Considerable attention has been paid in the preceding chapters to the various ways in which relative and absolute surplus-value can be procured. When Marx sets up a conceptual bifurcation of this kind, he invariably brings the duality back into a state of unity: finally, there is only one surplus-value, and its two forms are conditional on each other. It would be impossible to gain absolute surplus-value without an adequate technological and organizational basis. Conversely, relative surplus-value would have no meaning without a length of working day that allowed the appropriation of absolute surplus-value. The difference is only one of capitalist strategy that “makes itself felt whenever there is a question of raising the rate of surplus-value” (646). As usually happens when Marx moves to a point of synthesis, he both highlights materials already presented and takes them to a different vantage point whence it is possible to see the terrain of capitalism in a novel way. The new perspectives in chapter 16 have been more than a little controversial, and they therefore call for careful scrutiny.
Consider, first, the concept of the collective laborer, already appealed to several times in earlier chapters. Surplus-value is no longer seen as an individual relationship of exploitation but as part of a larger whole in which laborers, in cooperation and spread across the detail division of labor, collectively produce the surplus-value that the capitalists appropriate. The difficulty with this concept is to define where the collective laborer begins and ends. The simplest way would be to take, say, the factory as a whole and designate everyone in it, including the cleaners, janitors, warehouse managers and even trainees, as part of the collective laborer, even though many workers of this sort play no direct part in the actual production of commodities.
In order to work productively, it is no longer necessary for the individual himself to put his hand to the object; it is sufficient for him to be an organ of the collective labourer, and to perform any one of its subordinate functions. (643–4)
But a lot of labor does not take place in factories, and the tendency in recent times has been to resort to outsourcing and subcontracting behind which lie even other subcontractors. And what do we say about advertising, marketing and design functions as well as business services that are essential to the selling of commodities but are usually but not always separated from immediate production activities? Or do we confine ourselves solely to activities within the factory? The exact definition is hard to come by, and there seems to be no exact solution—hence the controversy. But without the help of such a concept, it would be difficult to make the move toward a more macro-theoretic approach to the dynamics of capitalism. So Marx plows ahead, asserting that the analysis so far “remains correct for the collective labourer, considered as a whole,” even as “it no longer holds good for each member taken individually.”
The second move is to contrast this broadening of the definition of productive labor with a narrowing of its compass such that “the only worker who is productive is one who produces surplus-value for the capitalist.” To depict everyone else as “unproductive” risks an emotive reaction because it sounds like a slur on all those who work extremely hard to make ends meet. But, as Marx hastens to point out, under capitalism, “to be a productive worker is therefore not a piece of luck, but a misfortune” (644). Marx’s notion of “productive” is not normative or universal, but a definition historically specific to capitalism. As far as capital is concerned, those who do not contribute to the production of surplus-value are considered nonproductive. The task for socialism would therefore be to redefine “productive” in a more socially responsible and beneficial manner.
But even within the context of capitalism, there are legitimate challenges on the issue of how “productive” might be defined. Feminists have long argued, for example, that unpaid domestic labor reduces the market value of labor-power and is therefore productive of surplus-value for the capitalist. Marx does not address this issue, but he does take up the question of the supposedly “natural basis” of productivity, and his analysis provides some clues as to how he might have approached some of these other questions. Productivity, he concedes, can be “fettered by natural conditions” or advantaged because “the greater the natural fertility of the soil and the kindness of the climate, the smaller the amount of labour-time necessary for the maintenance and reproduction of the producer.” All other things being equal, “the quantity of surplus labour will vary according to the natural conditions within which labour is carried on, in particular the fertility of the soil” (647–8). There is no reason not to say, therefore, that surplus labor will equally vary according to the social conditions (e.g., the productivity of family labor). We leave aside some odd passages that echo nineteenth-century thinking on environmental determinism and the domination of nature (“where nature is too prodigal with her gifts, she ‘keeps him in hand like a child in leading strings’”); Marx then concludes that “favourable natural” (to which we might now add social) “conditions can provide in themselves only the possibility, never the reality of surplus labour, nor…the reality of surplus-value and a surplus product” (649–50). That is, the dynamic relation to nature (or to daily life conditions and household labor) forms a necessary but not sufficient backdrop to the social processes and class relations whereby surplus-value is created and appropriated.
Marx urges us to recognize that the “capital-relation arises out of an economic soil that is the product of a long process of development,” such that the productivity of labor “is a gift, not of nature, but of a history embracing thousand of centuries” (647). Furthermore, he reminds us, “before [the laborer] spends [leisure time] in surplus labour for others, compulsion is necessary.” And the ultimate irony is that “both the historically developed productive forces…and its naturally conditioned productive forces, appear as productive forces of the capital into which that labour is incorporated” (651). The crux of the matter for Marx, rightly or wrongly, always lies in the specific configuration of surplus-value appropriation by capital from labor in the matrix of elements that define the totality of an ever-evolving capitalist mode of production. Had he addressed the issue, almost certainly Marx would have taken up the travails of domestic labor in the same way as he treats of the relation to nature (hinted at in his footnote on page 518).
The two moves, of both broadening and narrowing the definition of productive labor, are not independent of each other. Taken together, they help Marx move from an individual micro-perspective, in which the dominant image is of the individual worker being exploited by a particular capitalist employer, to a macro-analysis of class relations in which it is the exploitation of one class by another class that takes center stage. This class perspective is going to dominate in the remaining chapters.
Interestingly, all forms of economic theory encounter problems of some sort in moving from a micro-to a macro-theoretical terrain. Bourgeois political economy had no way to make the move since it had (and still has) no theory of the origins of surplus-value. Ricardo ignored the problem entirely and while John Stuart Mill at least recognized that it had something to do with labor he could not identify exactly what because he could not see the difference between what labor gets and what labor makes. Alas poor Mill: “on a level plain,” scoffs Marx, “simple mounds look like hills, and the insipid flatness of our present bourgeoisie is to be measured by the altitude of its ‘great intellects’” (654). While Marx’s theory of surplus-value does facilitate the move, the way he does it, as we have seen, is not above criticism. But we, too, have to plow on in order to harvest the fruits of his thinking.
The following two chapters do not pose any substantial issues. In chapter 17, all that Marx does is to recognize that surplus-value will vary according to three variables: the length of the working day, the intensity of labor and the productivity of labor, so that capitalists have, in effect, three strategies they can deploy. The diminution of possibilities on one dimension can be compensated for by resort to another. The underlying point is to emphasize, as Marx so often does, the flexibility of capitalist strategies in the search for surplus-value: if they cannot get it this way (by increasing intensity) then they will get it that way (by increasing the hours of labor). I emphasize this point because Marx is so often depicted as a rigid thinker operating with rigid concepts. Chapter 18 merely goes over (once again!) various formulae for interpreting the rate of surplus-value. There is a lot of repetition of this sort in Capital. It sometimes reads as if Marx is nervous that we have not quite got the point, so he feels constrained to repeat it just to make sure.
CHAPTERS 19–22: WAGES
The short chapters on wages, chapters 19–22, are relatively self-explanatory. Consequences flow, as might be expected, from the fact that it is the representation in money-form—wages—rather than the value of labor-power that provides the field of social action. This immediately poses the problem of the fetish mask that hides social relations beneath the ferment of representational politics. Marx begins, however, by reminding us that there is a huge difference between “the value of labor” (the term that classical political economists used) and “the value of labor-power.”
It is not labour which directly confronts the possessor of money on the commodity-market, but rather the worker. What the worker is selling is his labour-power. As soon as his labour actually begins, it has already ceased to belong to him; it can therefore no longer be sold by him. Labour is the substance, and the immanent measure of value, but it has no value itself.
To think otherwise is to engage in a tautology, in effect to speak of the value of value.
In the expression ‘value of labour’, the concept of value is not only completely extinguished, but inverted, so that it becomes its contrary. It is an expression as imaginary as the value of the earth. These imaginary expressions arise, nevertheless, from the relations of production themselves. They are categories for the forms of appearance of essential relations. That in their appearance things are often presented in an inverted way is something fairly familiar in every science, apart from political economy. (677)
In other words, the value of labor is a fetish concept that disguises the idea of the value of labor-power and thereby conveniently evades the crucial question as to how labor-power became a commodity.
The only way in which classical political economy could resolve the problem of what it was that fixed what it incorrectly called the value of labor was to appeal to the doctrine of supply and demand. This doctrine has reappeared several times in Capital, but Marx is at his most explicit here in rejecting its explanatory value. Even classical political economy
soon recognized that changes in the relation between demand and supply explained nothing, with regard to the price of labour or any other commodity, except those changes themselves, i.e. the oscillations of the market price above or below a certain mean. If demand and supply balance, the oscillation of prices ceases, all other circumstances remaining the same. But then demand and supply also cease to explain anything. The price of labour, at the moment when demand and supply are in equilibrium, is its natural price, determined independently of the relation of demand and supply. (678)
This independent determination Marx has already defined in his analysis of the buying and selling of labor-power. It is fixed by the value of the commodities needed to reproduce the worker at a given standard of living in a given society at a given time. Continuing to talk about the value of labor instead of the value of labor-power leads into all kinds of confusions. So Marx then tries to clarify matters by offering (once more!) a useful brief résumé of the theory of surplus-value on page 679.
But the laborer can be remunerated in different ways—by the hour, the day, the week or the piece. Chapter 20 is about time wages and how the time-wage system works. There is nothing very problematic here, except we must remind ourselves that the way in which this is being worked out in the market disguises the underlying social relation. Chapter 21 is about piece wages, the advantage of which for the capitalist is that workers can be forced to compete with one another in terms of individual productivity. Excessive competition between workers drives productivity up and wages down, quite possibly below the value of labor-power. On the other hand, competition between capitalists is likely to drive wages upward. So we end up once more with the idea that there is some equilibrium point where competition between capitalists and competition between workers is producing an actual wage in the market which adequately represents the value of labor-power.
The section on wages culminates in chapter 22, with an examination of national differences in wages. Marx here briefly departs from his tendency to analyze capitalism as if it were a closed system. There is an opening here to examine uneven geographical development in a globalizing system. But the treatment is too brief to go far. If the value of labor-power is fixed by the value of the basket of commodities needed to support the laborer at a given standard of living, and if that standard varies according to natural conditions, the state of class struggle and the degree of civilization in a country, then plainly the value of labor-power stands to vary geographically (from country to country, in this case) in significant ways. The history of class struggle in Germany is different from that in Britain or Spain, for example, and so there are national differences in wages (actually, there are often significant regional differences, too, but Marx does not consider that here). Similarly, variations in productivity in those industries that are producing wage goods in different parts of the world produce differentiations in the value of labor-power and wage rates. A low nominal wage in a highly productive country translates into a higher real wage, and vice versa, because workers command more goods with the wages they receive (this is what is now referred to as purchasing-power parity). So what happens to trade between countries under these conditions, and how will competition between the different countries work? Marx does not probe deeply into the question, since he mainly seems interested in how real wages and nominal wages differ primarily because of variations in productivity in the wage-goods industries in the different countries. The result will be contrasting dynamics between countries (for these were Marx’s units of comparison) in how capitalism develops and how surplus-value is being pursued strategically and extracted. Almost certainly this would lead, if Marx had taken the matter further, to a serious questioning of Ricardo’s doctrine of comparative advantage in foreign trade, but for some reason Marx chose not to pursue that line of argument further here. I have to say I find it hard to get excited about these chapters on wages, since the ideas are fairly obvious and the writing rather pedestrian.
PART VII: THE PROCESS OF ACCUMULATION OF CAPITAL
Part 7, however, is immensely interesting and insightful, for it is here that Marx takes up “The Process of Accumulation of Capital” as a whole. He here constructs what might best be called a “macro-analysis” of the dynamics of a capitalist mode of production. This is, unquestionably, the culminating argument of Volume I of Capital. A whole battery of earlier insights are brought together to create what we would now call a series of “models” of capitalist dynamics. It is vital, however, in reading part 7 to bear in mind the nature of the assumptions. Marx’s conclusions are not universal statements but contingent findings, based on and limited by his assumptions. We forget this at our peril. There are far too many commentaries on Marx’s work, both favorable and unfavorable, that pass over into serious misinterpretation because they neglect the impact of his assumptions. One of the most famous theses advanced here, for example, is that of the tendency toward the increasing immiseration of the proletariat and the production of ever greater class inequality. This thesis is contingent on Marx’s assumptions, and when those assumptions are relaxed or replaced, the thesis does not necessarily hold. I get extremely irritated with attempts to prove or disprove Marx’s findings in these chapters as if he were setting out his conclusions as universal truths rather than as contingent propositions.
Marx specifies the assumptions in the preface to part 7. He states that
the first condition of accumulation is that the capitalist must have contrived to sell his commodities, and to reconvert into capital the greater part of the money received from their sale. In the following pages, we shall assume that capital passes through its process of circulation in the normal way. The detailed analysis of the process will be found in Volume 2. (709)
The implication of “the normal way” is that capitalists have no problem selling their goods at their value in the market or recirculating the surplus-value they gain back into production. All commodities therefore trade at their value. There is no overproduction or underproduction; everything is traded in equilibrium. In particular, there is no problem in finding a market. There is never any lack of effective demand. Is this a reasonable assumption? The answer is, not at all, for we rule out one of the major aspects of crisis formation that, for example, dominated in the Great Depression of the 1930s and became central in Keynesian theories, i.e., the lack of effective demand. Marx abandoned these assumptions in later volumes, but in the next three chapters, he holds rigorously to them. Holding effective demand to one side permits Marx to identify aspects of the capitalist dynamic that might otherwise remain opaque.
The second assumption is that the division of the surplus-value into profit of enterprise (the rate of return on industrial capital), profit on merchant capital, interest, rent and taxes (Marx does not include the latter here) has no effect. In practice, capitalist producers have to share part of the surplus-value created and appropriated with capitalists who fulfill other functions. “Surplus-value is therefore split up into various parts. Its fragments fall to various categories of person, and take on various mutually independent forms, such as profit, interest, gains made through trade”—that’s merchant’s profit—“ground rent,” taxes, etc. “We shall be able to deal with these modified forms of surplus-value only in Volume 3” (709). Marx assumes, in effect, that there is a homogeneous capitalist class comprised of industrial capitalists alone. In Volume III of Capital, it becomes clear that the role of interest-bearing capital, finance capital, merchant capital and landed capital are all of considerable significance to understanding the overall dynamics of capitalism. But here all consideration of these features is laid aside. What we are left with is a highly simplified model of how capital accumulation works, and like any such model, it is only as good as its assumptions allow.
There is another tacit assumption which actually becomes explicit a bit later in a footnote.
Here we take no account of the export trade, by means of which a nation can change articles of luxury either into means of production or means of subsistence, and vice versa. In order to examine the object of our investigation in its integrity, free from all disturbing subsidiary circumstances, we must treat the whole world of trade as one nation, and assume that capitalist production is established everywhere and has taken possession of every branch of industry. (727)
Marx assumes a closed system within which capital circulates in a “normal” way. This is an important and obviously restrictive assumption. What we are left with is a stripped-down model of the dynamics of capital accumulation derived from the theory of absolute and relative surplus-value operating in a closed system. The model turns out, as we shall see, to be very revealing of certain aspects of capitalism.
Just to set the following chapters in their full context, it is useful to contrast them with what happens in the other volumes of Capital. Volume II confronts that which is held constant in Volume I: the difficulties that arise in finding markets and bringing them into a state of equilibrium such that the “normal” process of capital circulation can proceed. But Volume II tends to hold constant that which is treated as dynamic in Volume I, i.e., the extraction of absolute and relative surplus-value, rapid shifts in technologies and productivities, shifting determinations of the value of labor-power. Volume II imagines a world of constant technology and stable labor relations! It then poses the questions, how is capital going to circulate smoothly (given different turnover times, including problems that derive from the circulation of fixed capital of different lifetimes), and how can it always find a market for the surplus-value being produced? Since capital accumulation is always about expansion, how can capitalists find a market when the working class is being increasingly immiserated and the capitalists are reinvesting? There is, in fact, no mention of immiseration at the end of Volume II. The problem is to ensure “rational consumption” on the part of the working classes in order to help absorb the capital surpluses being produced. The model here would be Ford’s famous turn to a five-dollar eight-hour day for the workers, backed by an army of social workers to ensure that the workers consumed their wages “rationally” from the standpoint of capital. We in the US now live in a world where about 70 percent of the driving force in the economy depends on debt-fueled consumerism, which is perfectly understandable given the analysis of Volume II but not given that of Volume I.
There is, it turns out, a major contradiction between the equilibrium conditions defined in Volume I and those defined in Volume II. If things are going right according to the Volume I analysis, then they are likely to be going very badly from the standpoint of Volume II, and vice versa. The two distinctive models of the dynamics of capital accumulation do not, and cannot, concur. This prefaces the discussion of the inevitability of crises in Volume III, but my insertion of the phrase “debt-fueled” before “consumerism” signals that the terms of distribution (finance, credit and interest) may actually play a central rather than merely ancillary role in the dynamics of capitalism. Consumer power augmented by everybody (including governments) using their credit cards and going into debt up to the hilt has been central to the stabilization (such as it is) of global capitalism over the past half century. None of this will be encountered in the chapters to follow. But the highly simplified model of capital accumulation that Marx does construct and analyze is incredibly revealing, as well as deeply relevant to understanding the recent history of neoliberalism, which has been characterized by deindustrialization, chronic structural unemployment, spiraling job insecurities and surging social inequalities. We have, in short, been very much in the world of Volume I over the past thirty years. The problems of effective demand revealed in the Volume II analysis have been temporarily resolved through the excesses of the credit system, with predictably disastrous consequences.
CHAPTER 23: SIMPLE REPRODUCTION
The first chapter of part 7 models the qualities of a fictional capitalism characterized by simple reproduction. How does capital accumulation through the extraction of surplus-value get reproduced and perpetuated over time? To answer that question, we need to view capital accumulation as a “connected whole, and in the constant flux of its incessant renewal,” such that “every social process of production is at the same time a process of reproduction.” Furthermore, “if production has a capitalist form, so too will reproduction” (711).
Part of what the capitalist captures in terms of new wealth has to be put to reproducing the system. But this means that surplus-value has to recirculate back into simple reproduction. “This mere repetition, or continuity, imposes on the process certain new characteristics, or rather, causes the disappearance of some apparent characteristics possessed by the process in isolation” (712). The analysis so far has been concerned solely with the production of surplus-value as a one-shot event. But things look rather different when examined as a continuous process going on over time.
What flows back to the worker in the shape of wages is a portion of the product he himself continuously reproduces. The capitalist, it is true, pays him the value of the commodity [that is, the value of labor-power] in money, but this money is merely the transmuted form of the product of his labour. While he is converting a portion of the means of production into products, a portion of his former product is being turned into money. It is his labour of last week, or of last year, that pays for his labour-power this week or this year. The illusion created by the money-form vanishes immediately if, instead of taking a single capitalist and a single worker, we take the whole capitalist class and the whole working class. (712–13)
Class relations rather than individual contracts now move center stage in Marx’s thinking.
The capitalist class is constantly giving to the working class drafts, in the form of money, on a portion of the product produced by the latter and appropriated by the former. The workers give these drafts back just as constantly to the capitalists, and thereby withdraw from the latter their allotted share of their own product. The transaction is veiled by the commodity-form of the product and the money-form of the commodity. (713)
The image this conveys is that the working class as a whole is in a “company store” relation to the capitalist class. Workers receive money for the labor-power they sell to the capitalists and then spend that money to buy back a portion of the commodities they collectively produced. This company-store relation is veiled by the wages system and is not readily discernible when the analysis focuses only on the individual worker. The meaning of “variable capital” takes another twist. In effect, the body of the worker, from the standpoint of capital, is a mere transmission device for the circulation of a portion of capital. The worker is in a continuous version of the C-M-C process. But instead of seeing this as a simple linear relation, we now have to think of it as continuous and circular. A portion of the capital flows along as workers congeal value in commodities, receive their money wages, spend the money on commodities, reproduce themselves and come back to work to congeal more value in commodities the next day. Workers stay alive by circulating variable capital in this way.
This gives rise to some interesting observations. To begin with, variable capital “loses its character of a value advanced out of the capitalist’s funds…when we view the process of capitalist production in the flow of its constant renewal.” Capitalists pay their workers only after the work is done. In effect, therefore, workers advance the equivalent of the value of their labor-power to the capitalist. There is no guarantee that the worker will be paid (if, for example, capitalists declare bankruptcy in the meantime). In China in recent years, the nonpayment of wages owed has been very common, particularly in areas such as construction. But Marx is interested in reshaping our interpretation of capital accumulation in even more radical ways. He points out that the “process must have had a beginning of some kind. From our present standpoint it therefore seems likely that the capitalist, once upon a time, became possessed of money by some form of primitive accumulation” (714). This concept will anchor the discussion of the origins of capitalism in part 8. Here he simply asserts that there must have been some original moment when capitalists somehow or other got hold of enough assets (monetary and otherwise) to start on this process of capital accumulation. The question he poses here is, how and by whom is that original capital reproduced?
Marx gives an example: if a capitalist starts off with one thousand pounds and invests it in variable capital and constant capital to produce a surplus-value of two hundred pounds, then the capitalist appropriates the two hundred pounds as his or her own in addition to gaining back the original thousand pounds. But the original capital has been preserved by the workers’ productive consumption, and the surplus-value has been produced out of the workers’ surplus labor-time. Suppose the next year, the capitalist once again lays out one thousand pounds (having consumed the surplus away) to produce another two hundred pounds of surplus-value. After five years of this, the workers have produced one thousand pounds of surplus-value, which is equivalent to the capitalist’s original capital. Marx here makes the political argument that even if the capitalist had a right to that thousand pounds at the beginning, however he or she came by it, after five years of producing two hundred pounds of surplus-value every year, the capitalist has surely forfeited the right to the original capital. He or she has, according to Marx’s accounting method, consumed the original capital away. The thousand pounds now belongs by right to the workers, given the Lockean principle (not cited here, but clearly Marx has this in mind) that property rights accrue to those who create value by mixing their labor with the land. The workers are the ones who produced the surplus-value, and by rights it should belong to them.
The politics of this argument are important but go radically against the grain of deeply entrenched ways of thinking. We would all be surprised to be told that the original money we placed in a savings account at, say, 5 percent compound interest no longer belonged to us after a number of years. Capitalism appears to be capable of laying its own golden nest eggs, as far as we are concerned. But where that 5 percent comes from is a legitimate question, and it can only be, if Marx is right, through the mobilization and appropriation of surplus-value from someone, somewhere. It is discomforting to think that perhaps the 5 percent comes from the vicious exploitation of living labor in Guangdong province in China. Our legal superstructure is insistent on preserving original property rights and preserving also the right to use those rights to gain a profit. But those property rights in turn derive from the class power of capital to extract and maintain command over the surpluses, because labor-power has, by specific historical processes, become a commodity bought and sold in the labor market. The implication of what Marx is saying here is that in order to challenge capitalism, it is necessary to challenge not only the whole notion of rights, how people think about rights and how people think about property, but also the material processes whereby surpluses are both created and appropriated by capital. Then, indeed, after five years
not a single atom of the value of his old capital continues to exist…Therefore, entirely leaving aside all accumulation, the mere continuity of the production process, in other words simple reproduction, sooner or later, and necessarily, converts all capital into accumulated capital, or capitalized surplus-value. Even if that capital was, on its entry into the process of production, the personal property of the man who employs it, and was originally acquired by his own labour, it sooner or later becomes value appropriated without an equivalent, the unpaid labour of others. (715)
There happens to be an interesting example of a practical plan that reflects Marx’s way of thinking (whether it derived from Marx, I do not know). A Swedish labor economist called Rudolf Meidner, who played a major role in the construction of the highly successful Swedish welfare state in the 1960s and early 1970s, came up with what became known as the Meidner Plan. Confronting inflation, the powerful trade unions were urged to exercise collective wage restraint. In return, the extra profits (surplus-value) that would accrue to capital because of that restraint would be taxed away and placed in a worker-controlled social-investment fund that would purchase shares in capitalist corporations. The shares purchased were deemed untradeable, and over time (more than the five years of Marx’s example) control over the corporation would pass over to the social-investment fund. In other words, the capitalist class would quite literally be bought out (peacefully) over time and replaced by total worker control over investment decisions. The plan was greeted with horror by the capitalist class (who promptly awarded the so-called Nobel Prize in economics—it actually has nothing whatsoever to do with Nobel—to neoliberals like Friedrich Hayek and Milton Friedman and set up anti-union think tanks and mobilized fierce opposition in the media). The social-democratic government of the time got cold feet and never attempted to implement the plan. But when you think about it, the idea (much more complicated in its details, of course) is broadly consistent with Marx’s argument, at the same time as it offers a peaceful way to buy out capitalist class power. So why not think more about it?
When put together with the company-store relation of labor to capital, Marx’s argument leads to even deeper insights at the same time as it raises crucial (and in this instance, unfortunately, unanswered) questions. “Since, before [the laborer] enters the process, his own labour has already been alienated…from him”—that is, he has given over the use-value of labor-power to the capitalist—“appropriated by the capitalist, and incorporated with capital, it now, in the course of the process, constantly objectifies itself so that it becomes a product alien to him.” Neither the product nor the labor congealed in it belong to him.
Therefore, the worker himself constantly produces objective wealth, in the form of capital, an alien power that dominates and exploits him; and the capitalist just as constantly produces labour-power, in the form of a subjective source of wealth which is abstract, exists merely in the physical body of the worker, and is separated from its own means of objectification and realization; in short, the capitalist produces the worker as a wage-labourer. This incessant reproduction, this perpetuation of the worker, is the absolutely necessary condition for capitalist production. (716)
I find this an interesting and troubling formulation, worthy of serious reflection. “The worker himself constantly produces objective wealth, in the form of capital,” and that objective wealth becomes an alien power that now dominates the worker. The worker produces the instrument of his or her own domination! This is a theme that echoes and reverberates throughout Capital. It poses a general historical question of the penchant of human beings to produce all manner of instruments of their own domination. But in this case, the capitalist produces the subjective source of wealth, which is abstract, through the “physical body of the worker” which is “separated from its own means of objectification and realization.” The capitalist produces and reproduces the worker as the active but alienated subject capable of producing value. And this, please note, is the fundamental socially necessary condition for the survival and maintenance of a capitalist mode of production.
The worker engages in productive consumption and individual consumption (a distinction encountered earlier). Workers not only produce the equivalent of the value of variable capital, i.e., their own living, but they also transfer and thereby reproduce the value of constant capital. Through their labor, workers reproduce both capital and the laborer. The chapters on division of labor and machinery showed how the worker was necessarily transformed into an appendage of capital inside the labor process. But now we also come to see the worker as an “appendage of capital” in the marketplace and in the home. That is what the circulation of variable capital really means: capital circulates through the body of the worker and reproduces the worker as an active subject who reproduces capital. But the worker not only has to be reproduced as an individual person. “The maintenance and reproduction of the working class remains a necessary condition for the reproduction of capital” (719).
This raises a host of questions that Marx glosses over. The politics of class reproduction were, Marx holds, in his time brutal and simple. “The capitalist may safely leave” the daily grind of actual class reproduction to “the worker’s drives for self-preservation and propagation. All the capitalist cares for is to reduce the worker’s individual consumption to the necessary minimum” (718). But Marx is sliding over something important here that cries out for deeper analysis. The huge and fundamental question of the reproduction of the working class involves questions of propagation, self-preservation, social relations within the class and a host of other issues that Marx conveniently leaves to the workers themselves to sort out because that is what capital supposedly does. Actually, even in a state controlled by capitalists and landlords, matters of social reproduction are never left solely to the workers themselves, and certainly the conditions of class struggle and “the degree of civilization” in a country enter in here with at least the same force as they do with respect to questions of the working day, if not with even greater force. The earlier discussion of the educational clauses of the Factory Acts provided an example of state intervention in the politics of working-class reproduction, and the state has always been active in the fields of public health (given that cholera had the awkward habit of transcending class boundaries) and reproductive rights, population policies and the like. Issues of this sort need far more detailed consideration than Marx provides. But Marx’s general point is well taken. Simple reproduction is not a technical question. The crucial question is the reproduction of the class relation.
Capitalist production therefore reproduces in the course of its own process the separation between labour-power and the conditions of labour. It thereby reproduces and perpetuates the conditions under which the worker is exploited. It incessantly forces him to sell his labour-power in order to live, and enables the capitalist to purchase labour-power in order that he may enrich himself. It is no longer a mere accident that capitalist and worker confront each other in the market as buyer and seller. It is the alternating rhythm of the process itself which throws the worker back onto the market again and again as a seller of his labour-power and continually transforms his own product into a means by which another man can purchase him. In reality, the worker belongs to capital before he has sold himself to the capitalist. (723)
As a result, Marx concludes,
the capitalist process of production, therefore, seen as a total, connected process, i.e. a process of reproduction, produces not only commodities, not only surplus-value, but it also produces and reproduces the capital-relation itself; on the one hand the capitalist, on the other the wage-labourer. (724)
CHAPTER 24: THE TRANSFORMATION OF SURPLUS-VALUE INTO CAPITAL
For a variety of reasons, as we will shortly see, the idea of a capitalist mode of production in a stable, nongrowth state is improbable if not downright impossible. Chapter 24 examines how and why the surplus-value gained yesterday is converted into tomorrow’s new money capital. The resultant “production of capital on a progressively increasing scale” involves combining “additional labour-power, annually supplied by the working class in the shape of labour-powers of all ages, with the additional means of production.” For this to happen requires that capital must first produce the conditions for its own expansion.
Accumulation requires the transformation of a portion of the surplus product into capital, But we cannot, except by a miracle, transform into capital anything but such articles as can be employed in the labour process (i.e. means of production), and such further articles as are suitable for the sustenance of the worker (i.e. means of subsistence). Consequently, a part of the annual surplus labour must have been applied to the production of additional means of production and subsistence…In a word, surplus value can be transformed into capital only because the surplus product, whose value it is, already comprises the material components of a new quantity of capital. (726-7)
The production of luxuries or other useless products (such as military hardware and religious or state monuments) does not work no matter how profitable such production may be. The new means of subsistence and of production have to be produced and organized in advance. Then and only then “the cycle of simple reproduction alters its form and…changes into a spiral” (727). Another way of looking at it (given the analysis of the preceding chapter) is that “the working class creates by the surplus labour of one year the capital destined to employ additional labour in the following year. And this is what is called,” writes Marx with heavy irony, “creating capital out of capital.”
The laborer is, however, the active subject in this process. Marx continues, however, to assume that market processes “conform to the laws of commodity exchange, with the capitalist always buying labour-power and the worker always selling it at what we shall assume is its real value.” Again, I emphasize the importance of such assumptions in Marx’s analysis. “It is quite evident from this that the laws of appropriation or of private property, laws based on the production and circulation of commodities, become changed into their direct opposite through their own internal and inexorable dialectic.” The inversion of Locke’s principle of mixing labor with the land to create value as grounding the right to private property is clear.
The exchange of equivalents, the original operation with which we started, is now turned round in such a way that there is only an apparent exchange, since, firstly, the capital which is exchanged for labour-power is itself merely a portion of the product of the labour of others which has been appropriated without an equivalent. (729)
As a consequence, “the relation of exchange between capitalist and worker becomes a mere semblance belonging only to the process of circulation, it becomes a mere form, which is alien to the content of the transaction itself, and merely mystifies it” (729–30). Amplifying, Marx continues:
the constant sale and purchase of labour-power is the form; the content is the constant appropriation by the capitalist, without equivalent, of a portion of the labour of others which has already been objectified, and his repeated exchange of this labour for a greater quantity of the living labour of others. Originally the rights of property seemed to us to be grounded in a man’s own labour. Some such assumption was at least necessary, since only commodity-owners with equal rights confronted each other, and the sole means of appropriating the commodities of others was the alienation of a man’s own commodities, commodities which, however, could only be produced by labour. Now, however, property turns out to be the right, on the part of the capitalist, to appropriate the unpaid labour of others or its product, and the impossibility, on the part of the worker, of appropriating his own product. The separation of property from labour thus becomes the necessary consequence of a law that apparently originated in their identity. (730)
Marx has here returned (once more!) to the question of how equivalent exchange can produce a non-equivalent, i.e., surplus-value, and how the original notion of property rights gets inverted into being a right of appropriation of the labor of others. What then follows is a reprise, for what seems like the umpteenth time, of the theory of surplus-value (so if you are still unsure what it’s all about then read it carefully—pages 730–1). But Marx does go on to note that what can be derived from the standpoint of the individual doesn’t work out to be the same thing from the standpoint of class relations.
The matter looks quite different if we consider capitalist production in the uninterrupted flow of its renewal, and if, in place of the individual capitalist and the individual worker, we view them in their totality, as the capitalist class and the working class confronting each other. But in doing so we should be applying standards entirely foreign to commodity production. (732)
This is so because freedom, equality, property and Bentham prevail in the marketplace, rendering invisible the production of surplus-value in the labor process.
The same rights remain in force both at the outset, when the product belongs to its producer, who, exchanging equivalent for equivalent, can enrich himself only by his own labour, and in the period of capitalism, when social wealth becomes to an ever-increasing degree the property of those who are in a position to appropriate the unpaid labour of others over and over again…This result becomes inevitable from the moment there is a free sale, by the worker himself, of labour-power as a commodity. (733)
Bourgeois freedoms and rights mask exploitation and alienation. “To the extent that commodity production, in accordance with its own immanent laws, undergoes a further development into capitalist production, the property laws of commodity production must undergo a dialectical inversion so that they become laws of capitalist appropriation” (733–4). There is, to revert to the language of the preface to A Contribution to the Critique of Political Economy, a superstructural adjustment to legitimate and legalize the appropriation of surplus-value by appeal to concepts of the rights of private property. Hence Marx’s fundamental objection to any and all attempts to universalize bourgeois conceptions of right and justice. It merely provides the socially necessary legal, ideological and institutional cover for the production of capital on a progressively increasing scale.
Classical political economy, saddled with bourgeois conceptions of rights, produced all manner of “erroneous conceptions of reproduction on an increasing scale” (as the name of section 2 has it). To begin with, the relationship between capital accumulation and hoarding (saving) was left in a state of utter confusion. The classical political economists were, however, “quite right to maintain that the consumption of the surplus product by productive, instead of unproductive, workers is a characteristic feature of the process of accumulation” (736). But given Marx’s definition of “productive,” this means that yesterday’s surplus product has to be put to creating more surplus product and surplus-value today. The actual dynamics of this are tricky. Classical political economy focused exclusively on the extra labor and therefore extra variable capital (increase in wage outlays) that were called for. But as in the case of Senior’s last hour, which Marx so effectively mocked earlier, classical political economy tended to forget entirely about the necessity to procure new means of production (constant capital) with each round of accumulation (which entailed transformations in the relation to nature through raw-material extractions). This was the second “erroneous conception” that Marx had to rectify.
This brings us to the central question: when capitalists have surplus-value at their command, why don’t they just have a good time and consume it away? Some of the surplus-value is indeed consumed by the capitalists as revenue. The capitalist class consumes away a portion of the surplus in pursuing its pleasures. But part of it is reinvested as capital. Another question then arises: what governs the relationship between the capitalist consumption of revenues and the reinvestment of surplus-value as capital? Marx’s answer is worth quoting at length.
Except as capital personified, the capitalist has no historical value, and no right to that historical existence which, to use Lichnowsky’s amusing expression, ‘ain’t got no date’. It is only to this extent that the necessity of the capitalist’s own transitory existence is implied in the transitory necessity of the capitalist mode of production. But, in so far as he is capital personified, his motivating force is not the acquisition and enjoyment of use-values, but the acquisition and augmentation of exchange-values.
Capitalists, Marx avers, are necessarily interested in and therefore motivated by the accumulation of social power in money-form.
He is fanatically intent on the valorization of value; consequently he ruthlessly forces the human race to produce for production’s sake. In this way he spurs on the development of society’s productive forces, and the creation of those material conditions of production which alone can form the real basis of a higher form of society, a society in which the full and free development of every individual forms the ruling principle. Only as a personification of capital is the capitalist respectable. As such, he shares with the miser an absolute drive towards self-enrichment. But what appears in the miser as the mania of an individual is in the capitalist the effect of a social mechanism in which he is merely a cog. Moreover, the development of capitalist production makes it necessary constantly to increase the amount of capital laid out in a given industrial undertaking, and competition subordinates every individual capitalist to the immanent laws of capitalist production, as external and coercive laws. It compels him to keep extending his capital, so as to preserve it, and he can only extend it by means of progressive accumulation. (739)
The capitalist, according to Marx, has no real freedom, either. Poor capitalists are mere cogs in a mechanism, who have to reinvest because the coercive laws of competition force them into it. As capital personified, their psychology is so focused on the augmentation of exchange-value, on the accumulation of social power in limitless money-form, that money accumulation becomes the fetish focus of their deepest desires. Herein lies the similarity between the miser and the capitalist. They both want social power, but the social power of capitalists comes from constantly augmenting their wealth by releasing it into circulation, whereas the miser tries to hold on to it by not using it. And if capitalists individually show any sign of drifting away from their central mission, then the pesky coercive laws of competition (once more slid into the argument in a central role of policing the system) bring them back into line.
Faced with this reality, the bourgeois apologists create a noble fiction. The capitalists, they say, are creating capital and engaging their noble mission to create that “higher form of society” that even Marx concedes can be a product of their endeavours, through abstinence! I have to say, living in New York, I have never noticed the capitalist class abstaining too much. But Marx does suggest that capitalists face a Faustian dilemma. He even quotes Faust: “Two souls, alas, do dwell within his breast; The one is ever parting from the other” (741). They are forced by the coercive laws of competition to accumulate and reinvest on the one hand and are plagued by the desire to consume on the other. Coerced restraint with respect to the latter is then converted into an ideology of voluntary bourgeois virtue. Profit can even be interpreted as a return on virtue! Reinvestment, the story goes, is a virtue (it creates jobs, for example), and therefore deserves to be admired and rewarded. All those tax cuts for the ultrarich that George W. Bush set up during his presidency were construed as a reward for virtuous investors whose abstinence supposedly played a crucial role in job creation and economic growth. The fact that the rich soon acquired the habit of throwing ten-million-dollar parties for their kids’ graduations or their trophy wives’ birthdays hardly squared with this theory. Marx, however, once again heavily influenced by the story of Manchester capitalism, suggests that the struggle between the “two souls” dwelling in the capitalist’s breast underwent a gradual evolution. In the initial stages, capitalists indeed were forced to exercise restraint on consumption (hence the significance of Quaker ideology among some early capitalists in England). But as the spiral of accumulation on a progressively increasing scale got under way, so the restraints on consumption slackened. In Manchester, during “the last thirty years of the eighteenth century…‘expense and luxury have made great progress,’” Marx reports, quoting an account from 1795 (742). Under such conditions, “production and reproduction on an increasing scale go on their way without any intervention from that peculiar saint, that knight of the woeful countenance, the ‘abstaining’ capitalist” (746).
Driven by the coercive laws of competition and the desire to augment their social power in limitless money-form, capitalists reinvest because this is, in the end, the only way they can stay in business and maintain their class position. This leads Marx to a central conclusion concerning the essence of a capitalist mode of production.
Accumulate, accumulate! That is Moses and the prophets! ‘Industry furnishes the material which saving accumulates.’ Therefore save, save, i.e. reconvert the greatest possible portion of surplus-value or surplus product into capital! Accumulation for the sake of accumulation, production for the sake of production: this was the formula in which classical economics expressed the historical mission of the bourgeoisie in the period of its domination. Not for one instant did it deceive itself over the nature of wealth’s birth-pangs. But what use is it to lament a historical necessity? If, in the eyes of classical economics, the proletarian is merely a machine for the production of surplus-value, the capitalist too is merely a machine for the transformation of this surplus-value into surplus capital. (742)
What this means quite simply is this: capitalism is always about growth. There can be no such thing as a capitalist social order that is not about growth and accumulation on a progressively increasing scale. “Accumulation for the sake of accumulation, production for the sake of production.” Just read the press reports on the state of the economy every day, and what are people talking about all the time? Growth! Where’s the growth? How are we going to grow? Slow growth defines a recession, and negative growth a depression. One or 2 percent growth (compounded) is not enough, we need at least 3, and only when we reach 4 percent is the economy deemed to be “healthy.” And look at China with its sustained 10 percent growth rates over many years: that is the real success story of our times compared with Japan, which after decades of stellar growth fell into the sick bay of global capitalism, with close to zero growth throughout the 1990s.
To this imperative attaches a fetish belief, a whole ideology, centered on the virtues of growth. Growth is inevitable, growth is good. Not to grow is to be in crisis. But endless growth means production for production’s sake, which also means consumption for consumption’s sake. Anything that gets in the way of growth is bad. Barriers and limits to growth have to be dissolved. Environmental problems? Too bad! The relation to nature must be transformed. Social and political problems? Too bad! Repress critics and send recalcitrants to jail. Geopolitical barriers? Break them down with violence if necessary. Everything has to dance to the tune of “accumulation for the sake of accumulation, production for the sake of production.”
This is, for Marx, one of the defining characteristics of capitalism. To be sure, he arrives at this conclusion on the basis of his assumptions. But these assumptions are consistent with the inherent vision internalized within classical political economy as to the “historical mission” of the bourgeoisie. And it defines a very important and powerful regulative principle. Has the history of capitalism been about compounding growth rates? Yes. Have capitalist crises come to be defined as lack of growth? Yes. Are policy makers throughout the capitalist world obsessed with stimulating and sustaining growth? Yes. And do you see anybody really questioning the growth principle, let alone doing anything about it? No. To question growth is irresponsible and unthinkable. Only cranks, misfits and weird utopians think that endless growth, no matter what the environmental, economic, social and political consequences, might be bad. To be sure, problems deriving from growth, such as global warming and environmental degradation, need to be addressed, but rarely is it said that the answer to the problem is to stop growth altogether (even though there is evidence that recessions relieve pressures on the environment). No, we have to find new technologies, new mental conceptions, new ways of living and producing, such that growth, endless compounding capital accumulation, can continue.
This has not been a regulative principle of other modes of production. To be sure, empires grew and social orders episodically expanded, but then they also just as often stabilized and in some instances stagnated and even faded away. One of the big criticisms of actually existing communisms in, for example, the former Soviet Union and Cuba, has been that they didn’t grow enough and so could not compete with the incredible consumerism and growth performance of the West, centered on the US. I do not say this in praise of the USSR but merely to point up how automatic our responses tend to be to nongrowth—stagnation is unforgivable. So now we have enough SUVs, Coca-Cola and bottled water around to satisfy accumulation for accumulation’s sake with all manner of disastrous environmental and health consequences (such as the epidemic of diabetes, which incidentally, continues to be rare in Cuba compared with the US). It bears thinking about that the endless three percent compound rate of growth that has characterized capitalism since the mid-eighteenth century might be singularly hard to maintain. When capitalism was constituted by an economic zone of about forty square miles around Manchester and a few other smaller locations, a three percent compound rate of growth was one thing, but now it covers Europe, North and South America and above all East Asia, with strengthening implantations in India, Indonesia, Russia and South Africa. Starting from this base, the consequences of a three percent compound rate of growth over the next fifty years are unimaginable. At the same time, it makes Marx’s suggestion in the Grundrisse that it is time for capital to be gone, and to make way for some more sensible mode of production, more imaginable if not absolutely imperative.
There are, it turns out, a variety of ways to gain surplus-value without producing anything. Reducing the value of labor-power by reducing the standard of living opens up one path. Indeed, Marx writes, quoting John Stuart Mill, “if labour could be had without purchase, wages might be dispensed with.” But then
if the workers could live on air, it would not be possible to buy them at any price. This zero cost of labour is therefore a limit in a mathematical sense, always beyond reach, although we can always approximate more and more nearly to it. The constant tendency of capital is to force the cost of labour back towards this absolute zero. (748)
And Marx notes some ways to do this, such as providing recipes to workers so they can feed themselves more cheaply. Later this sort of thing became part of the practice of, for example, the Russell Sage Foundation and of the practices of social workers as they sought to educate other workers to proper modes of consumption. But plainly, taking this path creates problems of effective demand, which Marx does not consider here since he has ruled it out by assuming that all commodities trade at their values. Saving on constant capital (including cutting down on waste) can also be helpful while capitalists are constantly on the lookout for “something provided by nature free of charge” (751). “It is once again the direct action of man on nature which becomes an immediate source of greater accumulation, without the intervention of any new capital” (752). Changing the productivity of social labor through other means (motivation and organization) is also free of charge, and using old machines beyond their lifetime helps, as does the mobilization of past assets (e.g., built environments) for new purposes. Finally, “science and technology give capital a power of expansion which is independent of the given magnitude of the capital actually functioning” (754). Accumulation can be expanded by all these different means without resort to the capitalization of surplus-value.
“It has been shown in the course of this inquiry,” Marx concludes at the beginning of section 5,
that capital is not a fixed magnitude, but a part of social wealth which is elastic, and constantly fluctuates with the division of surplus-value into revenue and additional capital. It has been seen further that, even with a given magnitude of functioning capital, the labour-power, science and land (which means, economically speaking, all the objects of labour furnished by nature without human intervention) incorporated in it form elastic powers of capital, allowing it, within certain limits, a field of action independent of its own magnitude. In this inquiry we have ignored all relations arising from the process of circulation [he is here reminding us of the initial assumptions about the market], which may produce very different degrees of efficiency in the same mass of capital…[and] we disregarded any more rational combination which could be effected directly and in a planned way with the means of production and the labour-power at present available.
Once again, Marx insists on the incredible flexibility and maneuverability of capital. “Classical political economy,” in contrast, “has always liked to conceive social capital as a fixed magnitude of a fixed degree of efficiency.” That poor man Jeremy Bentham, a “soberly pedantic and heavy-footed oracle of the ‘common sense’ of the nineteenth-century bourgeoisie,” had a particularly fixed vision of how capitalism constructed a labour fund (758).
Capital is not a fixed magnitude!! Always remember this, and appreciate that there is a great deal of flexibility and fluidity in the system. The left opposition to capitalism has too often underestimated this. If capitalists cannot accumulate this way, then they will do it another way. If they cannot use science and technology to their own advantage, they will raid nature or give recipes to the working class. There are innumerable strategies open to them, and they have a record of sophistication in their use. Capitalism may be monstrous, but it is not a rigid monster. Oppositional movements ignore its capacity for adaptation, flexibility and fluidity at their peril. Capital is not a thing, but a process. It is continually in motion, even as it itself internalizes the regulative principle of “accumulation for the sake of accumulation, production for the sake of production.”