact, produces this surplus population over and over again through the displacement of labour by machinery. Since the unemployed are only a small part of the reserve army of labour, the study of the latter should replace the more restricted study of unemployment; this is one of the differences, to my mind, between a Keynesian and a Marxian approach to the study of labour underutilization.

(3) Critique of Smith?s theory of "labour as sacrifice": I found this point absolutely fascinating; when one grasps the positive, liberating aspect of labour, as Marx emphasizes, one is immediately able to see the idiocy of all of modern neoclassical macroeconomics that is based on the so-called labour/leisure choice.

(4) There is a nice discussion pertaining to the turnover time of capital (as the sum of production time and circulation time); the example where the annual rate of profit increases because of the increase in the turnover time of capital is illuminating.

(5) Cost of circulation as deductions from surplus value: the important point here is that exchange does not create value and hence the part of total social (labour) time that is devoted to circulation is a cost from the point of view of society, is a deduction from social surplus value. (Important exception: Transportation of goods from one location to another is not to be considered as circulation; it is a part of production and adds value. This has a nice contemporary ring: state contingent commodity markets!)

single-system argument in Marx

Marx seems to be making an argument in line with the so-called 'single system' approach in pages 423-434, where he criticizes Proudhon's explanation of overproduction. Proudhon understands overproduction to occur because capitalist adds interest and profit to the real value of product, i.e. its price is an overcharge on top of its real value, and as a consequence 'the worker cannot buy back his product.'

Marx counter-argues that capitalists' profit does not come from overcharging, and that surplus-value is already included in the value of the product.

There he makes several interesting statements:

"It might be said that necessary labour time (i.e. the wage) ... is .. determined by the prices of [subsistence goods] which already include profit." (p. 424)

"It is clear ... that the wage paid by the [capitalist] to his workmen must be high enough to buy the necessary [subsistence good], regardless of what profit for the capitalist may be included in its price." (425)

These seem to be consistent with the way the value of variable capital is determined not by the value of wage goods but by wage within the New Interpretation by Foley, etc.

Marx makes comments: "The puzzle arises simply because (1) price and value are being mixed up; (2) relations are brought in which are irrelevant to the determination of value of such." (425)

The first part is obvious from the above citations. 'Relations' referred in the second part seem to imply those which make price deviates from value, such as competition, 'fraud, reciprocal chicanery,' etc.

In sum, in these pages I read the single-system argument of Marx's as follows (citing without notice):

1) The determination of prices is founded on the determination of values.

2) But new elements enter in, and the price, not merely being the value expressed in money, but becomes further determined as itself a specific magnitude.

3) "Necessary labour time" i.e. the value of variable capital is determined by the prices of wage goods.

Grundrisse, pp 386-423

Short note – few thoughts (Grundrisse, pp 386-423)

1. The necessary of the working day will shorten by a rise in the productivity of labour, only if the latter touches the means of reproduction of the labour-force. A rise in the productivity in the industry of jewelry would have no affection at all in the necessary part of the working day. Of course, Marx refers here to a general rise in the productivity, which includes the means of reproduction of the labour-force.
2. A rise in the productivity of labour is meaningful for the capitalists only if it is accompanied by a change in the rate of exploitation, that is, if it lowers the ratio of necessary labour to surplus-labour (rising thus relative surplus-value). If the rate of exploitation rests the same after a rise in the productivity, then surplus-value produced will be less (both in mass and in %), profit will lower as well. Therefore, capitalists do not raise the productivity of labour unconditionally, braking the evolution of the means of production, if needed. That is a good reasoning for the limitation of capitalism in improving the means of production indefinitely – many cases can be drawn as examples; lately I was told the case of aircraft construction.
3. Alternatively, a rise in the productivity can be meaningful without a change in the % of expl. in the framework of competition but again, if capitals advanced with the new production relations are much bigger, producing thus bigger mass of surplus value. Take the case 60+40 (+40) and the next one: 700+300 (+300). The % expl. is the same (100%), the % profit is lower but 300 is much better than 40. Note that the Organic Composition of Capital (OCC) has changed (it has been raised) and that this is actually the argument for the falling tendency of the rate of profit. After all “relative surplus value rises much more slowly than the force of production, and moreover this proportion grows ever smaller as the magnitude reached by the productive forces is greater.”
4. Very insightful (I need to think further on the implications of this point concerning the emergence of financialisation, italics in the original, bold is mine): “The creation by capital of absolute surplus value -- more objectified labour -- is conditional upon an expansion, specifically a constant expansion, of the sphere of circulation. The surplus value created at one point requires the creation of surplus value at another point, for which it may be exchanged; if only, initially, the production of more gold and silver, more money, so that, if surplus value cannot directly become capital again, it may exist in the form of money as the possibility of new capital. A precondition of production based on capital is therefore the production of a constantly widening sphere of circulation, whether the sphere itself is directly expanded or whether more points within it are created as points of production. While circulation appeared at first as a constant magnitude, it here appears as a moving magnitude, being expanded by production itself. Accordingly, it already appears as a moment of production itself. Hence, just as capital has the tendency on one side to create ever more surplus labour, so it has the complementary tendency to create more points of exchange; i.e., here, seen from the standpoint of absolute surplus value or surplus labour, to summon up more surplus labour as complement to itself; i.e. at bottom, to propagate production based on capital, or the mode of production corresponding to it. The tendency to create the world market is directly given in the concept of capital itself. Every limit appears as a barrier to be overcome. Initially, to subjugate every moment of production itself to exchange and to suspend the production of direct use values not entering into exchange, i.e. precisely to posit production based on capital in place of earlier modes of production, which appear primitive [naturwüchsig] from its standpoint. Commerce no longer appears here as a function taking place between independent productions for the exchange of their excess, but rather as an essentially all-embracing presupposition and moment of production itself.”
5. “It is equally a tendency of capital to make human labour (relatively) superfluous, so as to drive it, as human labour, towards infinity.” It came to mind the attempt in Greece to expand the limits of people getting their pension from 65 to 69 or even 71, while unemployment is rising significantly.