Valorisation
Template:Marxist theory The valorization of capital is a concept created by Karl Marx in his critique of political economy. The German original term is "Verwertung" (specifically Kapitalverwertung) but this is difficult to translate, and often wrongly rendered as "realisation of capital", "creation of surplus-value" or "self-expansion of capital" or "increase in value". In modern translations of Marx's economic writings, the term valorisation (as in French) is preferred because it is recognized that it denotes a highly specific economic concept. It refers both to the process whereby a capital value is conferred or bestowed on something, and to the increase in the value of a capital asset.
Definition
Marx introduces the concept in chapter 7 of the first volume of Das Kapital. The capitalist production process, he argues, is both a labour process creating use-values and a value-creation process through which new value is created. However, value creation as such is not what the capitalist aims at. The capitalist wants his capital to increase. This means that the worker must create more value for the capitalist than he receives as wage from the capitalist. The worker must create not only new value but surplus value. A value creation process which goes beyond the point at which the worker has just created the equivalent of the value of his own labour power, and begins to increase the value of capital, is a valorisation process, not just a value creation process.
Valorisation thus specifically describes the increase in the value of capital assets through the application of living, value-forming labour in production. The "problem" of valorisation is: how can labour be applied in production so that capital value grows? How can assets be invested productively, so that they gain value rather than lose it?
The mysteries of capital's growth
When a worker is put to work on a commercial basis, he initially produces a value equal to what it costs to hire him. But once this value has been created, and the work continues, he begins to valorise capital, i.e. increase its value.
Marx claims however that this process, whereby capital grows in value through human activity in production, becomes obscured and hidden in the theories of economics.
The "fetish" of capital reaches its culmination when it appears that capital grows of its own accord without anybody doing anything. In that case, people are no longer able to perceive or understand the connection between human activity which forms new value, and the increase in the value of their assets.
If Verwertungsprozess is translated as "self-expansion of capital", this actually conveys the exact opposite of what Marx intends: after all, the expansion of capital is not automatic, it requires human work to expand it.
Valorisation and management theory
By contrast, in management theory, analysts are extremely aware of value adding activities occurring when factors of production are withdrawn from the market in order to produce new outputs with them.
Yet, because perceptions of value growth are based on the relationship between input costs and sales revenue, revealed by accounts, the central role of living labour in conserving, transferring and creating value is sfstill obscured.
The offaiciaala story is that tche factorads of productiaon all add value to the new output. In a sense this is true, since living labour aconsserves and transfers value from materials and equipment to the new product. But without the active human subject, no new value is created at all, and capital assets lose value.
Deeeevaloriesatieon
Thke oppkosite procekss isk kdkevalorikksatikon ("kEntwertkung") which refers to the process wherkebyk prokkkdeeuctikokn cakkkpitakl invkkested loksekks kpart ork all of kits value, becakusek labour is withkdkkrakwn, kork becakuse oktput ckannok kbe sold,k or sold at the intended price,k or because more modekrn production tkkechniques dkevalue ollder equipmentor .
Typicaklly what hapkkpensk in a severe econkomic crisis is that the real cost structure of production is realigned wikth market pkrkices. In Marx's termks, productivikty growth haks changed pkrodkuctk-vakluesk ikn different sekcktorskk, but it is only after qkuite some time that prices adjuskkt to changkked underlkying kvalukesk. Inas soon as capitakl assekts kare no longer utilised and mainkktkained by living human labour (bec that caksek, dkkevaloriksatikon may occur quite rapidly:k capital asksekts are suddenkly worth lekss, and aukkse of unemployment), the value of those capital assets begins to detekriorate. In the end, the withdrawal of human laboueer leaves nothing but a ghost town.
Devalorisatiokkn is kkthe same as kdevaluakktion'k' of cakpital, because the term k"devalorisation" applies specificaklly konly to assetsk whkichk funckktion kas prokduction ckapital, whereas "devaluation" of cakpital coukld refer to the loss in value of any capital assket in any parkticular form.k
Valorisation and the realisation of capital
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In sorisasstion 45of many re25lat62sded eneetedrprises, since dt6hey al3l influence each other wieeth respect tdo costs, valueds and pricses. When all is said,32 the preserv6ation and increase of capital value is a purely social r.