STUDYING DAS KAPITAL, Part 7 (of 8)

Summarizing, mostly defending and, at times, critiquing Volume 1

Part 7 of Das Kapital is called “The Accumulation of Capital” and consists of Chapters 23, 24, and 25. If you prefer to download a PDF with all eight parts of my study notes combined into a single document, click the button below to do that.

Studying Das Kapital Vol 1

499KB ∙ PDF file

Download

Download

Chapter 23: Simple Reproduction

Marx reminds us that the production of commodities requires commodities. Capitalists must therefore reinvest a portion of their income - even if merely to repeat the same production as the year before. Marx calls the case where there is no growth “Simple reproduction”. Capitalists reinvest only enough to produce the same size fund for their personal consumption year after year. Surplus value is not invested, it is merely a fund for the capitalists’ personal consumption..

Marx says that a typical political economist is the “ ideological representative” of the capitalists and sees any consumption by workers that is not aimed at keeping them strong enough to work as “unproductive”. In a footnote Marx lampooned an exception to this attitude: capitalists in the county of Durham claimed ownership of the excrement of agricultural workers on their land - an example where “individual consumption by the labourer becomes consumption on behalf of capital-or productive consumption”.

Marx repeats that capitalism is better than feudalism at hiding its coercive nature and dependence on the state, but he says that there are exceptions during crises. He reminds people that in 1815, capitalists resorted to legislation to prevent mechanics from leaving the country under threat of harsh penalties.

ASIDE: During the COVID pandemic a US judge issued an injunction forbidding nurses from quitting their jobs to work elsewhere.

Another illustration Marx points to was during the US Civil War when the British government refused to provide funds to help starving unemployed cotton workers to leave the country. Manufacturers complained that emigration during the crisis would eventually lead to an expensive labour shortage for them. Marx comments that a few years later the British government quickly compensated landowners after a cattle disease broke out.

Marx ends the chapter by stressing that capitalism must not simply reproduce commodities and surplus value but the very existence of a capitalist class that rules over workers.

Chapter 24: Conversion of Surplus value into Capital

Section 1: Capitalist Production on a Progressively Increasing Scale. Transition of the Laws of Property that Characterise Production of Commodities into Laws of Capitalist Appropriation

Marx defines the “accumulation of capital” as reinvesting surplus value as capital - as opposed to just consuming it as is the case with simple reproduction. Recall that Marx defines capital as anything, including labour-power, that the capitalist can acquire with or convert into money. The two general types of capital Marx identifies are constant capital (the means of production such as raw materials, land, machinery and tools) and variable capital (labour-power).

ASIDE: Standard economics textbooks define capital a bit differently. Paul Samuelson’s widely used textbook says “Capital goods, then, represent produced goods that can be used as factor inputs for further production, whereas labour and land are primary factor inputs not usefully thought of as being themselves produced by the economic system “

He asks us to consider a capitalist who starts off with £10,000. How did the capitalist get this original amount? Marx sarcastically asks us to accept the answer a typical political economist gives “"By his own labour and that of his forefathers"

ASIDE: Part 8 of the book examines the real answer: “primitive accumulation”, capitalism's horrific origin story - which is not only capitalism’s history in Europe but essentially applies everywhere capitalism goes to establish itself.

In Marx’s numerical example, c is £8000, s/v is 100% and v (wages) is £2,000. Therefore surplus value (s) is £2,000. He notes that if the original £10,000 produces £2,000 in surplus value then if the same conditions hold £2,000 reinvested will produce £400 of surplus value; £400 reinvested will produce £80 of surplus value etc. Marx reminds us that of course the original £10,000 did not disappear - and that the capitalist may consume some of the surplus value rather than invest it all.

ASIDE: If the capitalist started with £10,000 and reinvested all surplus value every year then his or her total capital would grow as shown below.

….Total Capital (C’)….investment (c+v)….Surplus value (s)

Year 1……...12000………..10000……………2000

Year 2….…..14,400……….12000……………2400

Year 3……...17,280……….14400………..…..2880

If the capitalist removed £1000 from surplus value every year for personal consumption then there would still be growth but it would be slower (see below).

….Total Capital (C’)….investment (c+v)….Surplus value (s)

Year 1……...12000………..10,000……………2000

Year 2….…..13,200………..11,000……………2200

Year 3……...14,640………..12,200………..…..2440

To accumulate, the capitalists needs to ensure that surplus value gets converted into more means of production and more labour power. And he notes that investment in machinery can reduce his need to hire as many workers to expand his total capital.

Deep into the book, Marx continues to reiterate his distinction between use- value and exchange value as it applies to labour power, and, based on that, to proclaim that “there is not one single atom” of surplus value that is not unpaid labour.

ASIDE: What if somebody argues “The workers also get a use-value from having a job that is greater than the time and energy they sacrifice to work. Without a wage they would starve”? But the “work or starve” choice presumes a society rigged to force that extreme choice. By that logic, a mugger who takes my wallet at gunpoint can claim to have offered me a wonderful deal. Depending on how generous a capitalist’s society’s welfare state is, the choice is actually “work or give up a lot of dignity and comfort”. Of course, a worker-run society would have to give people incentive to work - and that would include making people pay a penalty for refusing to work for no good reason, or for doing their work poorly for no good reason. Workers themselves would be victimized if the work of others is not done properly. But in a worker-run society the challenge would also be to optimize the use-value people get from their work in terms of dignity, solidarity etc..and also enhance their ability to enjoy their lives while not at work. In a worker-run economy, workers are who the economy is for.

Section 2: Erroneous Conception, by Political Economy, of Reproduction on a Progressively Increasing Scale

Marx writes that “Political Economy, acting in the interests of the capitalist class, has not failed to exploit the doctrine of Adam Smith…that the whole of that part of the surplus-product which is converted into capital, is consumed by the working class”

Marx basically accuses Smith of applying a sloppy version of the LTV which ends up allowing capitalists to claim that capital accumulation is ultimately wage accumulation.

ASIDE: Though Marx promises a more detailed rebuttal of Smith claims in Volume 2, it seems clear the problem with Smith’s claim is a failure to distinguish between paid and unpaid labour. That distinction rests on the difference between the exchange value and use-value of labour power that is central to Marx’s analysis.

Surplus value does not bleed away into wages leaving the capitalist weaker if he invests to expand production -as if the capitalist must either consume his surplus value or plow it back into the production only to lose it to workers.

Section 3: Separation of Surplus value into Capital and Revenue. The Abstinence Theory

Marx says that capitalist competition drives complacency out of capitalists. It forces them to “accumulate” capital (productive capacity) to survive as capitalists. Marx sees this as laying a productive foundation for something better to replace capitalism. But he also observes that as capitalism advances complacency may set in - less devotion to expanded production and a greater urge to spend surplus value on personal consumption - as easier ways to get rich emerge through speculation (in particular through the “credit system”).

Marx then quotes historian of English Manufacturing ,Dr. Aiken, to show that miserly and cruel capitalists develop eventually into ostentatious and cruel capitalists.

Marx says that Thomas Malthus advised that only part of the elite - landowners and clergy - should do consumption while the capitalists live austere lives devoted to accumulation. Capitalists didn’t like the idea. Ruining workers’ lives for the sake of capital accumulation was fine with them, but not their own.

Marx makes fun of Nassau Senior (who he also ridiculed in Chapter 9 for saying profits are only made in the last hour of the workday) for coming up with the theory that capitalists practice abstinence when they invest surplus value to expand production.

Marx attacks slave owners at one point in this section, ridicules the idea that they engaged in any king of abstinence, but some translations say he use the word “nigger” to do so which would expose a comfort level with European racism. However, in the original German, Marx used the term “negro” - an outdated term but there is nothing in the context that makes “nigger” an appropriate translation. So, in some cases, the translators were telling on themselves.

Section 4: Circumstances that, Independently of the Proportional Division of Surplus value into Capital and Revenue, Determine the Amount of Accumulation

Marx has mostly been analyzing capitalism by assuming surplus value is not produced by paying workers below market wages. Marx reminds readers that deviations from that assumption are important. Two scams Marx describes are paying workers with “relief” instead of money, and adulterating the food they buy (hence driving down the short term costs of feeding workers). Those scams increase surplus value and therefore capital accumulation as well.

Instruments of production are a component of constant capital. Depending on the industry, Marx says, they increase at a different rate relative to an increase in the number of workers -similarly with raw materials. In mining, he says, raw materials are not constant capital since nature provides what is extracted; and shift work (in agriculture, mining and manufacturing) allows more labour to increase without a proportional increase in the instruments of labour. In agriculture, he says raw materials are seed and manure which is gathered by workers so that more land can be cultivated. Agriculture and mining supply the basic inputs on which all manufacturing relies to feed workers and make all tools. Expanding labour-power and land are the keys to expanding capital.

Marx talks about how the productivity of social labour is key to expanding capital. He says increased productivity could produce a greater mass of surplus products even if the rate of surplus value (s/v) were staying the same or falling provided it were not falling faster than productivity. With increased productivity, he says capitalists may do more personal consumption even if it shrinks relative to the size of capital accumulation. Increased productivity increases the rate of exploitation (s/v) but real wages may still rise. In other words, Marx says workers may gain absolutely but not relative to capitalists. He stresses that advancements in science and technology are key to improving productivity; and that as machinery becomes obsolete, capitalists look to pay the costs of phasing it out through greater exploitation of workers.

He reiterates that increased productivity means workers transfer more of the old exchange value already contained in raw materials and tools to the product. However the new exchange value they create per worker per hour is always the same - because socially necessary labour time is the fundamental unit of exchange value as per the LTV. Hence all capital is “the services of dead and gone labour” (as Marx puts it in this section) but political economists don’t recognize this. Instead, says Marx, they concoct theories whereby capitalists “ought to receive a special remuneration in the shape of interest, profit…”. .

Marx repeats his observation that the more capitalism develops, the comfortable capitalists become sacrificing some accumulation for their personal consumption. The austere living capitalists who Malthus wanted to serve the luxurious spending landowners and clergy became rarer.

Section 5: The So-Called Labour Fund

Marx attacks Malthus, Bentham and others who said that the “Labour fund” that pays for workers to stay alive is fixed by nature rather than by capitalists who increasingly accumulate the spoils of unpaid labour.

Chapter 25: The General Law of Capitalist Accumulation

Section 1: The Increased Demand for labour power that Accompanies Accumulation, the Composition of Capital Remaining the same

Marx reminds us that he divides into constant capital (raw materials, tools. machinery i.e means of production) and variable capital (wages of workers on the job today). He defines the constant capital portion as the “organic” composition of capital; the variable part as the “technical” composition. The organic composition can vary from industry to industry but for now he will analyze it in the economy as a whole.

He considers the case where the means of production grow but the same number of workers are available: wages rise. He notes that a “lamentation on this score was heard in England during the whole of the fifteenth, and the first half of the eighteenth centuries.” But even during these kinds of periods workers “cannot get free from capital” and their “enslavement to capital is only concealed by the variety of individual capitalists to whom it sells itself”.

Marx quotes the economist Mandeville. Marx wanted the workers to run the economy, not to be kept ignorant and poor as Mandeville advised (though Madeville cautioned against poverty being too extreme) to maintain the dictatorship of the capitalists. Marx says that Mandeville didn’t grasp that even if workers wages are rising their dependence on capitalists is not broken.. Marx quotes the economist F. M. Eden who, perhaps grasping Marx's point, advised in a less brutal control mechanism of capitalist control than did Mandeville.

Marx says that under the worker-favorable capitalist conditions (rising wages) surplus value must still exist or capitalism collapses. Agreeing with Adam Smith, Marx notes that low profits may actually result in capital accumulating faster. He quotes Smith: “A great stock, though with small profits, generally increases faster than a small stock with great profits.” And Marx adds that if capital expansion is inhibited by rising wages, then a slowed expansion will adjust wages downward. The ratio of capital accumulation to wages is simply the ratio between the unpaid labour and paid labour of the population.

Section 2: Relative Diminution of the Variable Part of Capital Simultaneously with the Progress of Accumulation and of the Concentration that Accompanies it

Cting Adam Smith, Marx agrees that accumulation of capital may increase wages but therefore provide an incentive to increase productivity which leads capital to increasingly take the form of constant capital (i.e. the organic composition of capital goes up). He says that change in the composition of capital may be far less dramatic than change in the mass of constant capital. He argues this happens because rising productivity greatly increases the quantity of raw materials used, but is largely offset by their unit costs going down. Hence the increase in the value of constant capital is not as dramatic. Again he notes that a decline in the variable capital (wages) relative to constant capital does not mean that wages can’t rise absolutely.

He tentatively defines “primitive accumulation” as part of the origin story of capitalism: “the transition from handicraft to capitalistic industry”. He elaborates on what primitive accumulation is in Part 8 of the book. Once the capitalist mode of production takes root, the tendency is for the organic composition of capital to go up. Competition among capitalists can sometimes limit the extent to which capital is owned by few people. But the “expropriation of capitalist by capitalist” also occurs and should not be confused with capital accumulation.

ASIDE: In other words, one capitalist buying up all the machine shops in my hometown should not be confused with an increase in the number of machine shops.

He says capitalism trends towards monopoly or near monopoly : “the larger capitals beat the smaller” and “ends in the ruin of many small capitalists, whose capitals partly pass into the hands of their conquerors”. But financial capital (“the credit system”) eventually sneaks in and develops into a dominant force. Thus, “competition and credit” drive capital to be centralized in fewer hands. He repeats that the process of concentrating ownership in fewer hands is not the same as capital accumulation.

He says capital accumulation is a gradual process compared to centralization. But Marx describes centralization as a catalyst for accumulation and increased productivity which decreases the relative demand for labour.

Marx says new firms tend to be where innovations develop but then old established firms get renewed by those innovations. The result is a relentless drive to increase productivity - to do more with less labor - though Marx stresses that the workforce need not shrink in absolute terms but relative to the amount of constant capital deployed by capitalists.

Section 3: Progressive Production of a Relative surplus population or Industrial Reserve Army

Marx says that capitalism produces more workers than it needs for accumulation: “a surplus population”.

ASIDE: Indeed. It has been normalized under capitalism that the supply of jobs is always lower than the demand for jobs.

He says that many things are possible within different branches of industry as capitalism develops- including some cases where the number of workers keeps pace with capital accumulation. There can therefore sometimes be a steady or even rising relative share of variable capital in some sectors, but, overall, the trend is towards producing a surplus population whose existence weakens the bargaining power of workers. The industrial reserve army is also useful when sudden spurts of growth increase labour demand. Capitalists want the reserve army around during those spurts so that it can quickly be deployed without drawing away from other industries. During periods of rapid expansion the size of the reserve army falls. But even if strong growth were to temporarily eliminate the reserve army, it will still have made upward pressure on wages lower than it would otherwise have been.

Marx pushes really hard on the reserve army of the unemployed and the crucial function it serves for capital accumulation:”this surplus population becomes …a condition of existence of the capitalist mode of production…. It forms a disposable industrial reserve army…there must be the possibility of throwing great masses of men suddenly on the decisive points without injury to the scale of production in other spheres”

Marx says this reserve army does not exist before capitalism or in its very early stages. During a periodic crisis (downturns in the business cycle) the surplus population swells. Marx criticizes bourgeois economists for pointing to the availability of credit as the cause of crises as opposed to a consequence of crises. He says mainstream economists eventually came to observe the necessity of the disposable reserve army. Marx cites a long quote from political economist Herman Merivale arguing against helping unemployed workers emigrate during a crisis.

Marx says that while Malthus correctly admits that a surplus population serves the needs of industry, Malthus does not consider that productivity improvements expand that population, not just the birth, death & migration rates of workers. Capitalists, Marx insists, look for productivity improvements to help create the reserve army; they do not simply rely on”natural” population growth.

In some cases, variable capital (aggregate wages) may increase if the number of workers falls or stays constant if they work for longer hours (presumably for an hourly rate). He notes that longer hours may even be able to offset some fall in the hourly rate such that variable capital still rises. Marx says capitalists, to avoid spending more on constant capital, will always prefer to make workers work longer hours rather than hire more if the cost of each option is about the same. He says capitalists also try to deskill workers and to replace them with women and children as much as possible.

He argues the reserved army of unemployed allows capitalists to squeeze more out of workers which thereby helps swell the ranks of the reserve army - a vicious circle that Marx says develops faster than technological progress that intensifies it. To back this up he points to England which had well advanced labour saving technology but still relied heavily on overworked, unskilled labour.

He mocks British capitalists for seeing unions as infringing on the “sacred” law of supply and demand but then insisting that competitive markets be called off by state intervention in the Colonies (where capitalists struggled to create a reserve army of the unemployed as Marx explains in Part 8).

Section 4: Different Forms of the Relative surplus population.

Marx takes more shots at Malthus’ theories. It is not the total population that interests capitalists in modern industry, Marx says, but young boys or in some cases girls. Capitalists will therefore complain about a shortage of workers because they want them so young - even as huge numbers of adults are desperate for work. In this section, he cites grim medical testimony on the short lifespan of workers. But killing off workers also causes the “shortages” capitalists complained about.. Early marriages are encouraged to counteract short life spans and satisfy capitalist demand for child labour.

Marx defines the “floating” form of the surplus population - a part of it that increases or decreases in proportion to the scale of production in mining and manufacturing. In such industries, “the labourer, half-way through his life, has already more or less completely lived himself out” Marx says. He defines the latent form of the surplus population as part of it that as flows into towns and cities looking for factory jobs when capitalism takes over agriculture thereby creating mass unemployment. He defines the stagnant form of the surplus population as the part of it that is chronically unemployed who also tend to have large families. Marx says capitalism hunts them down as if they were weak animals producing in excessive numbers. Marx adds that the “lowest sediment of the relative surplus population finally dwells in the sphere of pauperism. Exclusive of vagabonds, criminals, prostitutes, in a word, the ‘dangerous classes’”.

The more developed a capitalistic society, the greater the size of its industrial reserve army Marx concludes. He explains that workers will not get the upper hand by restraining their population growth because capitalists make sure that productivity improvements are too fast for that to happen.

Marx cities, with disgust, some thinkers who approvingly observed that wealth requires misery: Venetian monk Ortes, Church of England parson, Townsend and Destutt de Tracy.

Section 5: Illustrations of the General Law of Capitalist Accumulation

A. England from 1846-1866

Marx shows data exposing that, while UK population growth slowed during these decades, wealth increased very quickly. Marx then turns his sarcastic fire on the British ruling class and how they viewed the misery of the people that produced these huge advancements in wealth. The ruling class denied nothing and flaunted its impunity, so Marx quoted them at length in this section. They made his work easy.

He notes that pauperism was 24.4% in London in 1864 “in this centre of the world market”. He says that the level of pauperism fluctuates with the business cycle, and that it is probably understated by official statistics, especially when the ruling class begins to fear workers’ “class consciousness” (i.e. potential revolt by the working class).

B. The Badly Paid Strata of the British Industrial Class

The British government did detailed studies that documented the savagery of the capitalist system. In this section, as in many others in the book, Marx also took full advantage of that to quote them at length. A study shows that cotton workers were barely at the levels that experts said were required to avoid starvation. A study shows that “Among the agricultural labourers, those of England, the wealthiest part of the United Kingdom, were the worst fed”.

Going through studies and parliamentary debates, Marx shows that contagious diseases spread among the workers to such an extent that even the wealthy were threatened by them. That prompted the passing of laws that displaced poor people and forced them to live in even more crowded conditions. Marx sneers at the fact that rich are expropriated with compensation while poor are kicked into the streets in the name of sanitation and public health.

C. The Nomad Population

Marx does more diving into government reports about the living conditions of rural people who travel around in search of factory work. Smallpox spreads around the country with them. Marx concludes “In conflict with ‘public opinion,’ or even with the Officers of Health, capital makes no difficulty about ‘justifying’ the conditions partly dangerous, partly degrading, to which it confines the working and domestic life of the labourer, on the ground that they are necessary for profit.”

D. Effect of Crises on the Best Paid Part of the working

Marx shows that in England even the “aristocracy of the working class” were starving. Through overproduction and financial speculation, iron shipbuilding went through a big crisis in 1866, and even the Tory press reported on the “frightful spectacle” of the “human torrent” of unemployed people in East London. In this section, Marx also remarks on conditions in Belgium, which British elites admired for being “free” of trade unions and factory regulations. Marx cites a Belgium government report that found working people there to be worse off than most prisoners.

E. The British Agricultural Proletariat

Reading through more reports, Marx comments “Of all the animals kept by the farmer, the labourer, the instrumentum vocals, was, thenceforth, the most oppressed, the worst nourished, the most brutally treated”. Marx reminds us that when industrial capitalists and landed gentry were at odds over the Corn Laws (see my Chapter 10 summary), the newspapers that sided with the capitalists reported on the horrific conditions and the country - also named and shamed the landowners. The corn laws were repealed in 1846. Agriculture modernized and agricultural workers became worse off. In 1863, Marx pointed to a study that found that prisoners in Britain were better fed than paupers and “free labourers” and that agricultural workers were the worst fed. The plight of children in agricultural “work gangs”, as Marx describes it, was grim and documented in reports at the time which he cites.

F. Ireland

Marx points to the great potato famine and immigration data from Ireland to refute the Mathusian notion that the poor can save themselves by lowering their population: “The Irish famine of 1846 killed more than 1,000,000 people, but it killed poor devils only. To the wealth of the country it did not the slightest damage…. the relative surplus population is today as great as before 1846; that wages are just as low, that the oppression of the labourers has increased,..” Capitalism weaponizes productivity gains against workers, and sadistically tells workers that they have too many children. One of the sadists Marx calls out in this section is Lord Dufferin, who claimed that Ireland was still overpopulated and “demands a new blood-letting of one-third of a million” as Marx put it.