OVERPRODUCTION AND THE FALLING RATE OF PROFIT (11)
C) CHANGES IN THE NATURE OF PRODUCTION AND CONSUMPTION THAT MEAN LESS RAW MATERIAL IS USED IN PRODUCTION
Today, the revolution in technology and in the patterns of production and consumption that it has partly brought about, has itself changed the whole structure of demand for . As I point out in the post linked to above,
"Similarly, if we look at other items of consumption we find that in fact the materials used are negligible. A mobile phone, a PC, an LCD TV, the various services we use such as cinema, theatre etc. In fact a mobile phone probably uses far less materials than did the old type of land line, the LCD certainly less than a CRT screen. Again the largest component in the value of these products is not the Capital or material used in the production, but the intellectual labour that went into their development etc. Look at the huge amounts now spent on Computer games, yet a CD or DVD takes very few material resources to produce, very little in the way of Constant Capital. But it does take the labour of skilled games programmers. Or music. When I was first collecting records 40 years ago to amass 1,000 records consumed a fair amount of vinyl. Now 20 times that amount can be stored on a tiny stick, instead of the cost of transporting all the vinyl etc to record shops the music can be downloaded all over the world instantaneously over the Internet."
I was talking to my son about this a while ago. He works in media production, and he was saying he and his friends were looking, at the weekend, at the production costs of various blockbuster films compared with their takings. With this in mind, I asked him about how those huge budgets were made up. A good portion of the budget of "Avengers Assemble" he said was probably just made up of Robert Downey Jnr.'s wages. Certainly, looking at the vast array of products that consumers now spend their budgets on - See for example the breakdown of- these kinds of products, alongside the huge growth in service production, mean that not only is the value of constant capital falling, not only is the quantity, of constant capital, required, for an increasing proportion, of current production, falling, but also the other side to that is that the proportion of highly complex labour to constant capital is rising. In other words, there are very strong forces tending towards a lowering of the , and thereby setting in place a tendency for the rate of profit to rise.
To give another example, take Manchester United. If we use current prices, let's say back in 1980, the product of one hour of had a of EUR100. On a Saturday, Manchester United's eleven players play for 2 hours to a crowd of 40,000, each paying EUR50, meaning the product of them is EUR2 million, or approximately EUR200,000 per player, giving EUR100,000 per hour. So each player's labour, as complex labour, is equivalent to 1000 hours of abstract labour.
Today, the game is sold via the Internet to 1 billion people each paying EUR1 each. Half the revenue is taken by the various providers of services, leaving EUR500 million for MU. So, now the product of an hour's labour is EUR25 million, per player, which means that it is the equivalent of 250,000 hours of abstract labour. If there is a 100% rate of , then each player would get the equivalent of EUR12.5 million, and produce the same amount of surplus value. On a Saturday they would produce the equivalent surplus value as 50,000 workers working a 50 hour week!
In the early 1980's, I wrote that exactly this change in the structure of production and consumption was occurring, away from manufacturing production, where a high organic composition of capital necessarily develops, to an increasing amount of production and consumption of service commodities, where it does not - . Back then, Services accounted for 57.2% of the UK economy. Today, they account for 78.2%. Back then industry accounted for 40%, today it accounts for just 21%. By nature, service industry tends to have a lower organic composition of capital, though neo-fordism is revolutionising that too. But, many of the areas of that production, are themselves based on high-value production, using very complex, high value labour. It is not just in Britain, where this transformation has taken place, and even in many rapidly developing economies, services already form a large part, often the majority of the economy.
Of course, this is like most things under capitalism a contradictory process itself. For example, to go back to the film industry, the porn industry has been a multi-billion dollar business. But, as I wrote a while ago, it has found itself getting screwed - . That is because, thousands of people across the globe have been making their own porn, and uploading it to the net. Nobody will pay for porn when they can get it for free. But, even here the point is that this development has only been possible, because the cost of constant capital itself has been massively reduced by the factors described earlier. A decent film camera will set you back EUR20,000, but if the image quality isn't vital, then you can do the filming on a DVR costing a few hundred pounds, or even just your mobile phone, or digital camera.
But, there are more instances of the opposite movement, and as things like gene technology begin to develop a whole series of new high value products that trend will continue.