Thus, for it to be shown that it was rising at the expense of the working class, it would have to be proved that, under the given economic, social and political conditions, a reduction in expenditure would lead to higher real wages rather than higher profits for the capitalist class. Without such detailed proof, the thesis would remain doubtful, to say the least. The analysis would have to take into account the probable dynamic of the political and social class struggle (a function of, among other things, the great historical shifts in the economic correlation of class forces within a given bourgeois society) and its precise impact upon the structure of both state revenue and state expenditure.

We seem to have strayed considerably from the problem of productive and unproductive labour, and its relation to the definition of the proletariat. But in reality, we have only now arrived at the heart of the problem. For the correct Marxist classification of the proletariat-the class which is forced by socio-economic compulsion to sell its labour-power to the capitalist owners of the means of production – implies that both variations in the level of the reserve army of labour, and the variegated relations between the ‘purely physiological’ and ‘moral-historical’ components of the value of labour-power,63 are of decisive importance for the proletarian’s immediate destiny.

Once we understand this, we can see the significance of the growth of unproductive wage-labour, which accompanies the absolute and relative increase in the size of the proletariat in contemporary capitalist countries. 64 Far frómreflecting increased exploitation of productive labour or a sharp rise in the rate of exploitation, it has rather established a ceiling above which the rate of exploitation can hardly climb under ‘normal’ political circumstances (excluding, that is, fascist or fascist-type régimes). For, despite the rapid replacement of living labour by dead labour (semi-automated machinery), it is this growth of unproductive wage-labour which, in many capitalist countries, has reduced the reserve army of labour for a whole historical period. Moreover, the services provided by a significant sector of unproductive wage-labour have been a major factor in developing the needs and living conditions of the proletariat far beyond the purely physiological bedrock. The new minimum standard which has arisen is, at least in the imperialist countries (and in some of the most developed semi-colonial countries with a powerful labour movement, like Argentina), much higher than the one existing in Marx’s time.

This acquisition should obviously not be taken for granted or regarded as unassailable. It is nothing but a conquest made by the working class under favourable conditions on the labour market (long-term decline of structural unemployment) and rendered objectively possible by the long post-war period of accelerated economic growth. Since the early seventies, as was foreseeable, this basic economic situation has been reversed.65 Massive structural unemployment has reappeared, together with savage attacks in many ‘rich’ countries on the real wages of the working class, be they aimed at ‘direct’ or ‘socialized’ wages or at both. Correctly, the workers have reacted strongly against massive cuts in social state expenditure, thereby showing that their class instinct is clearer than the ‘science’ of those theoreticians who persist in calling all state expenditure ‘surplus-value’ (the logical consequence of which would be indifference to, or even approval of the cut-backs).

8. LUXURY PRODUCTION, SURPLUS-VALUE AND ACCUMULATION OF CAPITAL

Also related to the integration of Marx’s labour theory of value with his theory of reproduction is the question of the exact nature of the labour which produces luxury goods, as well as its function in reproduction. This problem is important not so much because of the role of luxury consumption as such, but because of the obvious analogy between luxury products and another sector which has played an ominously growing role in capitalist economy ever since Marx wrote Capital. We are referring, of course, to arms production.

Controversy over the exact function of the arms sector under capitalism has been raging since the end of the nineteenth century, when the Russian populist V. Vorontsov raised for the first time the possibility of avoiding crises of over-production through ‘absorption’ of part of surplus-value by increased arms production.66 In the thirties and forties, a long debate among Marxists took up the role of rearmament in overcoming the long-term stagnation of the international capitalist economy during the inter-war period. Since the war, the Vance-Cliff-Kidron school has assigned a crucial position to the ‘permanent arms economy’ in the explanation of the long economic ‘boom’; and arms production occupies a central place in the process of ‘surplus absorption’ presented in Baran and Sweezy’s Monopoly Capital.67 More recently still, a new controversy has arisen between the author of this introduction and various other Marxist economists, centring on the specific relation of arms production to the evolution of the mass and rate of profit under late capitalism.68

Marx’s theory sees the essence of value in abstract social labour, irrespective of the specific use-value of the commodity it produces. The existence of some kind of use-value is a precondition of the realization of exchange-value only in the immediate and obvious sense that nobody buys a good which has absolutely no use for him. But the social fact of purchase is sufficient proof of the use-value of a commodity, that is, of its usefulness to its buyer. Hence only unsold commodities do not embody socially necessary labour and thus have no value; those which are sold are by definition the product of socially necessary labour and increase through their production the mass of socially produced value. Under capitalism, also by definition, the production of all sold commodities created by wage-labour increases the total mass of surplus-value produced and realized (unless they are sold at a price so far below their cost of production that society does not recognize any part of the surplus labour contained in them).

In Volume 2, Marx clearly distinguishes production and realization of surplus-value (and, by implication, profit) from expanded reproduction of capital, i.e. capital accumulation. Not all commodities produced contribute to the process of expanded reproduction. But Marx states quite explicitly that all commodities produced and sold contribute to the increase of total surplus-value appropriated by the capitalists and their retainers.69 By contrast, under conditions of simple reproduction, there would be no surplus-value and no profit whatsoever, since all surplus-value would be unproductively consumed without entering into the reproduction process.

The production of luxury consumer goods, purchased out of the portion of surplus-value which is not accumulated, remains within the sphere of the production of value and surplus-value, that is to say, it enlarges the mass of profit accruing to the capitalist class. By the same token, the production of arms or space equipment is a form of commodity production; the fact that the sole purchaser is here the state, whereas luxury products are exchanged for revenue of the bourgeoisie, makes no essential difference. In order to determine whether arms production depresses or raises the average rate of profit, the same questions have to be answered as for any other ‘sub-department’ of capitalist production. Is the organic composition of capital in that particular department equal, superior or inferior to the average organic composition in other departments? And does its rise (or fall) influence the average social rate of surplus-value?70

It is not as easy to define the contribution of armaments production to the accumulation of capital as it is to decide whether it constitutes a form of production of value and surplus-value which influences the oscillations of the rate of profit. Two basic situations have to be distinguished.

In a situation of ‘full employment of capital’ (which can be, and often has been, accompanied by structural unemployment of wage-labour), the production of weapons, like the production of luxury goods not entering into the reproduction of labour-power, evidently does not contribute to the accumulation of capital. This is true in a double sense. Weapons, like luxury products, do not provide the objective material elements of expanded (re-)production.