MARXISM - CAPITAL REFINED
Capital refined - Introduction
Developing policies in the interests of working people calls for the precision about our enemy that Marx offered throughout Capital. For Marx, the practice of science required penetrating beyond appearances to specify the structured dynamics in the accumulation of capital. His critique isolated the forms and stages through which capital expands.
This sequence on ‘Capital refined’ introduces most of the distinctions that Marx drew. The material will be split into eight items:
After unpeeling these layers, the sequence wraps up by asking ‘what is capital?’ and ‘who can become a capitalist?’
The manifestations of money capital as merchants’, usurers’, finance and fictitious will be presented in a separate sequence, as will be more about value, surplus value, profit, turnovers and their rates.
The present items provide no more than a checklist for activists embarking on Marx’s investigations. Introductory remarks are no substitute for hard reading, pen in hand. More importantly, Marx’s distinctions carry a political significance. Without his insights, we are more likely to be misled about manoeurvrings by our enemy. Only the keenest understanding of capital will let workers develop the policies needed to advance our interests. Chatter about greed drags us under.
The objective of our inquiries will be the actuality of capital. That is what Marx went after. Yet, it is also worth knowing what Marx wrote and what his words mean. But materialists do not engage in bibliomancy. Hence, the items do not push any of the versions of Marx enshrined by this cult or that grouplet.
Before going on, three cautions need to be sounded:
Plenty of bourgeois scholars have traced the origins and spread of capitalism. Marxists attempt more than painting a different version of that backdrop. We take a revolutionary approach to history as shaped by a struggle between classes - every second of every day for control of labour-time.
instances of capital-in-general can be extracted from across the millenia. Marx
mentioned the opposable thumb and language. In terms of physical
objects, the Via Appia Antica in
To pursue elements found in all systems of production deflects our attention from the distinct pathways to exploitation in chattel slavery or feudalism. By contrast, in focusing on capital-within-capitalism, Marxists confront capital as a particular relationship of power. On one side of that contest are capitalists as the personification of capital. Against them are wage-slaves who embody labour-time.
Capital-within-capitalism emerged over long periods via usurer’s capital and merchant capital, taking centuries to become the dominant mode. Just as there is no capital-in-general so there is no generality of capital-within-capitalism. Instead, it passes through stages. Lenin made a stab at tracking one of those transitions in his 1916 pamphlet on Imperialism, the newest stage of capitalism. (see 4a below)
Similarly, capital-within-capitalism mixes chattel-slavery with wage-slavery either inside a nation-market-state, or globally. The domestic mode is always present. (see item 8 on production).
Marxists do not slice the past into chronological periods, such as by century, or rely on descriptors such as Late or Post-Modern. We distinguish the moments within capitalism by rearrangements of the dynamic elements in exploitation to accumulate.
is also specific to places, that is, for nation-market-states.
Capitalism operates differently in
We must remain alert to these specifics of time, place and manner, because it is through them that we struggle. Socialists need to stick to the truths about exploitation and power while responding in our practices to their peculiarities. In doing so, we dare not mistake the crux of capital expansion for one of its manifestations.
individual and aggregate
Marx meant particular. An individual
capital is rarely a personal fortune. More often, individual
is a collective, as in a firm/enterprise/business. These days, an individual
capital is likely to be a global conglomerate, such as
Socialists cannot gain support from workers if we overlook the particular ways in which exploitation, competition and accumulation operate for their individual employer. When we call to ‘open the books’ we need to be able to interpret their numbers. The necessity that all capitals have to expand takes many routes. To devise appropriate responses, activists therefore need to drill through the global economy, past sectors and industries and on to the circumstances of each firm. We need to identify the problems and possibilities facing each business.
For example, how does it raise its investment funds? Coca-Cola moved in and out of franchising to spread the costs of raising capital to expand distribution. A mining corporation waits years before it gets any earnings whereas the cash-flow of the franchisee of a fast-food outlet starts within minutes of opening the door. Construction firms risk bankruptcy because of the short roll-over periods for their funds; they usually depend on progress payments which arrive only if they have met three-monthly targets.
QANTAS is extremely unusual among airlines since it has to raise all of its money capital in the market whereas most of its competitors have some government shareholding to fall back on. The US-based carriers take refuge in Chapter 11 bankruptcy while continuing to trade while insolvent, which is a offence under Australian law.
Aggregate capital is the adding together of all the individual capitals within an economy, whether a nation-market-state or an imperium.
The difference between individual and aggregate is significant for responding to the crisis. What is advantageous for one or more individual capitals is not necessarily rewarding for their aggregation, and vice versa. Rolex wants its staff to earn zero, but dreams of customers with a million to spend a year each.
Recognising the gap between the needs of one firm and those of the system as a whole is part of nutting out socialist responses under the rule of capital. For instance, is it better for the working class if taxes go to recapitalize banks and thereby keep credit flowing through the economy, or does our class benefit more by allocating those monies to protecting jobs at individual capitals such as GM-H?
These questions do not come with ready-made answers. They do, however, highlight the dilemmas imposed on workers by the il-logic of capital. Under its rule, we must seek ways to use its internal conflicts against itself.
Now, we move past aggregate, and onto ‘social’ capital, which is not what Radio National says it is.
As a preliminary, we must clear away Marx’s concept of social capital from how the phrase ‘social capital’ has been popularised. Progressives tied the term ‘capital’ to ‘social’ in the sense of community connections. They adopted the lingo of the enemy in order to get a hearing for activities they fear are being marginalised by ‘free-market’ economic correctness. From Marx’s viewpoint, there is nothing sociable about social capital.
Waffle about this bourgeois version of ‘social capital’ has become so widespread that confusion is likely to follow from our using social for the sum total of capitals. Marx sometimes wrote about ‘social aggregate capital’. Perhaps we should too.
Social capital is the subject of Marx’s inquiry throughout Capital. Social capital covers the same collection of capitals as aggregate but Marx conceptualises social capital in qualitatively different ways.
Capital becomes capital-within-capitalism only when it is social. Once understood in this way, the term ‘social capital’ could be seen as tautological.
Any substitution of ‘aggregate’ for Marx’s social is acceptable only for as long as ‘aggregate’ speaks to its differences from ‘individual’, as illustrated in the previous item. However, to treat an individual capital as autarkic is to ignore capital as a relationship of power. To picture individual capitals as no more than their aggregation is to see them as potatoes in a sack. Social capital, however, is far from being a plate of mash. Within social capital, individual capitals retain their identity, yet penetrate each other.
Capitals interact through the exchanges that distinguish capital-within-capitalism from capital-in-general. The key pair are (a) the exchange of money for commodities to accumulate more capital, and (b) as one instance of (a), the exchange of money for labour power to add more value to produceever more commodities.
Surplus value displays its social character because not all of it ends up as profit for the original exploiter. Some of the surplus value extracted by that capitalist will be distributed around several others, mostly his service providers.
The social nature of capital manifests itself inside factories where a variety of machines operate as arms of one vast machine, forcing labour and materials through a society of continuous processes to emerge as ‘the commodity’. The global chains of supply and for distribution, are further expressions of this social nature.
Social capital is no abstraction from aggregate capitals, or an archetype for capital as some disembodied form. Hence, the expansion of social capital is attained through individual capitals, which are its material forms.
The survival of capitalism as a system depends on the expansion of social capital at the expense of certain individual capitals. The outlay of money to achieve more money to outlay weaves individual capitals into each other while competition casts them against each other. The pressure on every firm to attain the average rate of profit will cut funds off from those that do not meet that expectation. One result is the concentration of capital, our next topic.
Before going down that path, a few dictionary-style definitions are in order:
Concentration of economic power runs along two lines: the horizontal and the vertical. In horizontal integration, one firm buys up all competitors in that sector; in the vertical kind, a firm owns all the firms with which it does business, up and down the supply chain. The vertical prevents other capitalists getting a share of the surplus value produced by the firm’s wage-slaves. However, this internalising can become so cumbersome that much of the surplus value is eaten up by ‘bureaucratic rent’. In that case, the firm experiments with ‘out sourcing’. Monopolising is a cycle of these ‘ins’ and ‘outs’ , but always for capital accumulation.
Monopolising is usually some combination of both horizontal and vertical. Many of their benefits can be gained without ownership by price-fixing cartels such as Visy and Amcor on packaging, and by QANTAS over freight rates. Moreover, monopolising would be greater were it not for laws on banking and the media.
Instead of talking about ‘monopoly capital’, Marxist-Leninists should use ‘monopolising capitals’. Monopolising is written with the –ing to highlight that we dealing with a process, never a completed condition. Capitals are in the plural. It is very rare for only one firm to dominate for any length of time. Hence, we combine ‘ing’ with an ‘s’ to think in terms of monopolising capitals. Monopolising is, therefore, more accurately called oligopolising.
This item has raised a vexed question among Marxists. How can capitalism be both competitive and monopolistic? In brief, the answer is that the competition leads towards monopolising without ever installing a single firm with total and permanent dominance.
Bourgeois economists, for their part, are wedded to a model of perfect competition. In the 1930s, Joan Robinson demonstrated that imperfect competition is the rule, through which bouts of competition erupt to re-jig the pecking order among the monopolisers.
It is equally important to see that Lenin’s imperialism is not the same as colonisation, as his five-point summary should make clear, but rarely does:
Most of what goes on in the first four elements of Imperialism has happened inside or between metropolitan centres. To smash imperialism is to put an end to monopolising capitals at home, not just to block their neo-colonialism.
is no colonialism-in-general, just as there is no capital-in-general.
The carve-up of
Monopolising was the hidden side of the latest wave of globalisation, and is being accelerated by the current crisis. Indeed, one benefit to social capital from crises is to purge capitalism of weaker firms. We are not seeing that today with governments taking the toxic debts from financiers and auto-makers onto budgets.
money-capital, production-capital and commodity-capital
Commodity capital comes into two kinds. The raw materials, semi-finished goods and labour power that go into production capital are commodities just as much as are the items produced out of them, in farms or factories or on construction sites.
The money (M) goes into commodities (C) that pass through production (P) to make commodities (C¹) for sale to increase the money (M+). This circuit of money-capital is given by the symbols M>C>P>C¹>M+.
This circuit is the one available to social capital expands. However, individual capitals short-circuit the process whenever they can. First, they speculate in commodities without going to the trouble and expense of producing any. Here the formula is M>C>M+. Secondly, they speculate on money itself and leap from M to M+. In both cases, the increments to turn M into M+ still have come from those capitals that persist in exploitation according to M>C>P>C¹>M+.
Recognising the differences between money-capital, production-capital and commodity-capital is only a start in wisdom. The three forms are not just tied together, like beads on a string. The key to understanding them is in how they are integrated.
The second item in this series raised distinctions between capital-in-general and capital-within-capitalism. Now we go further into the latter.
First, the three forms of capital – M, P and C - exist only when they are parts of a process. None of the forms of capital is capital-within-capitalism if it is outside this metabolism. A miser’s horde is not capital, capital of the future.
In other words, each form of capital is capital-within-capitalism only while it is transmuting to the next form. Capital must be moving through the circuit in order to be capital-within-capitalism. Interruptions to that process mean that capital ceases to expand. That blockage suspends the form’s existence as capital-within-capitalism.
Hence, bank deposits that cannot find a borrower are not money-capital. A factory closed for the night is not production-capital. Vehicles in a car-dealer’s yard are not commodity-capital. They are latent or potential capital.
This treatment of capital defies bourgeois common sense which is based on the appearance of capital as if it were always and only capital-in-general.
The transmuting of capital through its forms is one of the two keys to understanding Marx’s analysis. The other key is ‘variable’ capital, discussed in Item 6 below. Before proceeding to that pivotal aspect, a political caution will be interposed.
the three circuits in political practice
in the form of a book entry for money-capital
can now flit around the world at a keystroke. Capital in the form of
consumable commodities jet
between continents. Capital in the form of production commodities have
long been made in order to shipped around the globe to producers,
whether in manufacturing, transport, agriculture or construction. By
contrast, General Motors today has to think twice before shifting its production-capital
[These distinctions are but some of the easier to grasp differences between what Marx details in Volume Two as Department I and Department II, which we won’t investigate further here.)
different branches of the same form of capital also have distinct
capacities to move. It is easier for Pacific Brands to ship its sewing
during a crisis of the accumulation of capital, the plant and equipment
becomes worth little more than scrap metal. Excess capacity is so great
that a firm could buy up abandoned production capacity in
Emerging from the circuit with a larger quantum of money capital is not an end in itself. On the contrary, the aim is to get that extra money to buy more commodities to throw into expanded production …and so it goes …. round and round
The expansion of money-capital from M to M+ happens because of the appropriation of surplus value. To maintain our focus on capital, items presenting ‘value’ and ‘surplus value’ are in another series. This convenience in exposition risks deflecting attention from the actualities of exploitation but that weakness is countered by our now distinguishing variable from constant capitals.
variable and constant
Before going there, readers will have to take it on trust that our getting clear the distinctions between variable and fluid (or circulating) and between constant and fixed is essential. Failure to do so helps bourgeois ideologues to conceal the exploitative nature of the relations between capital and labour.
Variable capital starts life as the antithesis to capital in any its forms. This antagonism arises because variable capital enters the circuits of expansion as labour power. Capitalists buy this commodity from wage-slaves. As a result of that exchange, labour power becomes a form of capital.
At first, the notion of labour becoming capital seems absurd. Yet, this transmutation counts for most in the expansion of capital. None of the practices sketched in this series could exist without this turning of human capacities into capital to oppress their bearers. Here is the crucible of alienation and reification.
Labour-power starts as a commodity owned by wage-slaves. When we sell it, it becomes variable capital. That capital is then embodied in produce reappearing as a different kind of commodity-capital, one now owned by the capitalist.
Marx calls ‘labour power’ variable capital because it alone can produce more value than has gone into producing its value. That is to say, labour power varies the sum of the values of all the other commodities that are purchased for production capital and which come out of the production process as commodities to be sold.
Wage-slaves use money-wages to buy the bulk of consumable commodities. Our purchases are necessary to reproduce the labour power that we need to sell in order to put food on the table. The capitalists need us to buy these commodities so they can realise the surplus value lodged in them. After that exchange some profit can reach the capital that appropriated the surplus value.
To exist, labour needs the use values embedded in commodities just as capital needs to realise a profit through their sale. Only then can social money-capital expand.
Constant capital stands in contrast to variable capital. Constant capital covers the other means of production - plant and equipment, raw materials, semi-finished goods and ancillaries such as electric power that go into the production form of capital. Marx called them constant because, by themselves, they can do nothing to expand the values that went into their production. At most, they add the same value to the new values as they brought.
All the components of constant capital, and all of the variable capital, end up together in commodity-capital. However, they get there in different ways, and at differing rates, as we shall see in the next item on fixed and fluid capitals.
fixed and fluid
Hitherto, these items in refining capital have presented each component in Marx’s critique of political economy in ways that have not required knowledge of concepts yet to be explained. Now, it is necessary to indicate the importance of turnover times without stopping to explore them in detail.
The money-capital that pays for plant and machines (means of production) takes years to turnover. The bulk of the value embodied in this production capital does not enter into each circuit of capital expansion. Marx attached fixed to this element of production-capital.
Fixed is not a question of immobility. A railway track and the engine that runs on it are equally fixed capital because they both yield up their value very slowly.
To repeat: Marx wrote about fixed capital for the form embodied in plant and machinery. Only a small portion is transferred by wear and tear to each item of produce. In other words, fixed capital has a very long turnover time.
By contrast, each firm needs to have ready access to funds to pay for its raw materials and wages. The turnover times for those elements can be as brief as a working day. Marx calls this capital fluid or circulating.
The value that passes out of fixed capital into the production of commodities got there by previous circuits of expansion, that is, by the accumulation of value from some earlier exploitation of labour-power.
All capital derives from the wealth of nature congealed in a multiplicity of forms through the application of human capacities.
Now for the even harder part:
Our penetration of the connections and disjunctures between fixed and fluid can be strengthened by relating them to variable and constant.
> all fixed capital is constant capital. Put another way, fixed capital cannot add more value (that is, labour time) than went into its production.
> only some constant capital is fixed. For example, plant and machinery are both fixed and constant. However, the bulk of constant capital is fluid. Raw materials, semi-finished goods and ancillaries such as water and electric power are either absorbed into, or used up by, commodities, which then circulate in search of money.
> Most fluid capital is constant. The constant elements in fluid capital supply the physical form in which the variable capital (that erstwhile labour power) can go about as commodity-capital in order to return as a larger quantum of money-capital.
> all variable capital is fluid. All labour power (variable capital) passes into the commodity-capital produced to venture forth in order to yield a larger sum of money-capital.
Variable capital is the element that makes this expansion possible. All the other elements exchange – on average - at their values.
production and productive
Hence, money-capital becomes productive when it goes into production-capital but not when it is spent on champagne baths. Yet not all of the production-capital, or of the money capital, is productive of surplus value. Only the variable component of production capital adds more value than it brings to the making of commodities. (Item 6 above.)
Two disputes arise when this definition of productive is presented. One is a technical question which we won’t interrogate here. Suffice it so say that the point at issue is illustrated by asking whether the work of an Archbishop or an advisor to Gillard is productive of surplus value, or do they merely re-circulate the surplus value produced and realised elsewhere? Marx says ‘No’, they do not add value. Nonetheless, he accepts that train-drivers can add surplus value. Much ink has been spilt over whether the clerks who sell train tickets also contribute surplus value. We might leave that puzzle till after the revolution.
The question of un-productive labour has a second face. Bourgeois feminists get upset on hearing that domestic labour is unproductive. It seems not to occur to them that the domestic labour of a male who repairs his own car is also unproductive. Bourgeois ideologues stumble when separating sentiment from science. The matter of un-productive labour has to be considered from the vantage point of capital-within-capitalism and not as a-historical moralising.
No activity is productive or un-productive by its nature. Its designation is decided by its role in the capitalist relations of power. Indeed, the human capacities that go into domestic labour – whether cooking or sewing - become productive when their providers present them as labour power at a cafe or sweatshop. The housewife who was un-productive in her own home becomes productive by performing comparable tasks to add value for the woman who exploits her.
The bourgeoisie assume that being ‘unproductive’ is a Bad Thing. If ethics enter into the debate, surely it is productive labour which is malignant because the production of surplus value requires exploitation.
In addition, domestic labour is essential to the reproduction of the labour-power sold by wage-slaves. The performance of tasks at home, such as growing vegetables, building one’s own house and caring for children, contributes to the reproduction of labour power, on a daily basis and across generations. These efforts keep down living expenses and, hence, cut the socially necessary costs of reproducing labour power. Therefore, un-productive domestic labour indirectly benefits the expansion of capital by reducing wages. At the same time, that household production inhibits capital expansion by supplying use values outside the realm of exchange values; self-sufficiency limits the realisation of any profit on the surplus value embedded in the commodity-capital. In this sense, household labour can be seen as anti-productive as well as un-productive.
Capital refined - a reprise
What is capital? Who is a capitalist?
In asking ‘what is capital?’, this item seeks to clear away three misconceptions. After that, we consider the relevance of intent in becoming a capitalist. This series concludes by pointing to the critical mass of capital that is essential to transform any employer into a personification of capital.
1. Three common mistakes concern: a. micro-loans; b. home ownership, and c. your toothbrush:
The factories in which toothbrushes are made, all the toothbrushes in all the warehouses and all the toothbrushes in all the supermarkets are property. On the other hand, the toothbrushes in our bathrooms are possessions. Property is productive of surplus-value: a possession is not. Only a fool or a liar can believe that owning a toothbrush factory is the same as owning your own toothbrush. Socialism is the collective ownership of property, not of possessions. Of course, the volume of needed possessions will be less.
2. No one can become a capitalist of and by one’s own efforts. A wannabe capitalist must exploit others. But employing a few others is not the same as being the personification of capital. Four employees are likely to produce enough surplus value for one employer and dependents to live without working. Yet four wage-slaves are unlikely to produce enough surplus value for their employers’ money-capital to go on expanding. If Grollo had done no more than run a single truckload of cemintistas, Grocon would not exist.
3. To get up and running as the personification of capital, an employer needs access to vast quantities of money-capital to produce more production goods. The capitalist needs a reserve of all the forms of capital: money, production and commodity.
arrived in the late 1920s and spent more than a decade labouring in
forestry work-camps around
His sons had long harboured that intention, and the change from a firm supporting his family into a business for the self-expansion of capital had taken place years earlier. Loui did not foresee what his employment of labour had wrought.
contrast, before Franco Belgiorno-Nettis had arrived in