Ideas to Make a Difference: No. 4: Capital

Submitted by AWL on 26 July, 2004 - 12:12

By R. F. Price

Marx devoted his life and health to the study of Capital. Building critically on the work of the classical economists, he aimed to set out a scientific understanding which would help the proletariat to conquer political power and radically transform society.
His initial plan included volumes on the State, international trade and the world market and crises, volumes which were never written [Mandel.27-8].

Following the classical economists in recognising labour as the source of all wealth Marx clarified the process by introducing a number of distinctions. He began, in the first chapter of Volume 1 of Capital, with a discussion of 'The Commodity', something produced primarily for sale, distinguishing 'the substance of value', its 'use-value', from 'the magnitude of value', or its 'exchange value'. e.g. labour embodied in the substance of a chair, has 'use-value'. It is used for sitting on. But its exchange value, expressed in money, allows it to be equated with any other commodity on the market.

Another important distinction is that between surplus labour and surplus value, the form it takes only under capitalism. All class-divided societies have been based on the appropriation of surplus labour by the exploiting class. In pre-capitalist societies this has often taken the form of rent or taxes, extracted by political means, essentially by force. Under capitalism this process, now economic, became mysterious and difficult to penetrate. Marx showed that exploitation lay in the difference between the value of the commodity which workers sell to Capital, their ability to work, or "labour power', and the value of the work they actually perform. The value of the workers' labour power is largely determined by that of the 'socially necessary labour', the labour which enables the labourer to live and reproduce, a value which will vary in different societies and at different times. This difference, or surplus labour, appropriated in capitalist societies in the form of surplus value, forms the basis for the accumulation of Capital. But only workers who directly contribute to the creation of new values produce surplus value. Other workers, essential to the functioning of society, (workers in wholesale and retail business; teachers in government schools; civil servants, etc.) perform surplus labour and are thus also exploited.

While all this defines the actors and sets the stage it does little either to explain past history or to prepare us for the future. In attempting to do this we must move from the more familiar Vol.1 of Capital to Vols. 2 & 3. There Marx introduced a number of ideas, among them that the relentless drive to accumulate capital which he noted in the first volume leads to periodic crises of overproduction; and that there is a tendency for the rate of profit to decline over the years. Ernest Mandel has applied Marx's ideas to produce an understanding of the rather different contemporary economic world which Mandel calls Late Capitalism. He criticises previous marxists for concentrating on a single variable and argues that Marx's method was to study the interactions of a number of variables. Most important of these, he claims, are: the organic composition of capital; the distribution of constant capital between fixed and circulating capital; the development of the rate of surplus value; the development of the rate of accumulation; the development of the turn-over time of capital; and the development of the relations of exchange between the two Departments.

Finally, two points are important. Marx understood the Capital System as a world system from its beginning in the world market. Capitalism, in which everything, including labour power, is treated as a commodity, and where 'the drive for profit is the fundamental regulatory force of production' he saw as a phase which had come into being and would pass away. But that passing away would be the result of prolonged process of interaction between economic events and class struggle.

READING: Ernest Mandel's Introductions to the Penguin Edition of the 3 vols. of Marx's Capital.

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