Cse Bulletin Winter_72

7/24/2019 Cse Bulletin Winter_72

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- 3 -

CSO,DD Eu.11tin 17.int or 1

9 7

2 .

Conference

Contents.

Forwerd...

PaU2Ea.

The Marxian Theory of Crisis, Capital psad the State.

by David-. S. Yaffe.

Page 4

Post Keynesian Economic Theory and the Theory of Capita list

Crisis. by Jan Kregei-

Capitalism in the Second Half of the Twentieth Century.

E 3 5

by Michael. Barratt-Brown.

Capitalist Crisisand the Oranic Composition.

by Andrew Glyn.

Marx on the Rate of Frofit.

1 0 4

by Ian Steedman.

libtes an the na.rxi6t Education Course at S0

.

10

by Tim Putnam. .

A Rote on Women and Economics.

1 1 T ,

by Jean Gardiner,and Maureen Mackintosh.

Seminar on International Firms: a. Report

12


3/111

- 4 -

F O R W O U .

This issue of. the Bulletin is given over to the publication of

papers for the December Conference. Die next iss ue will be

published at the end of March. This would be facilltated if we

could receive some material to go into it. W6 have set the foll-

owing copy dates untyped manuscripts to be submitted by February7

24th, typed m a

nuscripts ( suitable for xeroxing, dimensions do not

matter ),by March 17th 1973. We hope by this t ime a more efficient

structure of production will have emerged from Conference discussions.

4


4/111

- 5 -

The Ilarxian

Theory

of Crisis, Capital and.

the State

(1)

'The abandoning of the Materialist basis leads inexorably 4om

revolutionary socialism to reformism' (Honryk Grossmann). (2)

1.

ntroduction

Marxists have always defended themselves with ardour against the attack that

they hold to a 'crude' deteminist theoiy of history. Unfortunately, their anxious

protestations have too frequently led to a rejection of the 'materialist' basis of

Marxist theory itself. That capitalism, admittedly with the interference of two

world wars, has shown its capacity to survive and. expand, has further made it all

the more difficult to accept a theory that shwas the

historically

limited character

of this 'node of production'. Discussion has, therefore, since the

.

1950's involved

stressing particular aspects of 1:arxiat theory to thedetriment of the 'total'

conceptio&of Marx's work.

Amongst Western philosophers and sociologists attempts to reinterpret 1:larx

concerned the emphasis on the 'humanistic' writings of the early Marx against the -

'scientism' of the later writings. The Frankfurt ::3chool of philosophy and .

sociology represents what is probably the earliest version of this 'humanismJ. Thrs

idea of 'Critical Theory' elaborates the distortions of human relations under capital-

ism 4nd contrasts them with the 'potential' of a more rationally organised society.

The 'possible' or 'potential' is counterpesed to the 'actual and the concept of

'enlightenment' i3

supposed to link the two. While for Marx the historical

'necessity' of the new society is shown in the contradictory development of the old

society, for the critical theorists there is no such 'necessity'. This development

has its counterpart in 'Marxist' political economy. Paul Baran's use of potential

(1) This article is a development and clarification of the arguments contained in

an earlier unpublished paper 'State Expenditure and the Marxian Theory of Crisis.'

written jointly (in August )971) with Audi Schmicde. With his permission I

have directly used some of the material in that parer. It has been most helpful

in reformulating and developing my arguments, to discuss with Robin

1 : 1 . / T a y ,

Stephen Parker and other members of the

.

C.S.E. in Brighton. Thanks are also

duo to Roy Tears for his comments on the earlier paper and., in particular,

for allowing no to use some of the material from our joint work on value and

price in the Marxian system which we hope to publish at a later date.

(2)' Henrylc Grossmann: Da- Al-

- 1-umul ,Itions

nd Zesaunbiuchsgej de

Kapitllstisehenjiyptems, krehiv Sozialistischor.Litoratur 3,

Verlag Neue Kritik, Frankfurt

p.74


5/111

and actual economic surplus in relation to underdeveloped countriesMand the

'wastage' of the alleged abundant surplus as described in Baran and Sweczy's

Eono

) o l y

.

Capital employ similar 'critical' concepts. (4)

That all the above positions have in common is a rejection of the 'general

laws of motion of capitalist society', as developed by Marx in Capital, for 'late'

capitalism. The contradictions of capitalist production for these theorists,

where they have not been completely contained, do not lie in the production process

itself but must be located in the ideological, technological and political

spheres.

Many of the' academic Marxist economists during this period have been more

concerned to show how much of Keynes was or was not anticipated by nrm thal to

examine the limits to and contradictory nature of state intervention in capitalist

economies.

( 5 )

The period of 'stability' since the second world war and the

consequent 'ideological' hold of

'Keynesianism' have certainly contributed to this

state of-affairs, but with increasing instability

and esrowing unemployment in Western

economies in the

recent period new explanations are being selvjht. The failure

of Social Democratic governments to substantially alter the condition of the -

working-class, and in Britain the complete subservience of the labour party as

government party to the interests of

international capital, have given added impetus

to these tendencies since the mid 1960's.

the capitalist mode

of

production can ensure, with

or without government

intervention, continual expansion and fell employment, then the most important..

objective a r g o : s a e n t i n s u p po r t

of

revolutionary socialist theory breaks down. It

will be the aim of this article to show that the 'value ana lysis' of capitalism

as 'developed by Marx, .must still be the starting point for an ana lysis of contemporary

'capitalism. On the basis of such an analysis it will be shown that state'inter-

vention in the economy, far from

resolving the central contradictions of capitalist

production has only .given them new expression. Stagnation and inflat ion as two

of the

central features of advanced capitalist economies today indicate the

limits

o e

(4)

Monthly Review Press. 1966

(5)

One of the most imr.ortant exceptions has

been

the work of Paul Mattick

Press

1 g 7 1 .

A great deal of the analysis in this paper owes much to

Eattick

especially his book Marx and_Kenes_. The Limits of t ' .

.e Mixed lEconmny. Merlin

or more generally to the same tradition of political economy that has clearly

influenced ix'attick. Roman 2osdolsky and henryk'Grossman,Aaro of pa rticular

iMpo:Aance but

unfortunately nothing of tileir work, as yet, has been

translated

into English.

(3 )

P.A. Baran. The Political Economy of growth. Monthly Review Fr,;ssY. 1962

and

The Iono

,

cr

View: Es

. say towards a critique of Political Economy. p.

269-307.

Montly Review N.Y. and London 1969'. .


6/111

.

and crisis ridden nature of capitalist production..

The article will be in two main parts. The first section Idll oanta in an

analysis of 1:::arx's theory of crisis. It will attempt to answer various criticisms

of that theor

y and examine, in particular, two false

versions of

the theory: the

underconsumptionist and disproporticnality theory of crisis. The second section

will begin an analysis of the role of state intervention in the economy and will

attempt to indicate the limitations of intervention by the capitalist sta te implied

by the earlier analysis of the theory of crisis

2 . a r x i s j t .

Political Economy

( a) Capital Production

What distinguishes Marx from his Classical predecessors is that he never loses

sight of the fact that the 'value-producing' process, central to capitalist pro-

duction, is only an historical form of

the material production and reproduction process

of society. The labouring process b ecomes a 'value-producin

g

' process and the social

relations are transformed into economic categories under caPital production.

Ca i l

italj,st production is oriented not towards consumption needs, that is the

production of use-values, but towards production for profit, that s the production

of DT:change-values. It is the dual nature of a commodity under capitalist production

c o n d i t i o n s, t a ' a t . i s . a s a

use-value and exchan

g

e-value that constitute the most a.encral

contradiction of the capitalist system. This may be pat in a nother form: while the

labour process is only limited by the natural resources aVailab le, by the historical

stage of development of the social productivity of lab our and the mass of labour in

society, the-labour process aS a 'va lue-producing' process has much narrower limits.

Under capitalist production natural resources are

only utilised, the Docial

productivity of labour only developed, labour is only employed if it serves the self-

expansion of capital i.e., the reproduction of the existing capital

values

and the

creation of additional value, surplus-value. Capitalist production therefore, is the

production of exchange-values through the production of commodities, its in being

surplus-value as additional exchange-value.

Accumulation is the continuous process

of

reproduction and self-expansion of

capital (VerwertUngsProzess des J:apitals), it is t he reproduction of capital on

a progressively increasing scale.

( 6 )

Necessarily, accumulation is also the reproduction

(6) S e e cy

. p i t o ,

Vel1 (Foscow Ed. 1961) p.581. In his critique of Ricardo's Theor

y

of

Accumulation itarx continually refers to accumulation

a s reproduction on a leer

scale, increase of capital, growth of constant capital, reproduction on an

extended basis and formation of additional value. he even indicates how the acre

reproduction of capital inves

t

ed- in the machine-building industry requires

continuous accumulation in other spheres of production. See Taories of Surollts

.

Valde, Vol. II (i::oscow Ed) p.467, p. 476, P

-

.473, p.522, p.485 and p.

483-1.

p.


7/111

-3-

of the capitalist social relation on a progressive sca le, 'mom capitalists

or larger capitalists at this pole, more wage workers at that'.

( 7 )

So long

as capitalist relations of production exist, so long a s one class owns the means

of production as capital, and another has to sell its labour-power to live, so .

long will the aim and end of production be the accumulation of capital.

Before an analysis of the accumulation process itself is possible it IS

necessary to say something about Marx's methodology

a r L ,

in particular, about.the

concepts 'capital in general' (Kapital in allgemeinen) ant 'many capitals' (widen

Kapitalien) or capital in its 'real' form of competition.

(b) 'Capital in veneral and 'many

capitals'

It is the particular form that social relations take under capitalist production,

their fetishistic form, which makes it all the moro necessary for political economy

to start from simple (abstract) conceptions and move by a process ofincreasing

concretisation to grasp the concre.te reality.

( a )

'The methOd of advancing from the

abstract to t he concrete is but the way of thinking by which the Concrete is

o )

grasped and reproduced in our mind as concrete' he failing of 1.)hat Marx called

'vulgar economy' is that it remains in the 'estranged outward appearances of .

economiC relations'. In so doing it takes on an apologetic character for the given

social relations and by treating t hem as 'eternal' fails to grasp their contradictory

character. 'But all science would ba superfluous if the outward appearance and

essence of things directly coincided'

, ( 1 o )

and it is precisely this point that7.--

indicates the indispens:ability of the valucanalysis for Marx's total work..

arx begins this analysis in Volume I of Capital by examining the exchange

of commodities. From this he deduces that Value or expenditure of abstract human

labour lies at the basis of Commodity-exchange,,independent.of.the use-values

of the

commodities. Ho then moves on to the only form Value can have under commodity

Prodtction, that is exchange-value. After deducing the money form of value he goes on

(7)

Capital Vol. 1 p..613-4 also p. 578

(8)

K .

Marx Introdncticn

to the Critiluo of Political 'Z,conomv as an appendix

to A

Contribution to the Critiono

of

P o l i t ic a l . . z ' . : c o n o n a

t r a n s l a t e d b y N . I . ' S t o n e .

Chicago, Charles

4 . Kerr P. Company p.

292 ff.

(9)

bid. p.

293-4

(i0) p a pita1 Vol. III (Moscow Ed. 1962) p. 797


8/111

to analyse the capital form of va lue. It vi

t

s the examination of capital, of va lue

( 1

that

generates surplus-

) N

value (value in process

, which presupposes a definite

historical relationship, the wage-labour relationship (labour power as a commodity),

that was to talc up the major proportion of Earx's effort and work.

In

order to develop the concept of capital it was first of all necessary to

abstract from 'many oapilals or the act ion of capitals on one anothr through

competition. The latter would be an

a

lysed after the consideration of what they (many

capitals) have in common, as capital.

( 1 2 ) I . 1 . 1 .

the Grundrisse the point is made veiy

c l e a r :

'Capital, in so far as we are considering it here....

is capital in general...

Value, money, ...azEtsa etc. prices etc. are presupposed, just as is labour etc.

f.'However we are concerned neither with a special

.

f o r m o f c a p i t a l n o r wi t h i v

.

. 3 , 4 u a l , .

capitai

.

as differentiated from. other irldiviclul capitals

. etc. 'lc are remaining

with its process of

generation

and g rowth (Zntstehungsprozcs. This dialectical

process of generation and growth is nothing but the ideal expression of the real .

movement of capital. The later relationships arc to be regarded as a development from

this 'central core' (Hem.... '(13)

It follows that the later form of capital is contained in embryonic form

(Keimform) within the general

concept of

capital. This means not, only the 'civilising'

dynamic tendencies of capital but also the latent contradictions which drive capital

beyond its own limits.

( 1 4 )

,

ilarx refers to

'capital in general' sometimes as 'the capital of the whole

5 )

socie

1

t y '

r nation, or as the g eneral economic basis of one class as opposed to

another class.

( 1 6 )

'Capital in general' is not a more abstraction or an arbitrary

abstraction, but on abstraction that must be understood as the*differontia

sPocifica

, (11)

g a P i . t p l .

Vol. 1 p. 154

(12) Grundrisse der_Kritik der

. P e l i t i ,

,

..lchqq_gckonpmie. Diets Verlag. Berlin 1953

p.416. A great deal of this analysis follows the arguments of iloan Rosdolsky

Zur

.

Lnts

.

teh

.

u n f

.

s

:

:eschichte

des_yxscl

-

, n i t a l ' B a n d I . l ' u r o p a ' o A s c h e .

Vorlagsanstalt Frankfurt 1 969 pp. 61 ff

(i3)

Grundrisso

op. cit. p. 217 (my 'translation)

(14) ibid. p.317. Lind p. 237 See also Roman Rosd olsky op. cit. p.70

( 1 5 ,

Grundrisse op. cit. p.252

(16) ibid p.735

/


9/111

- 10 -

of capital in distinction to all other forms of wealth.

( 1 7 )

If we are to

comprehend the basic presupposition of the dapital relation - the relation of

capital end labour and the role of surplus-value as the driving force of capitalist

production - then we must begin our dnalysis with 'capital in general' undisturbed

.

by a consideration of'many

,

cabitals' or the actions of capitals en one another.

A scientific analysis of competition is not possible before we have a conception

(ia)

of 'capital in general', that is, of the 'inner nature of capital'.

ompetition

is the 'essential locomotive of b ourgeois economy' which nevertheless does

not

create or establish its laws but merely allows them to be realised ('allows them

to be exhibited but does not produce theM')

( 1 9 )

Capitalist production exists in

its most 'adequate' form in so far as free competition develops. Nevertheless,

as soon as capital feels itself threatened it will seek-refuge in other forms', which

appear to perfect its rule ad capital

'through curbs on free competition'.

arx

2 o )

offers hero a clear context for understanding capitalism in its 'latest' stage. It

is precisely the nature of capital itself and the 5):.:servation of its rule as canital

that is central for an understanding of capitalism in its 'monopoly'stake. It has

not ceas-ed to be ca pital by virtue of the 'curbs on free competition'. 'On the,

contrary it is precisely the 'rule of capital' that makes the 'curbs on free

competition' necessary.

It follows, therefore, that the analysis of 'capital in general' is still the

startinc point of. any analysis of contemporary capitalism. The valus-analysrs of

volume I of Caoi:cal still retains its v alidity,

and although the 'law of value' is

'modified', ii nevertheless is the basis for a ny serious consideration of modern.

capitalism. The 'modifications' and this'iucludes interventions by the capitalist

State, are within limits governed bY the preservation of the 'rule of capital' itself

and so modern capitalism, like the capitalism of ham's day, is subject to va lue-

analysis. Baran and Swoczy are, therefore, wrong when they assert:

'the Earxian analysis of capitalism still . r

.

2sts in the final

an:Jysis on the assunwtion of a competitive economy'

. ( 2 1 )

( 1 7 ) i b i d . p . 3 5 3

. (18)

Capital Vol

-

. 1 p. 316

(19) rundrisse op. cit.

p . 4 5 0

(20)

bid

p . 5 4 4 - 5

.

(21)

onopolv Capital Monthly Review 'Press. N.Y. and London 1966.

p . 4 '


10/111

It rests on an analysis of 'capital in general', undisturbed by considerations of

competition, that has as its basis the value relations examined in

-

Volume

I o f

CaDita

.

l .

As

l o n , :3 p0

capital and therefore capitalist production relations

exist whether the LIR:Oket structure is competitive or monopolistic, the v alue al:alysis

is central.

( 2 2 )

Volume I

and II of Capital are primarily concornM with an examination of

'capital in general' and the special forms of the existence of 'capital in general'

as fixed and circulating capital. That this is often not understood has lead to all

kinds of confusion when .considering Earx's theory of crisis and its relevance for an

examination of contemporary society. It is not surprising that so many critics

o f l a r x

have

talked of a contradiction

between

Volume I and III of Canital

.

( c ,

-

2 . 1 3 O h m

Bawerk); and others have confused 'capital in general' with capital in trality',

'many capitals' (:

, I t o s a L u x e m b u r g ) .

It is

only in volume III of Capital that

Earx begins to 'locate and describe t h e concrete forms which cv dw out of the

lmoyemf,Ints of clnital an_e,_wolej as they 'ap9ioach step by Step the form which they

assume on the surfo.ce of society, in the action of differ:mt capitals upon on

another, in competition, and in the ordinary consciousness of the agents of production

themsefves'.(23)

( c )

Productive cnd

.

Unpmluctive :r .

abour

This distinction, sd central to Earx's theory of acdumulAion, is one often .

misunderstood by

both

Warxists and Earx's critics. No d iscussion of the role of

State intervention is possible until this distinction is clarified.

A DrOduCtlVO labourer is one who works for the self-expansion of capital and -

( 2 4 )

produces surplus-value for the capitalist through the production of comaodities.s -

It is labour which is directly exchanged

with

capital for the purpose of a rr:ummlnT

capital.

(25)

The use-value of the commodity, in which the labour of a productive labuzer

is embodied, is in no way relevant to this definition; the commodity 'may be of the

most futile kind'. (26) The definition of productive labour is the expression of a '

definite social relation of 'production, that is, of ca pitalist produCtion. Therefore,

any 'moralistic' definition of productive labour, ie

usoful to society, has nothing

(22)

aul Hattick 1...arxism and

. .

"Fonooly Carita

. 1 " . .

in Progressive Labour Vol. G 110. 1

J u l y - A l x , -;ust 1967

(23) a 7 -?ital Volume III p.25

(24)

p . : n _ i .

tal

Volume I

p. 509

T h o ( x . . i . : : S O f S = p l us - V a l u . c

Vol.

1 p.I53 and Crundrisse la.212-5

(26) ibid


11/111

1

2 -

in common with Earx'sdefinition and surely confuses the issue by abstretin

from the particular model of production and type of society. The aim of

capital 'is the at:cumulation cf vefl.t.h., the self ....mansion of value,its increase;-

that is to say the maintenance of the old-value and the creation of surplus-

v alue. And it achieves this

snecific_proch

lct of the capitalist production process

Only in exchan. ,

7e with labour, which for that reason is celled

.T 2 o d u c t j _ v j :

labur.' (27)

Unproductive labour is labour that is notexc1ian7ed withcapital but

directly with revenue, that iswith wages or profits.

C 2 8 )

This means that

services

paid out of the wage of workers or the income of capitalists are unproductive from

the capitalist standpoint.(29) They constitute a reduction of the surnlus-value

that is available for re-investment as capital. The case of

cervices, c.f. education,

which actually raintain or raise the value of labour-cower or alter the skill

(complexity of labour) of the labourer is slintly.more complicated. Marx talks

of such S e D 271CO S

as yielding in return 'a vendible commodity etc., namely labour-

power itself, into whose costs of. production these services enter'

( 2 9 ) .

but t'he

utility of the service alters nothing as far as the economic relation ic concerned, as

revenue is exchanged against labeur: The result of the service, by its very natnre,

cannot even be guaranteed by those rendering the service.

(30) he ca.:;(1 of State

expenditure on education e=ctly fits this cate

g

ory. In so far as education incrcas

. : , s

the total value of lab our-power(of all labourers) and has little or no effect on the

(27)

b i d ,

- : . 3

.

1 537-3

(28) bid

p.153

(29) b i d p. 1 . 6 3

(30)

bid D.395.

f the schoolmaster worked for a capitalist proprietor and

education was a necessary ingredient in the reproduction of labour-power; to

that extent, the schoolmaster could be re,:farded as-oreductive. This presumably

covers the case given by Earx in CE.nital Vol. 1 p.509. Sometimes Marx seems to

imply that labour is productive

t produces surplus-value for the capitalist

only and does not add to total social capital.( 'Theories of

.

u=lu

tyalue;

Vol. 1 p.393)

This mi.:I:lit have been what he had in :Lind in his productive

schoolmaster example if we refer to his remarks (quotinf.; smith) about how

little 'education' enters into pecost of prod

u

ction of the mass of working

men. (Theorie. s

.

of_Surolus.:Value, Vol.1 p.165). We reject such a definition

and hol6, clearly to that

1 . 1 0 3 e

consistent witb Karx's general analysis that

labour

is

only productive so long as it

-

auoments capital. (Grundisso p.212- 3).


12/111

W .

- 13 -

value-forni potential of the labourer (skill etc.) besides leading to a

fall in the average rate of profit, it alters the redistribution of the social

product in favour of the labourers and at the expense of surplus-value. To the

extent that it increases the skill etc. of the worker and/or productivity in the wage

goods industries the latter effects are compensated.

k 3 1 )

kere circulation costs fom the standpoint of capitalist production are

unproductive. Although wage-labour is performed and the capitalist investing in this

sphere receives a profit no addition to surplu2-value, to total social capital, is made.

Such costs, necessary for the realisation of profits reduce the overall rate of

profit. The employment of commercial workers, office staff etc. increase the expenses

of the inaustrial capitalist and therefore the mass of capital to beadvanced without

directly increasing surplus value. If the extra

.

coats are Ac, then the rate of

profit will be reduced from s/c to s/c+Ac.(32) The labourer who works in the

commercial sphere still performs unpaid labour and his cost to the capitalist is the

value of his labour-power.

'He creates no direct surplus value, but adds to the ca pitalists'

income by helping to reduce the cost of realising.purplus-value,

inasmuch as he performs partl y, unpaid labour. '(33)

These purely commercial costs are to be separated from the costs of transport

Shaping, storage etc. These are regarded as part of industrial production. A change

in the object of labour, in the, commodity takes place. In the case of transport 'its

spatial existence is altered, and along with this g oes a change in its use-value,

since the location of this use-value is changed'.(34) Such labour is regal:clod as

productive labour.

It follows from all this that from the standpoint of capitalism as a whole

'variable capital' represents only the wages of productive labourers not of the total

labour force. Yurther, surplus-value is not eeual to the total surplus-product

but to the surTqus-product of 'productive labourers. So that the share of wages and

profits in p.atioLn

income does not tell us very much about the rate of exploitation.

It is quite reasonable to assume that, if the unproductive (including the non-

profitable staWsector is growing at a faster rate than the productive sector, total

ages as a share of national income can.grow. and the rate of exploitation can still

rise. This is because a part of net income inputed to war

,

cs is in reality a part of

('31) See article by ElmarkItvater and 2reerk Huislzon in Sosialistische

r.8

September 1970. especially pages 82-91. The whole issue of the journal is

given over to a discussion of productive and unproductive labour.

' (32) Ceeltal Volume III p.293-4

(33) ibid p.294

(34)*Theorics'of Surplus-Val ue. Vol. 1

p.399

See also C,pite] Vol.II1 p.253


13/111

1 4 .

surplus-value produced by productive labourers. This latter point indicates one.

of the problems in trying to find statistical counterparts for the liarxian

categories.

( 3 5 )

To conclude this section we have the following important results. Variable

capital represents only the wages of productive workers. Surplus-value is the

total profit of the productive sector. Constant capital is the part of the means of

production employed in the productive sector. The rate of exploitation and organic

composition of capital relate to the variab les as. defined above. The unproductive

part of total production becomes relevant when we discuss the rate of Prefit,. Here

it will be included as a extra-cost. 'Fiore capital is advanced in order to finance

this unproductive sector and so the rate of profit will be correspondingly lower.

( 3 6 )

Having clarified the meaning and role of some of the central categories of

Marxist political economy we now turn to the general theory of accumulation and crisis'.

(35)

his is one weakness in Andrew Glyn ant Bob Sutcliffe's book British

Cauitaliun

iorkors and the

Profits Souceze. Penguin books 1972. On page .

15; they say 'The share of profits

is the total amount of profits expressed as a

proportion of the national income'. In another 'place (p.32) they speak of the

share of wa7cs

as 'total ways in industry expressed as a .proportion of the

value of industrial output'. But continue 'Sometimes the share of wages in

the national income is .referred to; it is the total of all wages expressed as

a pro -

oortion of national income. It is theeonnterpart of the share of profits',

They seem to show little awareness of the central problem of productive and

unproductive labour in choosing. their data. -

(36)

or

'a similar formulation of this result see Rudi Schmiede 7 . 9ntrale Probipme

.

der arxschen

.und Krisontht)orie . Soziologisohe Diplomarbeit.

Frankfurifilain 1972. p.48. It should be remarked that to clearly se

-

oarate

productive from unproductive labour empirically is not really a possibility.

The value of the conceptual separation will be clear in the later analysis.

e


14/111

3 .

h e

General Law of Capital Acculation and the Theory of grini:1

(a) Tho risinP orp

.

anic copoit ion of

c a p i t o , 1

Capitalist production has as its aim

and driving fo:

,?ce the production of

surplus-value as additional exchange-value), Surplus-valve is the difference between

exchange-value of labour-power (representing that part of the working day in which

the worker produces the equivalent of

his, own means of subsistence, necessary labour-

'7/

time)

and its productive capacity,kr::presonting the total working day). So that an

increase in the productivity

-Z-abour, viewed

capitalistically, makes no sence

unless it increases surplus-value :1. e, decreases the

value of

labour-power or the

i d t

time necessary to sustain and reprbduce the workers. In oth

e r words, the productiity

of labour is constrained by the need to produce value and surplus-value, in bound to,i

)

'

the xpnroduct*on,,and

s.e1S72;:xpansion.o.f_mpital.

k l w ( . u . v ( 1 0 , 4 4

0 - `

46.1- A g

s 0 4

:

Il

v s

7 1 5 3 . 9 3 . . s . s . .

Atric cannot prevent the fall in the value of labour--overkas .

.

'07)

productivity increases)

ut it can prevent,however,the occurrence that the 'value

falls in the same relation' as the productivity increase. That is, ensure a rise in

real wages takes place with increases in productivity at

the same time

. 3 : 3

an increano

in surplus-value.

( 3 8 )

While, in exceptional cases, e

x

tended - reproduction on the.same techoloL:icafl.

scale is possible, in general, accumulation

'revolutionises

out and out the technical

processes of

labour'.

(39)

...Ince continuous accumulation udder capitalist pxoduction

conditions coon comes across the limits of

the

, existing working population, that is sinee

the normal working day has

its 1 . i j v L s j

:

(a1 rind social limits,

( 4 0 )

a transition from the

production of absolute surplus-value

(extension of the

working day) to ltat of rcllative

(37) This important point, overlooked by those who use a Ricardian type model, i.e. sec

wages inversely proportional to profits, is merely another way of stressing that

'the rate ofa.ccumulation is tl -

le independent not the dependent,

variable; the rate of wages the dependent, not the independent,

variable

(Cil Vol. 1 p.620)

Marx again makes this point in

relation to the rise and fall of

-

Eho rate of

Profit in Theories of Surplus-Value Volume III p.312.

'The rise and fall in the Lte of

profit insofar as it is determined

by the rise or fall of waes resulting from the conditions of demand

and suply (in the labour market),..... has as little to do with the

general

law of the rise or fall in

the profit rate as the rise or

fall in the market prices of comr,oditics has to do with the

determination of value in general'.

. This -

point could be particularly

-

directed against many of the arguments in the

.

G l y n j ',; Sutcliffe book mentioned earlier.

(33) Theories of Surplus-Value Vol. III p.312 and p.300.

(39)Cuital

.

Vol. 1 p.510

( 4 0 )

yheories

of Punlus-Yalue. Vol. III p.300


15/111

surplus-value (decreasing the necessary part Of the working-day

by an increase in

the social oroductivity of labour) takes place. Together with this chance, occurs,

generally,

e-n increase in the intensity of labour as capitalism tries to obtain more

.

( 4

1

)

value per unit of time (increased expenditure of labour in a giv en time

/ from

r ,

the same worker. Both increased productivity and greater

augment the mass of arti.cles produced in a given time and

part of the working necessary'to produce the wages of the

increasing intensity of lab our requires, as compensation,

real wage, it has no effect on the rate of exploitation.

( 4 2 )

increase it.

he increase of the intensity of lab our

social limits so that the main method open for increasing

intensity of labour .

therefore shorten the

wo r k e r s . In s o f a r a s .

an equivalent increasing

Otherwise, it will

has also physical and

surplus-value under

developed capitalist conditions of production is to increase the productivity of labour,

i.e. through technical change.

Increases in the productivity of labour from the standpoint of material production

involve a change in What I.Larx, calls the technical. composition of cabital.

'This latter composition ,

is determined by the relation between the mass

of the means of production employed, on the one hand, and the mass of

labour necessary for their employment on the other'. (43) -

in(;eascs in productivity involving increases in the technical comnosition

o f

capital arc represented under capitalist production by changes in the value

composition of caPital i.e. tho ratio of constant capital, or value of means of

production, and variable capital or value of labour power. Between the technical

and value compositi,on there is a 'strict correlation', harx expresses thiri relation .

by saying that:

The value composition, in so far as it is determined by its

. technical composition and mirrors the changes of. the latter (is called) the

orrr.anic composition of capital' 44)

value side is crucial for understandinz 1.1arx's general theory.

(41)

apital Vol. I

p.524

(42)

he relevance of the class-..struggle is important here. One aspect of

productivity deal bargaining quiteclearly involves the question of compensation

for increases in the intensity of work

(43.) Capital Vol. 1 p.612

.(44) ibid,

The importance of grasping the process of a ccumulation from both

.

its tate/ial-ani


16/111

- 17 -

The increase in the mass of means of production uer worker (rise in the

technical composition) is not merely a technical premiss which enters into Karx's

argument at particular stage. It is the expression in general torus of the only

way that the productivity of labour can rise under capitalist production, that is

by the exteqs6n of

the octal division of

labou. This latter process,accompanied

by an increase of the mass and volume of means- of production, is also C basis of 1:arx's

argument that the organic composition of capital inr.ofar as it is determined by the

technical composition will rise, although not as

fast as the technical composition,

due to the increasing productivity of labour.

'with the growth. in the proportion of constant to variale capital,

grows also the productivity of labour, the productive forces brou

ght into

being, with which social labour operates. As a result of this

productivity of labour, however, a part of the c:i.sting con

stan

t capital

is continuously depreciated in valUe, for its value LTendo not on the

labour time that it costs originally but on the laboure with. which

it can be reproduced and this

.

, is continuously diminishing as the

productivity of labour grows. Although, th.erofere, the va lue of the

consnt capital does not increase in proportion

to its amount,

it increases

nevertheless because

its amount

increases even more ral*.ly than its value

falls'. (45)

Karx re g

arded it as an incontrovertible fact,

(46)

as a self-evident or a

( , 1

tautological proposition

7 )

' , that the organic composition of capital should rise.

To show that this was not a more assertion but follows logically from the concept

of capital itself will be the concern of the rest of this section.

. The compulsion to employ machinery, under capitalist production and to increase

by these means the productivity of labour is expressed in reality by competition and

the consequent need to reduce L'r.e c ost of producLion. But this is not its

explanation which must be deduced, in terms of.14.arx's method, from the concept of -

( 4 0 )

casual itself. '

he concert, of capital is a contradictory one. On the one

stdc

we have capital as 'value in process' as value attempting to expand itself without

limit and on the other side we have the working population, the limited basis of that .

expo.usion. Oaoital, therefore, must, on the one hand, try

and sake itself as indepen-

dent as possible of that basis in its process of self-expansion; it at.tmpts to

(45)

heories o2 Sur , :lus-Value Vol./11A p.415-16

(46)

h o r i e s o f S u 2 : 1 : 1 1 . y

lv

o l . I I I

p.364

(47)

bid D.366

(43) Orun.drisse p.662


17/111

-8 -

reduce the necessary labour time to a minimum by increasing the productivity of

labour.. On the other hand it needs to increase the basis of its expansion, tf.lat

is the

labour-Power available for exploitation; that means to increase simultan-

eously the working population. This can be expressed in another way.

iven

the working-population ( in labour-time

units i.e. number of workinc: days.

multiplied by the time Per workin; day) available to society, than surplus-value

can only be increased by increasing the productivity of labour, that is, by a

-reduction of the (relative) workin population. Similarly, assume a given developr

i l e a t

of the

productive forces then surplus-value can only be increased by.increesinz.

the available working

population i.e. by.

an incyciape_in.the

(relative) working

population. Earx then argues

that

'the unity of this contradictory tendency ther

e

fore, of the

contradiction, (comes) first vith

machinery'(49)

The dialectical solution to this contradiction (its removal to a hi,

- .

,hor level)

is

to increase the scale of

production

through the replacing of livin2 labour by

objectified (dead) labour in the. form of machinery. In this %,ense machinery

in so far as it

comprises fixed capital is

capital in its most adequate foal.

'Thus r_achinery

.

appears therefore as the most adequate form of Axed

car,i_tal and fixed capital in so far

as capital can

be considered as

on

related to itself, as the most adeouate

f

capital

f . e n o r a l l I : ( 5 0 )

(49)

bid p.660-1

(50) bid p.586

ee David YcLellan iyxGrumdrisse. McLij_lan ,1:4 Co.

1 9 7 1

p.134 for English translation. l'arx cent

- inn:es 'On the other hand, in So

far. as fixed capital is

firmly tied to its existence as a particular use-

value, it no lon:;er corresponds to the concept of capital which, as a value,

can take up or

thro7:: off any particular form of

alue; and incarnate

itself in any of them indiffors.nItly. Seen from this aopect of the external

relationships of capital, circi.11atim ca

-Ata1 appears as the most adeauato

form

of capitalas opposed to fixed capital.'


18/111

-

Marx clarifies this imwrtant point in the followinjc passaFes taken

f r o m t h e q ] . . . . L n d i s f : I p :

In machine17; objectified (dead) labour ar;pears in the labour

process itself as the dominating force opposed to living labour,

a..force represented by cal)ital in so far as it appropriates

living labour

The developent of th3 means of labour into machinery is not

fortuitous for oapitl, it is the historical transformation of the

traditional means of labour into moans adequate to capitalism....

Thus the full development of capital does not take placr

. , Y - i n e th e r

words, capital has not set up the moans of production correpponding

to itself - until the moans of labour is not only foxnally determined

as fixEd col:ital but ha s been transcended in its direct form, a nd five('

caital in the shape of a machine is opposed to labour within the

.production process

The quantitative volume, and the efficiency

(intensity) with which capital develops as fixed' capital, thus shoes

in general the degree to which capital 1

-

,as developed as

capital, as

.

d o m i n a t : ' , o n iving labour and the dec .

;rce to which its dominates

t h e -

croduction process in gene el. It also expreses the a ccuslc.tion of

objectified productive forces and likewise

of objectified le ..bour'....(51)

What we have tried to show from

an examination of the concept

of

Capital

s the

neessity of increasing the social

.

division of labour, through the application

of vachmery and therefore, of replacing on an incre

asing scale living labour by

objectified (dead) labour. It follows from this that both the to2hnical

cortion

o

f c a s i t

al and the..02:2:nai.0 comsoc I then

. of Cr:32j. MISt iner e a u t o i n t h e crocess o f

capitalist Production although the

latter will not increase as quickly as the follner

-due to increases in the prod

-lctivity of labour.

( 5 2 )

This is clearly el -Tressed by Marx when he says:

' h o

w ever, much the use of inachinery may increase- the

surplus-

labour at the expene of necesSary labour by heibtning

productiveness of

labour, it

is clear that it attains this

result, only by diminishing the nr , lber of workmen employed by .

a given amount of

capital. It converts what was formerly variable

capital, invested in

labour power, into machinary which, being

constant capital does not produce surplus-value.....' (53)

( . 5 1 ) i b i d p . 5 8 5

, and McLellan p.133.

(52)

or a discussion of the relation between the technical composition, the

organic co1:1)osition of capital and the scale of production, see Thaoedes

oL

Surplus--Vaaue Vol..

III

p.302

f f .

(53)

onj,tal Vol. 1 p.407


19/111

The necessity to continually extend a nd substitute

objectified

labour

for living labour is clearly expressed in the condition for the introduction

of machinery for the purpose of chapening

a product.

That is, that less

labour must be expended in the production Of the machine than the (paid) lc,bour

(value of labour.power) that is displaced by the employment of the machinery. The limit

to the use of the machinery is

, :j.V(21

by the difference between the va lue of the

machine and the value of the labour power replaced by

it. '

hin latter

point can be expressed algebraically as follows:-

cii

t

( v

t

usual notation)

clearly if all labour available for exploita tion is to be employed in the interest '

of capital this requires a further extension of the division of labour (material side)

and C must increase at a faster rate than V for total social capital (value-

side). Likewise if we consider total social capital in periods 't' and tti-1

1 and let

w .

be the total va lue produced in one period of production, then with the usual.

notation

= W,

S .

t + 1

t + 1

+1 =

I r t + 1

_

If the total working-time available to capital for

its aaplornent remains constant

V S. = const) than for accumulation to take place

I r

t+1 > " t

co that with or without

an

increase in the

be elployed

rate of exploitation, if all labour is to.

(54) ibid p.392


20/111

;- 21 --

If the working population increases then accumulation would have to be

that much faster (,

;2 2

-

ator than the increase in the working popuLAion) to

satisfy the condition for the introduction of machine

ry

and the expansion

requirements of capital.

Beforc finally concluding this section we must say something about cagJ.

til

p:?,Tinil_innovat:lpn. This term can only have real significance if the innovation

is brought about by ' gratis 2

increases.in t he productDztty of labour. In general

the increase in the productive power itself must be paid for from capital, it is

.

(5q)

not f7..eo. (gratis)

n such a

.

case all the above arguments hold. hat of

this case where the cheapening of the elements of constant caDita.1 comes about

'gratis'? Ka= compares this to the increase exploitation of natural 1.Tealth

by the more incroaso in the tension of labour pow-or. 'Science and technolo g

y

give capital a poWer of expansion, independent of the :; -

iven magnitude of the .

(56)

capital functioning'

A number of points can be made here: .

(1) Capital caving innovation is a confusing idc2 2.9.ic1 term . Prom the

standpoint of total social cai)ital such innovation is labour-saving; less

labour time is necessary to reproduce constant capital. Such innovation

would therefore allow accumulation to take place at a much faster rate without.

the increase in the organic composition that would have occurred without the

innovation. So that accumulation and expansion udli be given an impetus.

Unless such inventions are continually re-occuring the t

,t.Nneral tendency of the

organic composition to rise

-

would. reappear. Logically such 'gratis' inventions

have to be treated separately from the accumulation process

. They modify it

but do not belong to its intj.:rnal logic. To give any more significance to such

inventions it has to be shown that, necessarily, they mist continua:13.y re-occur.

(55)

, Grundrisso

.662

(56) Capital Vol. 1 p.605


21/111

(57) 'Accumulation of capital is therefore increase of the proletariat' Cmital

Vol. 1 n.614 ,

(53) ibid

p.644

- 22-

(2)

The

introduction of such inventions pre-supposes that a developed capital

structure already exists. That is, the, development of capitalist production

. has taken place along the lines indicated above; accumulation and the consequent

rising . organic composition of capital. So that new 'waves' of such

inventions have as a presupposition for their introduction into the

production process a further normal development of capitalist production.

(3)

The effect of such inventions will be less the higher the org:inic composition

of capital already a chieved i.e. more developed and widespread 18:capitalist

production.

(4)

There is no reason to assume that such 'gratis' inventions . will not

affect labour equally. After all a great deal of so- called 'scientific

managenentl is concernedwith jus.:1; such an application of 'science' to the

labour process. If this is the case, the effect of such 'grat is' increases in

productivity will be even more

l i m i t e d ,

he organic coMT;osition.

(b) The

7

2endencv of the Rate of Profit to Fall and. the Crisis TheorV

That it is inho'rent in capitalist prOduction for capital int he process of its

self-expansion, to create an ever increasing basis for that expansion, that is, the

proletariat,C

5 7 )

ad at the same tine seek to increase the productiveness or s ocial

labour, that is set into motion a.constantly increasing quantity of means of pro-

duCtion with less expenditure of labour power, leads to the formation of the

:

industrial

0

reserve calm

'The same causes which

-

devolop the expansive power of. capital,

develop also the labout-powor at its disposal. The 'relative mese

of the industrial reserve army increases therefore with the potential

energy of wealth' (58)

Marx calls this the absolute rteneral law of Capitalist accumulation which like

all other laws, he says, is modified in its working by many circ=tances.


22/111

2

3 -

This law is the eneral expression of the contradictory nal:111v of capitalist

production, of th'e-increase in the social productivity of labour ander the

'domination of capital'. The size of the reserve a rmy

i s

relative. to the rate

of capital accumulation. During periods of stanation ant averac prosperity it

weihs down on .the woildna population and during periods

of rapid expansion, beinr;

a reservoir of

labour

power, holds back the 'pretensions of the labour force.

( 5 9 )

The process of capitalist production, of accumlation and the increase of the

social productivity of labour has so far been examined throuch an analysis of its

invisible and

.unknown essence'. The appearance of surplus-value and rate of

surplus-value 'on the surface of the phenomenon' in the form of profit and

the rate of profit is the next step in the analysis.

'Althowjl the rate of profit thus differs numoricany from the rate

of surplus-value, while surplus-value and profit aa-o

actilly the same

thiuf nd numerically equal, profit is nevertheless a converted form of

surplus value, a form in which its oriin and the secret oT its

existence

are

obscured and exstinuished. . In effect,

profit is the

form in which surplus-value presents itself to view, a nd

must he

initially stripped by analysis to disclose the latter' (60)

The general law of capitalist accumulation from the standpoint of capital

(and the capitalist) represents itself 'on the surface of the phenomenon' as a

tendency of the rate of profit to fail. This is not a mechanical or algebraic

relation but the erezessim of the contrdicfc,erv nature of the a ccumulation

proe

e .ps

from the standpoint of capital.

The development of the social productivity of

labour under

capitalism, leads to

a decrease of exchange-value of commodities relative to their use-value, (they alv'

produced with loss expenditure of labour-time) tog ether with an increase of the Mass

of use-values. The .

accompanying

rc,flosition o f _ o p . -

nital means that .

the mass of the means of production grows faster than the mass of labour employed from thE

material side, and from the value side, constant capital grows faster than variable

capital. However, due to the increasing

productivity of labour the value-composition

rises slower

than the technical-composition. If the rate of exploitation, the

proportion between surplus and necessary labour-time remained the same, the rise j

. : , r 1

t h e o r .

, -

-;anic comosition of capital would lend to a f3,11i,np. _rate ef Troi;it since it is .

(59) ibid p.639

. (60) paDitp, Vol. III p.47


23/111

-4 -

only the variable part of capital that yields surplus-value, while the rate of

profit is measured on total investments i.e. constant. and variab le capital. This

inherent tendency for the rate of profit to fall is called by Marx

the most important law of modern political economy and the most -

essential one for understanding the most complicated relationships.

It is t he most important law from an historical standpoint. (61).

Since the increase in the organic composition of capital represents an increase

in productivity, the rate of surplus-value uill ne

. t

. remain constant but will be

increased because the value of the mass_of prpduc0

.

constituting the equivalent

for the necessary labour-tine is cheapened. This is the result of an increase in

relative surplus-value.

.'The tendency of the rate of profit to fall is bound up with a

tendency of the rate of surplus-value to rise, hence with a tendency

for the rate of labour exploitation to rise.. .Both the rise in the

rate of surplus-value and the fall in the rate of profit are but

specific forms through which growing productivity of labour is

expressed under capitalism'. (62)

Does this mean thatthe fall in the rate of profit can b e completely

compensated by an increase of surplus-value? Or as Sweezy put it

'it is not possible to demonstrate a fa lling rate of profit

by beginning the analysis with the rising organic composition of .

capital'. (63)..

Yarx was quite aware of this objection when ho slid. that

4

'the compensation of the reduction in the number of labourers by mcans

of an increase of exploitation has certain insurrocuntablo limits. It

may, for this reason, chock the fall in the rate of profit, but cannot

prevent it entirely.' (64)

(61) Grundrisse D.634

(62)

apital Volume III. p.234. It is quite amazing that critics of Marx such as

Joan Robinson can say tha t Narx's theory rests on the assumption of a co2ntant

rate of exDloitation. Our analysis of the general law of capital accumulation

shown nothing could be further from the truth. And Marx makes the point many

tinos in Volunie III of Cnil

e Joan Robinson An Essay on Marxian

London MacMillan

1 9 6 3 . p . 3 8 .

(63)

. Sweczy. The

f_CaPita)

r

ist Dovelopmnt 1962 e.

1 0 5 .

M. Dobb in his Ppcal

Eqorionv ap.d_SPita lis:.1 (1940) 1963. p.109 expresses a similar view, w liieh is

repeated by M. Blaui -; in F,cononic

Theory in Retrospect p.249-51. Heine

-

i l a n n L o n d o n

2nd

Edition.

1 9 6 8 .

Capital Vol. III

.

p.242 slightly corrected translation)


24/111

Sweezy could find no real answer to this problem because hcfails to see the capitalist

process of production from both its va lue and material side.- His own discussion

rests on purely value . .

considerations whereas 1:arx sees

the process in its entirety.

Surplus-value is produced by living labour and the physical and social limitations

and possibilities involvin::; this labour affect . the production of surplus-value.

'Inasmuch

as the development of the productive forces

reduces

t h e

paid portion of employed labour, it raises the surplus value, because

it raises its rate; but in as much as it reduces the total mass of labour

employed by a Ejvan capital, it reduces the factor of the number by

which the rate of surplus-value is multiplied to obtain its mass. Two

labourers, each working 12 hours daily, carlot produce the same mass of

surplus-value

as 24 who Work

only 2 hours, even if they could live on

air and hence

aid not have to work for themselves at all.', (55)

Althouch the

argument is unclear as

to what is the surplus labour-time of the

twenty-four

labourers,

the point is clear. While

the

::leans of production per man

employed have no 'finite' limit theoretically the mass of surplus-value

-produced by

a worker has an

impassable limit, namely the duration of the

workinr

; day. Further

as capitalism develops it becomes inerca:::iocfly mOre difficult

to'short3n

the necessary

labour-time by an increase in productivity.

T h e

great or the surplus-value appropriated by capital because of

.

1;h0 au :;mented productivity....or the smaller t".fte already established

- f r a c t i o n o f t h e w c ) r l d . . -

a-day which provides an equivalent for tlo-wo2::

-. c r s .

20 much the

smaller is

the increase in surplus-value which

eapitc.1 can obtain

from an increase in productivity. Suiplus-voaue increase, but in over

dininishinc

: proportion to productivity. To tae extent that capital is

alroady

.

.developed....so much the nor:: frihtfully must it increase product-

ivity even to expand (i.e. to

increase surplus-value) by a lessened

proportion - because its

barrier always

remains the proportion between

the fraction of tiv) day which exDreses necelary labour cmi the entire

uor dac:-day. Only within these b oundaries cum it move.' (66)

1

:arx given numerous arithmetical examples in the grjdrispo of the decreasin

effect an increase of productivity of labour will have , the smaller is the already

established part of the working day which provides an equivalent for the

workers. We

shall just give one of his extreme examples which makes the point very clear. Suppose

the necessary labour is

already reducedto 1/1000 of the working day. The total

Surplus-value would be

incr E_Ise the productivity of

labour by a thousand

99/1000-

so that the necessary part of the working day is 1/1 ;000,000

value

999,999

/1,000,000. Now the

increase in

surplus-value due to a thousand-fold

increase in productivity will be

000

1,000,000

o n c .

999 .

1000

1 - -

; Z Y 0 U T U

.

Z

1

1 0 0 1

( 6 5 )

bid

66)Gyundrisse D.246

_

and the total surplus


25/111

- 2-

So that a

thousand-fold increase in the

.

sroductivity of labour increases

surplus-value by less than

1/1col (or _

1

_0.

( 6 7 )

hile this rather

.

unrealistic

TO

4

.example only

'

brings VAC point home, the point can be made more Eanerally.

If a is the labour-time available to s ociety (assumed constant). Then

with

the usual notation

-

3 1 :

* If c is the

rate of

exploitation ( .

s /

v

)

Then

s =n 2)

So that s ( 1 .

1

) =

n (3)

( )

Differentiating

(3) with

respect

to time, we obtain

ds

1

dt

(4

)

That is;

1

do.

s (it

de .

=

(1-1-e)

it

(5

)

So that a unit incLase in

's will-require a

larer

increase in e, the larger

e is

already

So that

the

higher the rate of exuloitation (the less-time it requires to reproduce

the value of labour-D ower) the greatr mpt be the increase in the rat e of .

exploitation

in

order to

increase the mass of

Profits sufficiently

to compensate

for

the

. falling rate of profit. (68)

(67) ibid. p.244 See also p.2 39-47

(68) We can assume a

uniformly

incresing,

population

of (5) we would obtain

do

+,

(1+;)S

- 1+e)

ie dn

colst). Instead

(It

1

e

t

As s increases k .e

and

our result

is not

significantly

altered.

(1+e)s


26/111

The tendency of the rate of profit to fall is an expression of the incraSing

difficulty in raising the rate of exploitation sufficiently to satisfy the calf-.

expansion requiremonts of capital as capitalism progresses.

, The aunulation process involves a rise in the orcsanic composition of canit0.

a rise in the productivity of labour ard a relative dee:yeas (

absolute increase)

in the labour employed. These express themselves in a tendency of the rate of profit

to fall, although the mass of profits or surplus-value absolutely increases

and the rate of eploitation increases. This means,

'The progr

e

ss of the process of production and-accv. -m.ulation must

therefore, be no

y a '

,:rrollth of the mass of available and

appro

-

oriatod surplus labour and conso.ouently by a growni of the

absolute mass of profit appropriatea by the social capital...The same

laws, then, p r o du c e

for the social capital an increaso in the absolute

mass of profit and a falling rate of profit.' (69)

So loni2

as accumulation increases the mass of profits sulTiciontly to compensate

for the failing rate of profit, all is well. This is the case if capital ,r,:ows at

a faster into than the rate of profit falls. This only express

e s the fact that

capital of a id.-her er.

,-anic composition of capital mu.st

.

grow at a faster rate than

that of a lower compositio .

g to employ the name, let alone an incsod im:lount of labous:2-'

(70)

power.

,Besides the ilumnent'tendency, within the accumulation process, to chock the tendency

of the rate of profit to fall by an increase in the mass of profits there are other.

counteracting tendencies that can

a

pply temporarily. These are the increase in the

rate of surplus-value by lengthening the working-day or intensification of labour,

the pushing down of wages below their value, the cheapening of tho elements of

constant capital, and foreign tra&,:

. (71) The fall in the into of profit is,

therefore, net linear but in some periods is only latent coming to the fore more or

(69)

Capital Vol. III p.214. (The translation is taken from the C.H. Kerr ed.

Chicago 1909. Vol. III. p.256)

(70)

Theories

of Surplrs-Value Vol. II p.542

Cpital

. Vol. III p.218 and p.220

(71)

Although we can not

discuss tic -theory of imperialism hero it can only be

developed in relation to the theory of crisis. For a discussion of the

: f 1

,

:

lation of

accIlmulation and imperialismsee my review

.

article. I

plis!'4

Accumulation of Capital in the C.S.i4 Bulletin 2, 2 Au;,:st 1972. o.70 ff. See also

Caoital Vol. III. p.252-3.


27/111

loss strongly in other periods and appearing'in the form of a crisis cycle..

On this theory capitalism is always driven to a hi

g

her and hicher productivity

of social labour in order to produce sufficient surplus-value for the continuous

reproduction and expansion of the growing capital. But this process is a

contradictory one.

tThe contradiction ... consists in this that the capitalist mode

of production has a tendency to develop the productive forces

absolutely, repardless of value and of the surplus-value contained

in it and regardless of the social conditions under which capitalist

production takes place; while it has on the other hand for its aim

the preservation of the value of the existing capital and its self

expansion to the hiifnest limit (that is an aver accelerated growth of

this value).' (72)

Then the expansion of . .

production outruns its profitability, when existing cdnditions

of exploitation preclude a further profitable capital-expansion or what amounts to

the sane thing 'an increase of accumulation does not increase the mass of surplus-value

or profits, an absolute over-accumulation has occurred and the accumulation process

c o n e s

to a halt. This interruption of the accumulation or its-stagnation constitutes the

capitalist crisis. It represents an overproduction of capital with res

e t to the

d o

-

-ree of exploitation. From Vile point of view of profitability at this stage, existing

capital is at the same time too small and too lar7e. It is too large i n relation to

the existing surplus-value and its is not large - enough to overcome the lack of

surplusvalue. Capital has only been over-produced in relation to profitability.

is

is not a material overproduction forthe world in this respect in undor-capitalised.

This stresses onee again the central contra.iCtion between the commodity as a use-value

and as an exchange-v alue, between production foruse and that for profit.

There exists besides the Earxian theory of value and accumulation (of which the

second is only a more concrete development of the first)'no separate theory of

crisis.

( 7 4 )

As nattick has put it:

tHary's value theory of capital development is at once a Jgeneral

theory of accumulation and 'a special crisis theory; that is to say

. neither one nor the other can to dealt with senarately'.(75) .

(72) apital Vol. III p.244 (Translation Kerr ed. p.292. taken frog)

(73) . Nattick Harz and '1..eynps op. cit p.68

(74)

ee Rudi Schmiedc op.cit. p.165 for a discussion on this.

(75)

. Kattick op.cit. p.93


28/111

-9 -

Altholk

,

.-th the actual crisis hns to be explained out of the real movement

of capitalist production credit and competition,

(76)

it is the genenal tendencies

of the accumulation process itself and the. long-run tendency of the rate of

profit to fall that constitutes the basis of that explanation. These tendencies

have been analysed thronL .

h an understa

f the 'inner nature of cvq7intale. The

overproduction of capital arises out of the conflict between the increase and

development of the productivity of labour from a material standpoint and the

narrow basis and aim of that development under capitalist conditions of

production, i.e. the self-expansion of capital.

; . .L n c .

. .2 ,ri t .

al_itself. It is the fact that capital

and its self-expansion appear as, the star

. ;ing and closing point, as the motive

and aim of production; ti

lat production is merely production for

.e .

;

-,n) :Ltal

not 'vice versa, the means of production m(:,

,

re means for an ever expanding

system of the life process -

kr the benefit of t he cociet7,r of producers. The

unconditional development of the productive forces of socie ty-comen

continually into conflict with the limited - end, the self-expansion of the

existin:; capital .

(71

)

We have shown the tendency that capitalism has towards overproduction and

crisis without.considering competition. In the discussion co far it has also been

assumed *that all goods are aetnallv sold

. at their value and there are no realisation

difficulties;

(w3)

that is the tendency towards crisis and overproduction of capital

can be deduced independent of such considerations. In order to indicate why the

crises taixs the form of 'periodically reoccurring ex

-

Plosions' winth each cycle

tending to be more severe tllan the next, we need to 'discuss t: o role of the

crisis in restoring the conditio.n

.

.:3 for a new profitable expansion. It is here that

competition becomes a decisive factor in the Whole discussion.

With .a relatively decreasing mass of surplus-value in relation to the growing

mass of constant capital, competition for this decling mass becomes a vital element

in the accumulation process. Competition is ther esult of the struggle for profits

and extra-profits accompanying the rise in the productivity of labour. For those

first introducing new methods Of production can sell their cheaper produced commo-

dities above their price of production, and .

under their social value, (above their

individual value). Competition is the force that equilibrates differ .211; production

prices to a new social average value.

(70 T1 1 ,

29:yie :?

ol. II p.512

. (77) Capital Vol. III p.245 (Kerr ed. p.293)

(7a) This is not quite the sane as accepting Seys Ler for the purpose of devolopir'y

the lonf.:-to

-

nr. trend. Says Law is con=ned with the equality of an ox-nos-t

magnitude 'proceeds' to an ex-ante schedule 'ap,v

,-.7eg.ate sulml.y

-larl: assumes

the id.entity of iproceeds' and a,..r

.

re.;_cate value and both of these are

OX

,-

)O1;.

magnitudes. Sec

iaeTee_ Law _of _the_

ColuMbia

Univ. Ph

.D thesis 19,53. Univ. 1

,

licrofilm.s.

rborir hin:an

.

p.129ff.

For an inter-:.:sting; discussion on1CSrnL

JsJqf see Bernice Thoul in

Snonnacr a.

len (eds) Elssays

-

in :::collemic

.

:Chount. (RiAnd c a Lp, Ch:

.ca::o

196g) pp. 454-469.

.ts


29/111

'a fall in the rate of profit connected with accumulation necessarily

calls forth

a

competitive strzle. Compensation of a fall in thJ rata of

profit by a rise in the mass of profit applies only to the total social

capital and to the. big, firmly placed capitalists. The new additional

capital operating independently does not enjoy any such compensating conditions.

It must still win them and so it i3

that a fall in the rate of profit calls

forth a competitive stru7gle amongst capitalists, not vice versa' .(79)

Competition comes into its own in the crisis situat ion. The crisis while

representing an end to the accumulation process, is nevertheless the precondition

for its continuation on a hither level. In the crisis profitability of capitalist

production is restored, in principle, in a number of ways. Assuming no physical

destruction of capital takes place (either through lack of use of abandonment or .

destruction through war), the same quantity of use-value, of means of production,

before the crisis represents a smaller exchange-va lue of means of production

after the crisis through devaluation of constant capital. However, neither

the rate of surTaus-value nor the mass of surplus-value are affected as theyr elate

to the unaltered use-value of capital and hence to its unaltered productive capacity.

Hence the rate of profit will indrease because the same amount of surplus-value relaes

to a lower total capital. Clearly, this only holds once the expansionary process

has begun again and represents a redistribution of profits

(or

potcntial

profits) in

favour of those capitalists who have manmed to buy U p capital 'cheaply'. Secondly,

with the centralisation and restructuring of capital that takes place in

t h e

crisis

through competition, only the more productive capitals survive and allow for

a higher social

productivity

of labour with increased markets. It is this mechanism

which decreases the value of labour-power and thereby increases the rate of

erploitaticn and mass of sur

p

lus-value. Tho larger markets allow for incrosing

'economies of scale'.

Thirdly, this restructuring usually includes the abandoning of part of the 'east'

profitable and Often obsolete constant capital and as such frees the surviving

capital (in money or commodity form) for new, more productive investment. Fourthly,

duo t o the relative

surplus-population

(increase in uncnployment) wages, which

had a -

tendency to go above their va lue in.the period of prosperity previous to the

crisis are now temporarily pushed below their value.

Simultaneously,

the workin

z

.

j - d a y

(79) Capital

Vol. III p.251


30/111

can also be lengthened and the intensification of labour

can

be increased resulting

in an a ddition of surplus-value.

Further throu sfn 'rationalisations' in the labour-

force new methods and techniques of work, new r.ethods of production can be intro-

duced without the

'frictions' that would have taken place before the

'disciplining' aff

ct of the c -

JA:As On the labour-force.

All these factors :tTogether play a role in

the restoration of

profitability of

capital and this allows the accumulation process to continuo on a new hi-,711e,,K

. lvel.

The crisis

therefore removes the

temporary barrier to further accumulation but only

to set new limits on a higher level still. .

We have explained why competition has only

been

introduced att his

stage.

In

effect competition takes place throughout the

production. process

reflecting

the striving after surplus-value and tending to equalize profit rates, establishing

prices of production

and

driving the loss efficient

capitals out

of

business, But

iti3

only in the crisis that cowpetition really

. becomes 'a

l i f e : 2 1 1 d death strile.

'Unler all circumstances, a portion of the old capiteiwould be

compelled to lie fallow, to give up its capacity of capital and stop

acting and producin

:: value as such., The competitive struggle

would

decide what part would have to go into this fallow state. So long

as overythin Oes well, competition effects a practical brotherhood of

the capitalist class as we havo

seen

in the case of the average rate of

Profit,. so that each shares in tho common loot in pronortion to the

mnitude of his share of invostmont. But as soon as it is no lonzer

a

question of sharing profits, but of sharing losses, everyone tries to

roc::.uce his own share to a minimum and load as much as possible upon the

shoulders of some other competitor..:. competition then transfoims itself

into a fight of hostile brothers. The antagonism of the i.atcrests of the

individual capitalists

and

those of the carAtalist class as a

whole

then makes itself felt as previously the identity ofthese interests

innressod itself nraCtically as competition. (80)

The overproduction of capital, and therefore the crisis, was due to the fact that

accumulation and the expansion of production had outrun profitability. Given the

degree of

exoloitation.any further capital invested would not yield sufficient profits.

(80) Capital. Vol. III p 248 (Translation Kerr od..Vol. III p.297)


31/111

'

2 -

The crisis mechanism restructures capital and increases the rate of exploitation

so that anew expansiOn becomes possible. In this sense the capitalist crisis

can be regarded as the strongestcounteracting.temfcncy to the long

-run tendency .

of the rate of profit to fail. (81) The tendency towards 'breakdown' and stagnation

therefore takes the form of cycles due to the effects of the countertendancies of

which the actual crisis is an extreme case.

'Otherwise, it would not be the fall of the general rate of profit, but

rather its relative slowness, that would be incomprehensible. Thus,

the law acts as a tendency. And it

i s

only under certain circumstance,

and only after long periods that its effects become strikinCiy pronounced'.(82)

The. actual periodicity of crises Simply .stems from the ability of capitAism

to overcome the overproduction of capital, through changes in the conditions of

production which increase the mass of surpaus-value,and restore an adequate rate.

of exploitation relative to. existing ca pital. (83)

Whether the crisis will be successful in restructuring capital Co a greater

profitability clearly is not merely a narrow 'economic' question. nothing is more

clear in the crisis tha the wasteful and destructive side of capitalism. Its

'civilising' tendencies are seen to be bouhi; at an cmormous expense. The struggle

between

Capital and labour, the class-struggle in the widest s ense, becomes a strugle

about the system -

itself. The outcome of the struggle cannot be predicted, and. in

this sense 'no crisis is the final crisis' for capitalism. The 'crisis' is the

most poignant exprpssion of the 'disease' of the contradictions of capitalist

production but it is also the 'cure' the forcibly. established unity of elements that

have become independent'. (84)

(81)

udi Schmiec'aop. cit.p197.

(82) apital Vol. III. p.233

(63)

Hattick op.cit. p.73. The definite

crisis-cycle of

the last century, as Llattick say:-

is not directly related to the I,arxian

. theory..

(84) Theories of Surplus-Value Uol. II. p.513. In this sense as Earx says 'Permanent

crises do not exist' ib id. p.497.

That Marx clearly held to such position can be seen from his passage in the

Grundrisse, a. great deal of it written by ham in Enlish

'Hence the highest

development of productive power with the greatest expansion

of existing wealth will coincide with d epreciation ofcanital, dar_dation of tho

labourer, and a most straightened exhaustion of his vital

powers. These

contradictions load to explosions, cataclysms, crises, in which by morLentaneous

suspension of labour and annihilation of a great portion of capital, the latter

in violently reduced to the point, where it can ,?,o on

hereby it is enabled

(to) fully (employ) its productive powers with out coMmittin:L. suicide. Yet,

-these regularly recurring catastrophes load to their repetition on a hir

. : h e r

scale, and finally to its (capitals) violent overthrow .

. G r u n d : c i s s _ c i ) . 6 3 6


32/111

-33-

(4) Incect_yersons_of the Theory of Crisis

(a) The Possibility_pf Crisis Confused wit12 its

.

Causc,

There arc many rossibilities for disturba nces and crisis prone developments in

the circulation process of commodities arid capital. Karx discusses the circulation

process of capital in Volume 11, of Capital and many Y.

, ?..rxists have assumed that

the cause of crises lies in the circulation pTocess. In

he general

theory of accumu ation and crisis Marx assumes that all commodities are sojd at

their value and that there are no disturbancet in the process of circulation.

ilevertheless.the system is driven towards crises duo to the overproduction of

c a p i t a ] . .

In his critique of Ricardo's

theory of accumulation he 'drops the assumptions

that t

her e

arc no difficulties in the circulation process. He indicates the

ever prsent possibility of crises occasioned by the fact that the capitalist economy

.

is not

one of .

barter,

t h e e x c h a n c . x : o f products

against produc?.;s, but one of TAono - f i p : a

Ind money is not merely a medium of oxchano, but i S a store of Value

(abstract general social labour) in its function as a means of payment.

Marx pointed to two crucial features of the e:.:change of

commodities

t

h

at

contain within it the possibility of

crisis. They a r e t h e s o p : ' . a t i o n o f . s . 7 0 _ e _ a n l i

purchase

and the fact that money is used as a means of payment to

bridge t h e

The commodity

xists as a use-value and _nominally_ exists, in its price; as

an exchange-value. So-it is that in the pe_tamou'l

,

,2sis of the commodity the

sibiliI

of crisis exists. To realise its

price,

it must

be sold. The

1)ossible difficulty of

converting the coimodity into money(C-M)of selliat it, .. lavise[; from the fact that

the commodity must b'e turned into money

,but the money need

n o t b e i l l u a c

, diately turned

into a commodity (M-C). Sale and purchase can be separated. Ho one can s ell unless

someone else

purchases, but no one need purchase because he has jui

,

it sold. (Money

can

be hoarded).

We now consider money as a means of payment. If a particular commodity

cannot be

sold for some reason or other in a prticular tine:the producer of that

commodity

might not be able to pay his

debts etc.

This can mean that a whole

netviorIc

o f

mutual obligations and debts cannot be met, and therefore, the possibility of

crisis exists. These are what Harx calls the

forwA_Lossillilities of crisis. The

first fonl is possible without the

latter,

that is to say

s

crisis are possible Nithout

credit and without money serving as a means of payment. But the second f0174 is not .


33/111

3 4 *

possible without the first, i.e. t

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