Profit depends not only on the demand for different commodities (reflecting their prevailing use-values) but also on the rate of economic exploitation in different branches of production. It is therefore crucially related to the course and outcome of struggles between capital and labour at many different points in the circuit of capital and in the wider social formation (17).
In this traditional understanding of profit and value, labour is not only conceptualized as the source of all value, but also, socially and politically, as the leading obstacle to realizing ever greater profits.
Yet, at least according to neoclassical economic thought, labour is but one factor among many, and often not the leading factor, in the supply and demand price of any given commodity. Thus, for example, under competitive conditions investors are continuously attempting to reduce the cost of the factors of production, not only by driving down wages and benefits, but also by improving capital equipment in order to decrease the factor cost of per unit output and by continuously surveying the markets of factors of production, whose suppliers, likewise, under competitive conditions, are seeking to improve their productivity.
It could be objected that increased productivity at any given stage of production requires that investors calculate which factors of production can be economized and that labour is often found among the most expensive of the factors. It might also be objected that, at whatever stage of production, behind every factor that is not immediately the product of labor—a capital good for instance—is a supplier for whom labour is among the leading factors of production. Finally, even when a producer is able to reduce labour costs to a minimum, the central place of labor in production is best illustrated by aggregate labor—labor in the abstract, i.e., abstract, homogeneous, undifferentiated labor.
And it is here, at this abstract level, that neoclassical theory and neo-Marxian social theory coincide. They coincide because, once all of its historical and social specificity has been bracketed, labor can itself be bracketed, leaving only its residue, abstract value or, more commonly, price. Price accurately captures this coincidence because, from the beginning, it aims not to analyze the production process or price formation into its constitutive elements. To the contrary, from the beginning price aims to identify that abstract place where marginal supply price and marginal demand price meet, a place which, according to neoclassical theory, bears within itself, as a singular data point, the full, although unarticulated, backstory of each transaction. Aggregate labor, labor in the abstract, and aggregate value, value in the abstract, or price: these two are one and the same thing.
And, to illustrate this point, we need only observe what happens when, as is often the case, the factors of production, in aggregate, have cost investors more than the quantity of capital distributed among buyers in that production process. For this is precisely what happens when, notwithstanding an aggregate increase in productivity that entailed declining aggregate labor costs, the factors of consumption experience across the board declining wages greater than the levels of productivity realized by investors. In this case, rather than seeing an across the board increase in per unit returns (owing to increased productivity), investors instead see flat or even declining returns on account of decreasing demand in the aggregate.
This declining rate of profit, to use Jessop’s language, can be explained by the fact that the consumers who account for declining demand on one side of the ledger are the same individuals, in aggregate, as the value producing labor on the other side of the ledger.
And here also we can see the mistake of the neoclassicals. By considering factors of production only in the aggregate—which includes, but is not reducible to, labor costs—and by considering factors contributing to the demand price only in aggregate, they lose track of the fact that while a ton of pig iron, a kilometer of water transport, a hector of land, and so on can be priced without considering the labor that contributed to their production, none of these factors of production also contribute to the factors of consumption save the individuals whose wages presumably derive from producing these items. That is to say, only labor, uniquely, falls on both sides of the ledger.
Which is precisely what brings the “struggles between capital and labour” into the foreground. But note—and this is the point—this foregrounding of the struggle between capital and labour is only possible on account of the necessary relationship between the two: capital forms labor, labor forms capital.
That is to say, contrary to what Jessop claims, there is no first instance—i.e., an instance when accumulated capital takes hold of and pulls labor into its formation—any more than there is a first instance when labor constitutes the first commodity onto which this relationship has been inscribed. To seek a priority here is to display a fundamental misunderstanding of the always already mutually constitutive relationship between them.
Which explains why labor’s reappropriation of alienated value—i.e., the victory of labor over capital—so long as it does not also bring to an end value-producing labor, is condemned to reinscribe the very same process perhaps onto a new administrative or distributional map, but cannot bring to a close the relationship or process itself. To do this, we would have to also terminate the role that labor plays in producing value per se.