ECONOMIC DEVELOPMENT OF CAPITALIST SOCIETY. USURIOUS PHASE (JOINT-STOCK OR MONOPOLY CAPITALISM).
1. Socio-productive relations.
At the turn of XX century, capitalist society turned from the productive phase of its development to the new, usurious phase being the last phase of development of capitalism. The last phase of capitalist society has both differences from the last phase of slave-holding society, and common features with it. Let’s compare them.
In process of transition of slave-holding - serf society to its last phase, the division of large enterprises into a number of small individual households took place. On the contrary, during the transition of capitalist society to its last phase, the amalgamation of many small capitals, many small and medium enterprises into one large, joint-stock enterprise took place.
On the transition of slave-holding society to the last phase of its development, the centralization of production was brought into accord with operational division of labour by means of rapid decentralization of production. On the transition of capitalist society to its last phase, the centralization of production was brought into accord with operational division of labour by means of rapid increase of the level of centralization of production. In process of conversion of slave-holding society to its last phase, the elimination of large slave-holding production, its substitution for small production of serf slaves with the reservation of slave-holding ownership of the main means of production occurred. In process of conversion of capitalist society to its last phase, the partial liquidation of small and medium capitalist production, its replacement by large production with the retention of capitalist ownership of the main means of production took place. During the transition of slave-holding society to the last phase, there appeared as if the leasing of means of production by slave-holder to his serf slaves that, having got these means of production in their personal use, returned the slave-holder their surplus product, entirely or partially, in the form of usurious ground rent. During the transition of capitalist society to the last phase, there appeared as if the leasing of means of production by capitalists to their hired labourers, workers and employees, that, having got these means of production in their collective use, returned the capitalists their surplus product (surplus value), entirely or considerable part of it, in the form of usurious dividend.
On the transition of slave-holding society to its last phase, there appeared the separation of social function of ownership of means of production from the social function of production control (management). The function of ownership was reserved for slave-holders, while the function of management was shifted to serf slaves. On the transition of capitalist society to its last phase, there also appeared the separation of social function of ownership of means of production from the social function of production management. The function of ownership was reserved for capitalists-shareholders, while the function of management was moved to hired labourers - managers. In process of transition of slave-holding society to the last phase, the slave-holders, that previously took part in the socially useful labour (production management), withdrew from it turning to idling parasites, usurers, rentiers. In process of transition of capitalist society to the last phase, the capitalists, that previously took part in the socially useful labour (production management), also withdrew from it becoming lazy parasites, usurers, rentiers.
Production (industrial) capital of capitalists-employers turned, on the transition of capitalist society to its last phase, to usurious or loan or joint-stock capital. Employers’ (production) profit turned to usurious profit in the form of usurious dividend; production form of exploitation of hired labourers by capitalists-employers was replaced by usurious form of exploitation of hired labourers by capitalists-usurers (shareholders).
The transitions of both slave-holding and capitalist societies to their last phases occurred owing to the action of one and the same economic law – the law of correspondence of centralization of production to the level of operational division of labour.
A question may arise: why did the industrial capitalism turn into joint-stock capitalism exactly at the turn of XX century, not earlier of later, after all, operational division of labour appeared long before the end of XIX century? The transition of capitalist society to the last phase of its development could occur only at that time because it was directly connected with the completion of industrial-technical revolution in advanced countries of the world that took place in the end of XIX century. If, in XVII-XVIII centuries, the basis of industrial production was the light industry, then, in XIX century, this role was taken by heavy industry, including machine building, in which, especially in the second half of XIX century, a great number of various machine technics began to be made. And even the most simple machine, unlike pre-machine technics, consists of many diverse assemblies, parts, components, for production of which, a great number of various operations are necessary. This caused the insistent need for the use of operational division of labour of high level, for the utilization of its benefits. But this is possible only at large and first-rate enterprises, the number of which was very small because of insufficiency of capitals of single persons. As a result, the amalgamation of many individual capitals in united large joint-stock enterprise took place.
The formation of large and first-rate enterprises was also necessitated by the fact that small and medium enterprises of single capitalists had smaller possibilities to use expensive machines and new technology. Besides, single capitalists, owing to the insufficiency of their capitals, were not able to fulfill many projects, for example, to build a railway of large or even medium length. “The world would remain without railways, if we had to wait until the process of accumulation increase some single capitals to the size enabling them to cope with the building of a railway. On the contrary, the centralization by means of joint-stock companies fulfilled this task in no time” (K.Marx “Das Kapital”, vol. 1, p. 642). Finally, the sharp reduction of transportation costs at the final stage of industrial-technical revolution and the high level of social division of labour greatly promoted the growth of operational division of labour that outgrew the low-centralized production of the second half of XIX century.
The main classes of joint-stock capitalism were the exploited class of hired workers and the exploiting class of capitalists-shareholders or capitalists-rentiers or capitalists-usurers. Besides, there were also other classes in monopoly or joint-stock capitalism: capitalists-employers, because a number of private enterprises remained; trade bourgeoisie; small commodity producers. The class of capitalists-usurers, together with shareholders, includes also landed capitalists-rentiers, money capitalists loaning money capital to joint-stock or private capitalist enterprises, directly of by means of banks.
Joint-stock enterprises, that can be called collective capitalist enterprises, come out, function in various forms: in the form of single joint-stock companies; cartels being the associations of a number of enterprises (usually – joint-stock ones) of one branch of industry, that do not eliminate their production and commercial independence but anticipate the agreement between them on a number of issues, such as establishment of unified prices, market-sharing arrangement, etc.; syndicates being the associations of a number of enterprises of one branch of industry with elimination of their commercial independence; in the form of trusts being the associations of ownership and management of a number of enterprises of one or several branches of industry with complete elimination of their production and commercial independence; as well as industrial complexes and concerns. In spite of their great distinctions, these associations are similar being joint-stock enterprises that were the main form of production in monopoly capitalism.
The appearance of great number of joint-stock enterprises and their associations under conditions of the beginning of scientific and technological revolution means that the preconditions for transition of society from capitalism to socialism are available.
“If crises revealed the inability of bourgeoisie to manage modern productive forces, then the transition of large production enterprises into the hands of joint-stock companies, trusts and to state ownership demonstrates the uselessness of bourgeoisie for this purpose. All the social functions of a capitalist are now performed by hired employees. There is no social activity left for capitalist but to rake in profits, to reap their rewards and to speculate on the Stock Exchange where different capitalists take away capitals from one another. If, previously, capitalist method of production drove out workers, then, now, it drives out capitalists al well, although, not to the reserve labour army yet, but only to the category of odd people.
But neither transition to the hands of joint-stock companies, nor transformation to state ownership eliminates the capitalist nature of productive forces. It is obvious for joint-stock companies and trusts”. (K.Marx and F.Engels. Selected works. M., 1979, vol. 3, p. 159-160).
Joint-stock capitalism is the capitalism in which the capitalist private ownership and collective production of hired labourers of joint-stock companies-enterprises are combined, at that, and this is the main point, this collective production of hired labourers is completely subordinate to the capitalist private owners (shareholders), the same way as, at the last phase of slave-holding society, the individual production of serf slaves was entirely subordinate to slave-holding private owners. Both the slave-holders at the last phase of slave-holding society, and the capitalists-shareholders at the last phase of capitalist society, taking no part in the process of production, hold it in their subordination, under their control.
This subjection of joint-stock companies to capitalists, this capitalist control, this interference of large capitalists in the activity of joint-stock enterprises hampers, restricts the development of productive forces; furthermore, the major part of aggregate surplus product of society is appropriated and consumed by the parasitic class of capitalists-usurers being the most useless, odd class of society.
The society that, in process of its natural-historical development, deprived once the class of capitalists of social function of socially useful labour of production management, has the moral right to deprive this class, having turned from useful to useless for society, of the social function of ownership of means of production and other means of subsistence. The society has the complete moral right to eliminate this class of idlers, parasites, rentiers, usurers, the same way as biological organism gets rid of some organs becoming obsolete. And modern society will do this, sooner or later, by means of proletariat, the same way as medieval society had eliminated the class of slave-holders – rentiers, parasites, usurers by means of bourgeoisie and serf slaves. Modern society will do this with the aid of new, fourth social revolution – socialist revolution.
2. Usurious exploitation. Usurious profit.
At the last phase of capitalist society, like previously – at the last phase of slave-holding – slave, and still earlier – at the last phase of communal society, the main, the usurious exploitation became the dominant form of exploitation of man by man. And this is quite natural. Each phase of development of class society, class socio-economic structures, has its own, specific form of exploitation. Thus, the trade form of exploitation, i.e. exploitation of the class of small free commodity makers by the class of slave-holders – traders and the class of trade bourgeoisie in process of trade exchange, was the dominant one at the first phase of both slave-holding and capitalist societies. So, we call it trade phase. The second phase of both slave-holding and capitalist societies was characterized by mainly production form of exploitation, i.e. exploitation of the class of serf slaves by the class of slave-holders – managers and of the class of hired workers by the class of capitalists-employers in process of production of material values. So, we call the second phase of development of slave-holding and capitalist societies production phase. Finally, the third phase of both slave-holding – serf and capitalist societies corresponds to the usurious exploitation as the main form, i.e. the exploitation of the class of serf slaves carrying on their small household by the class of slave-holders – rentiers and of the class of hired workers by the class of capitalists-rentiers (shareholders, owners of bank deposits, etc.). That is why, we call the third phase of development of slave-holding – serf and bourgeois-capitalist societies, as well as of primitive-communal society, when the usurious exploitation appeared for the first time and became widespread, the usurious phase.
Of course, there are a lot of distinctions between the last phases of primitive-communal, slave-holding – serf and bourgeois-capitalist societies. Primitive-communal society at the last phase of its development was based on state ownership of the main means of production, free labour and individual household of community members. Slave-holding – serf society at the last phase of its development was grounded on private slave-holding ownership of the main means of production and of the producers themselves, their labour power; compulsory labour based on combination of economic and non-economic kinds of coercion; and individual household of serf slaves. Bourgeois-capitalist society at its last phase is based on private-collective ownership of the main means of production; hired labour with economic coercion; and the large, social by its nature, production of hired workers and employees. However, in spite of all these differences caused by distinctions of socio-productive relations at the usurious phases of these societies, socio-economic structures, there is also unification, similarity conditioned by that very fact that the main form of exploitation at the last phases of these socio-economic structures was (and is) the usurious exploitation.
In each of these socio-economic structures, the usurious exploitation was implemented in its own form depending on means of exploitation used. This kind of exploitation can be accomplished by means of food-stuff, for example, grain; money; land; dwelling houses; domestic animals, especially plough cattle; technical means; craft workshops; slaves; and, finally, large modern enterprises: industrial, construction, transport, commercial, agricultural, etc. In each socio-economic structure, the usurious exploitation as the main form at the last phase of its development was implemented mainly in one form. Thus, at the last phase of primitive-communal society, the main kind of usurious exploitation was the exploitation by means of grain. At the last phase of slave-holding - serf society, the usurious exploitation was implemented mainly by means of land. And at the last phase of capitalist society, the usurious exploitation as the dominant form of exploitation is accomplished mainly by means of ownership of enterprises, first of all industrial ones. Other kinds of usurious exploitation, in each socio-economic structure, were auxiliary kinds supplementing the main one. Thus, in modern monopoly capitalism, the usurious exploitation implemented by means of money, though being widespread, only supplements the usurious exploitation accomplished by means of joint-stock capital and is an auxiliary one.
The form of exploitation (trade, production and usurious) is, apart from anything else, the index of maturity of existing socio-economic structure. If we consider some class society, country, state in some limited period of its historical development and find out that the main form of exploitation in it is trade exploitation, then, irrespective of type of state – slave-holding or bourgeois – we can assert at once that it is at the initial stage of its development, at the trade phase. If it is found that the main form of exploitation is usurious exploitation, it means that given society is at the last phase of its development. The same was, for example, the slave-holding - serf society in Middle Ages, since III to XV century, in Western Europe. The same is also modern capitalist society that, having passed through the trade and productive phases of its development, entered the last, usurious phase at the turn of XX century. The transition to the usurious phase of capitalist society signifies that this society, having passed through the stages of childhood, youth and maturity in the course of its natural-historical development, entered the phase of old age, senility and, therefore, is destined to give place to new socio-economic structure, because the old age of capitalist socio-economic structure as social organism cannot last infinitely, as it is the case for any other organism – social or biological.
If the usurious phase of primitive-communal society became the last phase of its existence that was followed by its substitution for a new, slave-holding socio-economic structure by means of social revolution; if the usurious phase of slave-holding - serf society also was its last phase followed by its replacement by new, capitalist socio-economic structure by means of bourgeois social revolution; then, the same way, the usurious phase of modern capitalist society is the last phase of its existence, development that will be inevitably replaced by socialist socio-economic structure as a result of new social revolution. The transition of capitalist society to the last, usurious phase of its development is the beginning of its end.
The trade exploitation is accomplished in the sphere of trade exchange; the production exploitation is implemented in the sphere of production of material values. In what sphere is the usurious exploitation implemented? It is implemented in the sphere of service. If usurers of primitive-communal society, making use of the misery of peasants and craftsmen, lent them grain on condition that the latter should return them twice as much after the next harvest, then they, of course, rendered a service to poor folk, helping them to survive to the next harvest, saving them from starvation or half-starved beggarly existence. If slave-holders gave land into the use of their serf slaves on condition that the latter should give them back half of their harvest, then they, of course, rendered their slaves a service for which they had to pay rent in kind or money rent. If capitalists give their enterprises into the use of their hired labourers (workers and employees) on condition that the latter should give back all the profit or its major part, then they also render a service that is to be paid for. The same way, leasing land by landed capitalists to peasants or farmers carrying on large capitalist production; leasing flats by capitalists-house-owners; lending money by money capitalists to other capitalists; selling commodities on credit – all these are services of capitalists-usurers for which they gain their usurious profit. If we relate the trade to the sphere of services, as many people do, then the usurious exploitation would approach the trade exploitation, because both of them, unlike production exploitation, are implemented in the sphere of services. However, one should remember that, in spite of the fact that they are implemented in one sphere, sometimes even together, inseparably linked with one another, for example, during the sell of commodities on credit, these are absolutely different forms of exploitation of man by man.
On the entry of capitalist society into the last phase of its development, private capitalist enterprises, not all but a significant part of them, were transformed to larger corporate enterprises. At that, owners of single private enterprises turned to owners of shares of united enterprises. Some part of shares was sold out among the labourers of these enterprises, including workers. In this connection, many bourgeois researchers assert that workers having got several or even one share turned to small capitalists since they gain dividends (profit) on their capital (shares). On the other hand, the bourgeois researchers affirm that those higher employees, managers of corporate enterprises not having shares in their private ownership and getting only salary and “award fee” belong to the united class of hired labourers. Formally speaking, this is so. But, as a matter of fact, the things are different.
Suppose, the prices of production of commodities at some corporate enterprise having average organic composition or average fund capacity is equal to their values. Suppose also, that 10000 workers and employees that can be related to productive labourers are occupied at this enterprise; they produce commodities of aggregate new value of 400 thousand labour hours a week, and the price of these commodities that is equal to newly created value (not taking the value transferred to commodities from the means of production into account) is 1 million MU (monetary units). Then, it’s easy to calculate that each productive labourer of the enterprise makes commodities of aggregate value of 40 MU a week, the price of which is 100 MU. Suppose, the rate of exploitation is equal to 100%. Then, the labourers of this enterprise get weekly wage of 50 MU for 40 working hours, while the remaining 50 MU are appropriated by shareholders in the form of usurious dividend. Thus, an average labourer of the enterprise, having created the commodity of 40 w. hours value and 100 MU price, receives the commodities of 20 w. hours value and 50 MU price. Consequently, he receives 50 MU less a week appropriated by capitalists-shareholders.
Now, let's imagine, that capitalists, wishing to create a "people-capitalist" image of their enterprise and in order to damp down the class struggle of workers, sell them some part of shares. If a worker having bought several shares gains the dividends at the rate of 5 MU a week, then he, of course, would not exploit his colleagues. After all, he would return only a part of the 50 MU that he looses every week owing to exploitation by capitalists-rentiers (large shareholders not participating in labour process). If the worker buys more shares and gets dividends at the rate of 10, 20, 40 or 50 MU, he would not be related to the class of capitalists yet. Only those workers of this enterprise getting more than 50 MU of dividends a week can be related to the class of (small) capitalists, because they appropriate more material values than they make themselves. If some labourer of the enterprise, maybe even a worker, gains dividends on his shares at the rate of 200 MU a week, then he, undoubtedly, would belong not to proletariat but to capitalist bourgeoisie. But there are no such in capitalist society except for, maybe, isolated cases.
Let’s take a hypothetic director of corporate enterprise possessing no actions, such a director-“proletarian”, though there are no such in capitalist society (like workers-“capitalists”). If this director gets salary plus award fee at the rate of 2000 MU a week, i.e. like 40 average workers, then he, of course, belongs not to proletariat but to middle class though he does not exploit workers directly. He gains surplus product in a “roundabout way”, via the class of capitalists-shareholders, the same way as, say, money capitalists-usurers lending money usurious capitals to corporate enterprises, or capitalists-traders selling commodities of corporate enterprise. Higher managers appropriate the surplus product (surplus value) not in the form of profit (if they haven’t got shares) but in the form of unduly high salary that is paid not by working class but by the class of capitalists.
At the usurious phase of capitalist society, the leveling of the rate of usurious profit for all the groups of the class of capitalists-rentiers: capitalists-shareholders, money capitalists, landed capitalists, capitalists – house-owners takes place. It appears as a result of the fact that, at the phase of monopoly, joint-stock capitalism, everything turns to commodity being sold, bought, resold day by day: not only land, dwelling houses, money, but also industrial and other enterprises that are sold wholesale, entirely and by retail, in parts by means of shares.
Enterprises, land, buildings, as well as other commodities, have their values (though many land plots haven’t got a value being created not by man by means of deforestation, bog reclamation, irrigation of arid zones, etc., but by nature: people simply get them ready for use). But all these commodities have their retail prices that, under the balance of demand and supply, are equal to values. But the supply and demand concerning these specific commodities often does not agree. The demand for enterprises or their shares, for land plots, buildings, that bring their owners higher rate of profit, increases, while the demand for enterprises or their shares, for land plots, houses, that bring their owners lower rate of profit, reduces. And the discrepancy between the demand and supply of commodities leads, as we know, to the deflection of market prices of commodities from their values. That is why, prices of some enterprises or their shares, land plots and dwelling houses multiply exceed their values; the prices of other enterprises or their shares, land plots and dwelling houses more or less correspond to their values; the prices of still the other commodities are lower than their values. But the change of prices for capital calls the change of rate of profit. If the price of enterprise rises, the rate of profit decreases; on the contrary, the reduction of prices leads to the increase of rate of profit. And these deflections of prices from values take place until the complete leveling of rates of usurious profit in all the spheres of application of usurious capital: in industrial production, agriculture, transport, money circulation, house ownership, trade (sell on credit), etc. occurs.
Suppose, three enterprises are built manufacturing the same production, that has the same value, i.e. the same amount of means was spent during their construction. However, these enterprises use technics, technology, labour management, etc. of different efficiency that leads to the fact that they bring their owners-shareholders different rates of profit, say, 10% at the first, 20% at the second, and 30% at the third one. If the leveling the rates of profit at these enterprises were not influenced by other factors, their common rate of profit would be settled at the level of 20%. It would occur as a result of the fact that the price of shares of the first enterprise would become half owing to the lowering of demand for them, while the price of shares of the third enterprise would become half as much again owing to the rise of demand for them.
If the value of a share embodies 100 working hours, its initial price is 100 MU, and the first enterprise gives the share dividend of 10 MU, the second – 20 MU, and the third – 30 MU, then the prices of shares of the first and third enterprises would change until the same rate of profit is established, and this, in turn, would appear when the price of share of the first enterprise is 50 MU, and the price of share of the third enterprise is 150 MU:
10 MU * 100% 20 MU * 100% 30 MU * 100%
-------------------- = ------------------- = ------------------- = 20%
50 MU 100 MU 150 MU
However, leveling the rate of usurious profit takes place in the whole capitalist society. So, at these three enterprises, the rate of profit existing in the society at given moment will be established. Suppose, that, by the moment of putting our three enterprises in operation, the rate of usurious profit in the society, including the rate of profit on money loan capital, is 5%. Then the prices of all three enterprises, their shares will grow, but not to the same extent: the price of first enterprise will be doubled, the price of second one will rise four times, and the price of third one – six times. As a result, the price of shares of the first enterprise giving the dividend of 10 MU will be 200 MU, the price of shares of the second enterprise will be settled at the level of 400 MU, and the prices of shares of the third enterprise will rise up to 600 MU. And all the three enterprises will bring the owners of share capital the same rate of usurious profit:
10 MU * 100% 20 MU * 100% 30 MU * 100%
-------------------- = ------------------- = ------------------- = 5%
200 MU 400 MU 600 MU
This rate of profit will be the same as that of all other capitalists-usurers: shareholders, land-owners, house-owners, money owners lending their money on interest.
In the period of industrial capitalism, the leveling of rates of profit of industrial capital appeared as well, but this was the leveling only between different branches of social production and non-productive sphere, so that average rate of profit on capital invested in industry, agriculture, trade, transport, etc. was, as a rule, the same. In the period of joint-stock capitalism, the inter-branch leveling of rate of profit is supplemented by intra-branch leveling.
Under industrial capitalism, different enterprises of one and the same branch brought different rates of profit to their owners that promoted the technical and technological progress. In the modern monopoly capitalism, all the enterprises bring capitalists-rentiers the same rate of profit that promote only speculation in shares the owners of which don’t think of technical and technological progress. Instead, they try to sell their shares at possibly higher price and to buy equivalent ones at lower price; at that, false rumours, artificial panic, etc. are used.
The usurious exploitation restrains the initiative of not only capitalists-rentiers but also of hired workers, since all the benefits of increase of labour productivity and lowering of production costs pass into the possession of not hired workers but capitalists-shareholders; at that, dividends and, consequently, price (rate) of shares rise and so does exploitation of workers.
The transformation of usurious form of exploitation to the main form in trade capitalism does not mean that trade and production kinds of exploitation have disappeared. They exist as before, together with capitalists-traders and capitalists-employers. However, the trade and production forms of exploitation become auxiliary, secondary forms of the last phase of capitalist society.
Just as, under trade capitalism, the main form of exploitation was the trade exploitation, in process of accomplishment of which, the major part of aggregate surplus product of society was appropriated by capitalists-traders, commercial capitalist bourgeoisie, while production and usurious forms of exploitation though being widespread only supplemented the trade exploitation; just as, under industrial capitalism, the main form of exploitation was the production exploitation, in process of accomplishment of which, the major part of aggregate surplus product of society was appropriated by capitalists-employers, industrial capitalist bourgeoisie, while trade and usurious forms of exploitation though being widespread only supplemented the main, production exploitation; the same way, under joint-stock or monopoly capitalism, the main form of exploitation is the usurious exploitation, during the implementation of which, the major part of aggregate surplus product of society is appropriated by capitalists-rentiers, usurious capitalist bourgeoisie, while trade and production forms of exploitation though being widespread only supplement the usurious exploitation. At the first phase of capitalist society, the trade capital dominated; at the second phase, this role passed to the productive capital; at the third phase, the usurious capital is dominant.
3. Economic laws and economic contradictions.
At the last phase of capitalist society, the social division of labour had reached such a high level that the necessity to create the united world commodity market became absolutely evident.
Meanwhile, the capitalist world is divided into many economic groupings leading fierce competitive activity and using, to suit their own ends, the interference of bourgeois states, each of which has for an object to place its country, its national production, its national trade, its national class of capitalists into the most favourable conditions, to create them a preferred position. But, as long as the governments of all bourgeois states aim at this, then, in the end, the state interference does not promote the development of international trade, on the contrary, it hampers it. And the absence of world commodity market restrains the development of productive forces of society, commerce, commodity production, social division of labour. At the modern level of economic development, productive forces of society are in need of elimination of any trade-economic bounds. The level of social division of labour in modern world has reached such a height that the commodity production needs the creation of a durable world economic union, but such a union is impossible under conditions of capitalist social structure, bourgeois and petty-bourgeois nationalism. Only socialism, on the basis of proletarian internationalism, can and will create the world economic and political union, the world commodity market, the world international community. And only then, the social division of labour will reach its highest level. The complete, durable and permanent correspondence between the size of commodity market and the level of social division of labour will be established only then. But today, there is a deep contradiction between the level of social division of labour and the size of markets (there are several of them in capitalist world) that could not be resolved under the domination of existing capitalist socio-productive relations. Limited sizes of regional and national commodity markets hamper the specialization of social production, since highly specialized large and first-rate enterprises manufacturing great number of similar products haven’t got the market for their commodities. Therefore, these enterprises are forced to make not one, but many various products that does not enable to make use of the benefits of social division of labour to the maximum extent.
The appearance of contradiction between the narrow bounds of commodity market and the increased level of social division of labour in capitalist society is conditioned by the action of law of correspondence of the size of commodity market to the level of social division of labour. But the level of social division of labour depends not only upon the size of territory of commodity market. Suffice it to say that the territory of Roman Empire was enormous, nevertheless, the dominant position in its economy was occupied not by commodity production, though it was rather developed, but by natural economy.
So what are the factors that influence the social division of labour? These are (taking not only capitalist but any other society into account) the rise of labour productivity in the sphere of production, increase of people’s needs, growth of significance of industrial production, progress in transport technics leading to the rise of labour productivity during transportation and to lowering transportation costs.
If some labourer making only necessary product has nothing to exchange in commodity market, then there cannot be a social division of labour in this case. First, the labour productivity reaches such a level that the excess of labour product, i.e. surplus product, appear. This took place in process of the hunting-technical revolution. More or less regular exchange between communities appeared at that very time. The developed social division of labour did not exist then, but the necessary prerequisites for it had been already created. And not only prerequisites, but also rudiments of social division of labour, mainly on geographical basis.
In modern capitalist society, the growth of labour productivity in production affects the development of social division of labour. If some enterprise achieves higher labour productivity in making some article in comparison with other enterprises, then it begins to increase the production of this article, while lowering and, later, breaking the production of other, less profitable articles made with lower (comparing with other enterprises) labour productivity.
The growth of people’s needs also exerts some influence upon the development of social division of labour. The wish of people to obtain some material or spiritual values make them exchange a part of products of their labour on commodity market. However, not all the products made by them are in demand on commodity market; so they began to make mainly the products being in demand, lowering or breaking the production of other labour products.
Strengthening the role of industrial production exerts the significant influence over the development of social division of labour. After the separation of industrial production into an independent branch, it began to determine, to a great extent, the position of commodity production in the whole social production, since nearly all the industrial product turns to commodity. And in the course of strengthening the role of industry in the social production, increase of the role of commodity production took place as well. The commodity production developed on the basis of social division of labour from the very beginning, therefore, the increase of significance of commodity production means the growth of social division of labour.
Besides, the industrial commodity production transforms the agricultural production to commodity production, specialized to a considerable degree, i.e. based on the social division of labour.
At all times, the growth of labour productivity in process of transportation exerts the great influence on the social division of labour; at that, the transportation costs sink and the territory of commodity market increases. And the growth of labour productivity during transportation is the consequence of progress of transport technics and means of transportation.
The main landmarks of this progress were the period of agrarian-technical revolution, when the mechanization of transport on the basis of draught technics and sailing fleet took place, and the period of machinization of transport during the industrial-technical revolution.
The increase of the level of social (as well as operational) division of labour is profitable until the transport costs rising with the increase of transportation distance is equal to lowering the production costs, i.e. until the saving of labour in production at the expense of the increase of the level of social division of labour is equal to labour inputs during transportation at the expense of the rise of distance with the expansion of market. The aforesaid concerns the operational division of labour as well.
Thus, in modern society, like at all times, the progress of transport technics and means of transportation exerts the great influence over the development of social division of labour. The lower are transportation costs, the higher is the level of social (and operation) division of labour, the larger and more specialized is the production, the higher is the labour productivity, the lower is the costs of manufacture of commodity products, and the more effective is the production.
The great influence is exerted upon the development of social production in capitalist society by another law – the law of correspondence of the degree of centralization of production to the level of operational division of labour. The action of this law was especially apparent at the end of the second, productive phase of capitalist society. The grandiose transformation of capitalist production, capitalist economy took place owing to the action of this very law. In process of natural-historical development, small and medium capitalist enterprises were substituted for large and first-rate corporate enterprises.
This law goes on influencing the economic development of capitalist society at its last phase. If only the degree of centralization of production is too high or, on the contrary, too low comparing to the level of operational division of labour achieved at one or another enterprise, this discrepancy adversely affects the activity of this enterprise, its effectiveness.
Suppose, some capitalist enterprise manufactures complex production, say, motor-cars, tractors, machine tools, etc., at that, a complete product consists of, say, one thousand parts. What must be the degree of centralization, in particular, how many people should work at this enterprise, for it to be the most effective?
Even if each component part of the machine produced by this enterprise is so simple that it could be made by means of single operation, then one thousand specialized machine tools and operators should be needed. However, different parts have different degrees of complexity: some of them could be made in two or three operations, the others – in eight to ten ones, etc. If an average part is made by means of ten operations, then, on condition that one worker performs one operation, whether permanently, or by turns one after another, 10 thousand people should be needed. But different operations are done during different time. Some operations may require multiply much time than the others. Thus, if short operations are performed by single worker, then longer operations should be made by several workers, each of them performing one and the same operation. Some operation may need one worker, the other – two, still the other – may be, ten workers. If an average operation is to be done by three workers, then the total number of machine tools and operators (if all the operations are performed by machine tools) should be risen up to 30 thousand people. But, together with operators, other workers: servicemen, metalworkers, electricians, welders, heat-treaters, assemblers, inspectors, etc. are also needed.
Besides, the employees, technical intellectuals and production managers (administrative staff) are necessary: book-keepers, rate fixers, economists, planners, production engineers, designers, foremen, shiftmen, heads of shops, departments with their deputies, etc. As a result, overall number of labourers will be, perhaps, doubled – up to 60 thousand people.
If the size of enterprise is several times less, then one worker would have to perform several operations that cause inter-operational waste of working time, machine tool down time, lowering the utilization factor of machine tools, labour productivity, effectiveness of production. If the size of enterprise is several times more, it would not lead to further growth of labour productivity since the ability of operational division of labour would be already exhausted, but would complicate the organization and management of production and, the main point, it would increase transportation costs, especially the costs of transportation of complete products since the increase of scale of production causes the expansion of market: the products would be to transport for longer distances with the purpose of their sale that increases their total cost consisting of production and transportation costs.
Insufficiently high level of centralization of production could be partially compensated by handing over (under agreement) the production of some parts and assemblies of complex product to other enterprises. However, this is connected with the rise of transportation costs. Besides, the parent enterprise could suffer great losses because of irregularity of deliveries from adjoining enterprises manufacturing single parts and assemblies.
Thus, the degree of production centralization should optimally correspond to the level of operational division of labour; otherwise, enterprises would suffer unjustified losses.
But if the degree of centralization of production depends upon the level of operational division of labour, then what does the level of operational division of labour itself depend upon, what are the factors determining its development? There are several of them. These are social division of labour, production scale, specific character of production, complexity of products being manufactured, transportation costs, etc. Let’s consider them.
The social division of labour is a prerequisite, without which the operational division of labour cannot develop successfully. If we take two small enterprises with the same number of workers, say, 20 men, one of which produces one or several articles, another – some two dozen, then it is obvious that, at the latter unlike the former, the operational division of labour either is impossible at all, or has very low level since, owing to the low level of social division of labour, each of the 20 workers of the second enterprise has to make one or two articles by himself from beginning to end. The operational division of labour could appear only if the number of the articles being manufactured is reduced at the same number of workers (or the number of workers is increased at the same number of articles), so that one article is made by several workers. Therefore, the origin and increase of the level of operational division of labour are impossible or ineffective without reaching some level of social division of labour. The development of operational division of labour is affected by the scale of production. Suffice it to say, that, in small individual household of craftsman, the operational division of labour, at least that of high level, was out of the question. After all, there was no one to divide and to distribute different operations since only one, sometimes – two or three labourers worked in a handicraft workshop.
If we take two enterprises producing, say, five articles, one of them has five to ten workers, the other – thirty to forty men, then, at the former, the operational division of labour either does not appear at all, or has very low level comparing to the level of operational division of labour at the latter enterprise, where each worker performs one or two operations, while each worker of the first enterprise performs five to ten different operations.
Specific features of production also affect the level of operational division of labour. Suffice it to compare the agricultural production that became the leading branch of social production in process of agrarian-technical revolution with the industrial production. In agriculture, like in industry, many different operations are to be done but, unlike in industry, these operations cannot be performed simultaneously since the necessity of single operations is seasonally dependent. If one industrial worker can permanently turn work-pieces at the lathe, the other – grind them, etc., then one agricultural worker cannot be occupied constantly by tillage, another – by weeding, etc. The dependence of agriculture on seasons does not enable peasants to use the benefits of operational division of labour to the same extent as in other branches of social production, especially in industry.
The complexity of products being made affects the level of operational division of labour as well. If each of two enterprises produces only one article, but, at the first enterprise, this article is very simple and requires some ten operations to be made completely, while the article produced at the second enterprise, is very complex being made in 500 to 1000 operations, then, undoubtedly, the level of operational division of labour at the second enterprise could be much higher.
The level of operational division of labour is also affected by correlation of production and trade, mainly transportation, costs. Suppose, an enterprise produces a complex article consisting of a hundred parts and being produced in 500 operations; there are 250 workers at the enterprise, they produce 1000 articles a year.
We can see that the ability of operational division of labour at this enterprise is not exhausted, since each worker performs, on average, two operations. If the number of workers is doubled, from 250 to 500 ones, then the level of operational division of labour would rise and, as a result, the labour productivity would increase, say, by 10%. Then this enterprise would produce not 1000 but 2200 articles. The number of articles produced would double at the expense of the increase of the number of workers and would grow by 200 ones more – at the expense of the rise of labour productivity.
Everything would be all right, if it were not for difficulties with the sale of products. It is impossible to sell 2200 articles on the local market capable to absorb only 1000 ones. Therefore, the products are to be sold on a distant commodity market, for example, in neighbouring city, but this leads to the rise of transportation costs. If the costs in process of transportation of these additional 1200 articles exceed 10% of production costs for all products, then the enterprise would suffer losses. In such a case, it would be more profitable to build a similar enterprise in neighbouring city. At that, the potential of operational division of labour (at the rate of 10%) would remain unused and, besides, additional transportation costs (more than 10%) would not appear.
Thus, transportation costs influence the development of operation division of labour. If, in the course of expansion of production, the share of transportation costs is 15% of total costs of production and that of production costs is, respectively, 85%, then the growth of the level of operation division of labour owing to the expansion of production is profitable only if production costs reduce by more than 15% at the expense of growth of labour productivity. In our example, this value is equal to 10%, therefore, the additional transportation costs would exceed the labour saving and the value (price of production) of the product would rise.
But let's suppose that, as a result of development of transport technics, the costs of transportation have been halved. Then, concerning our example, it would be more profitable to expand the existing enterprise not to build a new one since, in such a case, the labour saving in process of production (10%) would exceed the labour expenses during transportation (7,5%).
However, the development of operational division of labour is affected not only by the progress of transport technics and means of transportation but also by the development of production technics (as well as technology, etc.), at that, these influences are opposite. In our example, the transportation and production costs were equal, first, to 15% and 85% respectively and then – to 7,5% and 92,5%, that has affected the growth of operation division of labour favourably. But if, as a result of technical and technological progress in some period of time, the production costs is also halved, then the previous ratio would be restored; i.e. the production costs would sink down to 85% and the transportation costs would rise up to 15%, so that it would be economically inexpedient to increase the size of enterprise. However, the reduction of production costs can also cause the opposite effect; it can promote the growth of operation division of labour.
The narrow bounds of capitalist socio-productive relations hamper the development of productive forces of society, the progress of scientific and technological revolution, taking place today. This revolution is a consequence of the action of economic law of correspondence of the labour productivity level to the level of people's needs.
However rapid the rise of labour productivity in XIX century was, nevertheless, the growth of people's needs was still quicker stipulating the constantly growing lag of labour productivity that did not enable to satisfy people's needs growing quickly. As a result, there appeared the contradiction between the growing people's needs and the labour productivity that fell behind. This contradiction began to be resolved by the origin of the fourth revolution in the development of productive forces of society, the scientific and technological revolution, in the depths of capitalist socio-productive relations. However, to develop rapidly, this revolution is in need of new socio-productive relations. The scientific and technological revolution creates new productive forces that need new socio-productive relations for their progressive development.
Any kind of exploitation of man by man is based on non-equivalent exchange, i.e. on violation of the law of correspondence of market prices of commodities to the amount of labour embodied in them, or the law of value. This phenomenon is the most evident at the example of usurious exploitation being the most undisguised, the most cynical form of exploitation. Trade and production forms of exploitation are more or less masked forms since the trade and employer's forms of profit are joined, mixed to the one inseparable whole – income with wages (remuneration for labour in the field of management of production and trade at production or commercial enterprise). And the whole income of capitalist comes out as the single large salary of capitalist-manager the size of which depends upon the efficiency of his managerial activity.
The usurious exploitation shows its nature distinctly and unambiguously, since capitalist-rentier, unlike capitalist-employer or capitalist-trader, is not occupied with any kind of labour. Here, the social function of labour (management) is separated from the social function of ownership of means of production. Capitalist-rentier is released from performing the former social function, only the latter one is reserved for him.
But if this fact became obvious for society, then, sooner or later, it will free the class of capitalists from performing this last function shifting it to the class of labourers. It would mean the elimination of non-equivalent exchange, abolition of exploitation of man by man, liquidation of the split of society into antagonistic classes.
With the development of scientific and technological revolution, one more contradiction appears in capitalist society being the reflection of the action of economic law of correspondence of socio-productive relations to the nature of labour. The new, socialist social revolution could resolve this economic contradiction.
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