“It is capitalist accumulation itself that constantly produces in direct relation to its own energy and extent, a relatively redundant population, i.e. a population which is superfluous to capital’s average requirements for its own valorization, and is therefore a surplus population.” p. 782
“The working population therefore produce both the accumulation of capital and the means by which it makes itself superfluous and it does this to the extent that it is always increasing.” p. 783
The industrial reserve army belongs to capital just as surely as if it had bred it at its own cost. It creates a MASS OF HUMAN MATERIAL ALWAYS READY FOR EXPLOITATION in the interests of capitals valorization requirements. p. 784
Marx, Capital, Vol. 1, Ch. 25
Thanks go to Comrade John Ayers of the Socialist Party of Canada for compiling these apt extracted quotes in reader friendly size.
– Credit has been a powerful influence on the development of capitalist production. Marx writes,
” If the credit system appears as a principal lever of overproduction and excessive speculation in commerce, this is simply because the reproduction process, which is elastic by nature, is now forced to its most extreme limit; and this is because a great part of the social capital is applied by those who are not its owners, and who therefore proceed quite unlike owners who, when they function themselves, anxiously weigh the limits of their private capital. This only goes to show how the valorization of capital founded on the antithetical character of capitalist production permits actual free development only up to a certain point, which is constantly broken through by the credit system. The credit system hence accelerates the material development of the productive forces and the creation of the world market, which is the historical task of the capitalist mode of production to bring to a certain level of development, as material foundations for the new form of production. At the same time, credit accelerates the violent outbreaks of this contradiction, crises, and with these the elements of dissolution of the old mode of production.”
(Capital, volume III, p 572 in the Penguin Classics edition.)
Credit has now assumed such an important role in capitalism that it’s safe to say without it, the system could not function in any meaningful way.
” Apart from the joint -stock system – which is an abolition of capitalist private industry on the basis of the capitalist system itself, and which destroys private industry to the same degree that it spreads and takes over new spheres of production – credit offers the individual capitalist, or the person who can pass as a capitalist, an absolute command over the capital and property of others, within certain limits, and, through this, command over other people’s labour. It is disposal over social capital, rather than his own, that gives him command over social labour. The actual capital that someone possesses, or is taken to possess by public opinion, now becomes simply the basis for a superstructure of credit. This is especially the case in wholesale trade, and the greater part of the social product passes through this. All standards of measurement, all explanatory reasons that were still more or less justified within the capitalist mode of production, now vanish. What the speculating trader risks is social property, not his own. Equally absurd now is the saying that the origin of capital is saving, since what this speculator demands is precisely that others should save for him. (As recently the whole of France saved up one and a half thousand million francs for the Panama swindlers – F.E.)”.
(Capital, Volume III, page 570)
Note the term “social” here that shows that capital and what it produces is a social property, not individual and that it is the labour and product of us all that is expropriated, showing the capitalist system is based on theft.
– Marx describes interest as follows,
” Let us take the average annual rate of profit as 20 per cent. Under average conditions, then, and with the average level of intelligence and activity appropriate to the intended purpose, a machine with a value of 100 pounds that is applied as capital yields a profit of 20 pounds. Thus a man who has 100 pounds at his disposal holds in his hands the power of making this 100 pounds into 120 pounds, and thus producing a profit of 20 pounds. What he possesses is a potential capital of 100 pounds. If this man makes over his 100 pounds for a year to someone else, who actually does use it as capital, he gives him the power to produce 20 pounds profit, a surplus-value that costs him nothing and for which he does not pay an equivalent. If the second man pays the proprietor of the 100 pounds a sum of 5 pounds, say, at the end of the year, i.e. a portion of the profit produced, what he pays for with this is the use-value of its capital function, the function of producing 20 pounds profit. The part of the profit paid in this way is called interest, which is nothing but a particular name, a special title, for a part of the profit which the actually functioning capitalist has to pay to the capital’s proprietor, instead of pocketing himself.”
(Capital, volume III, page 460).
Interest, then, is simply a part of profit handed by the capitalist to the owners of money advanced to him for which he pays fee. It is, then, free money for the owner of the money paid for by the unpaid labour of the worker.
Marx described the process of globalization of production one hundred and fifty years ago and saw the direction it would take
…”And instead of producing for the individual merchant or for particular customers, the weaver now produces for the entire world of commerce…Trade now becomes the servant of industrial production, for which the constant expansion of the market is a condition of its existence. An ever- increasing mass-production swamps the existing market and thus works steadily towards its expansion, braking through its barriers. What restricts this mass production is not trade (in as much as this only expresses existing demand), but rather the scale of the capital functioning and the productivity of labour so far developed.
The industrial capitalist is constantly faced with the world market; he compares and must compare his own cost prices not only with domestic market prices, but with those of the whole world. Previously, this comparison was almost exclusively the task of merchants and ensured commercial capital its mastery over industrial.”
(Capital, volume III, pp 454/455).
In other words, in order to exist, production must be constantly expanded. When capitalism consisted of small pockets of industrialization in Western Europe, expansion was indeed manageable but as the scale of capitalism covered the whole world, such expansion necessarily has great and irreversible impact on out environment, totally unnoticed by capital.
– The basis and main tenets of capitalism never change and are, in fact, unable to do so given the nature of the system. Marx noted in his time,
“And whereas in the sixteenth century, and partly still in the seventeenth, the sudden expansion of trade and the creation of a new world market had an overwhelming influence on the defeat of the old mode of production and the rise of the capitalist mode, this happened in reverse on the basis of the capitalist mode of production, once it had been created. The world market itself forms the basis for this mode of production. On the other hand, the immanent need that this has to produce on an ever greater scale drives it to the constant expansion of the world market, so that now it not trade that revolutionizes industry, but rather industry that constantly revolutionizes trade. Moreover, commercial supremacy is now linked with greater or lesser prevalence of the conditioned for large -scale industry…. In India, moreover, the English applied their direct political and economic power, as masters and landlords, to destroying these small economic communities.”
(Capital volume III page 451)
It’s a preview of globalization and a snapshot of methods applied to get there.
Commercial capital is the precursor of production/industrial capital andwas the source of the primitive accumulation of capital necessary for the establishment of capitalist production. Marx writes,
“ Within the capitalist mode of production – i.e. once capital takes command of production itself and gives it a completely altered and specific form – commercial capital appears simply as capital in a particular function. In all earlier modes of production, however, commercial capital rather appears as the function of capital par excellence, and the more so, the more production is directly the production of the producer’s means of subsistence. Thus there is no problem at all in understanding why commercial capital appears as the historic form of capital long before capital has subjected production itself to its sway. Its existence, and its development to a certain level, is itself a historical precondition for the development of the capitalist mode of production (1) as precondition for the concentration of money wealth, and (2) because the capitalist mode of production presupposes production for trade, wholesale outlet rather than supply to the individual client, so that a merchant does not buy simply to satisfy his own personal needs, but rather concentrates in his act of purchase the purchase acts of many. On the other hand, every development in commercial capital gives production a character oriented ever more to exchange-value.”
(Page 444, Capital, Volume III)
“ There can be no doubt – and this very fact has led to false conceptions – that the great revolutions that took place in the sixteenth and seventeenth centuries, along with the geographical discoveries of that epoch, and which rapidly advanced the development of commercial capital, were a major moment in promoting the transition from the feudal to the capitalist mode of production. The sudden expansion of the world market, the multiplication of commodities in circulation, the competition among the European nations for the seizure of Asiatic products and American treasures, the colonial system, all made a fundamental contribution towards shattering the feudal barriers to production.”
(Page 450, Capital, volume III)
– The capitalist system has developed many innovations to keep production functioning and growing. Commercial capital, for instance enables the producer to have continuous production as follows,
” If the linen producer had to wait until his linen had really ceased to be a commodity, until it had passed to its final buyer, the productive or individual consumer, then his reproduction process would be interrupted. Or, in order not to interrupt it, he would have to restrict his operations, transform a smaller part of his linen into yarn, coal, labour, etc., in short into the elements of productive capital, and retain a greater part of this as a monetary reserve. This would make it possible for one part of his capital to be present on the market as a commodity, while another part carried on the production process, so that when this latter part entered the market as a commodity, the other part would flow back in the money form. This division of his capital is not abolished by the intervention of the merchant. But, without the latter, the part of the circulation capital that exists in the form of a money reserve would always have to be greater in proportion to the part employed in the form of productive capital, and the scale of reproduction would be accordingly restricted. Instead of this, the producer can now regularly apply a greater part of his capital in the actual production process, leaving a smaller part as a money reserve.”
*Thus production is made much more continuous with the help of merchant capital. Note, however,
“Commercial capital is nothing more than capital functioning within the circulation sphere. The circulation process is one phase in the reproduction process as a whole. But in the process of circulation, no value is produced, and thus also no surplus-value.”
(Capital volume III, pages 387 and 392).
– Socialists hold that the whole of the working class is exploited by the whole of the capitalist class in that surplus value is extracted from or aided in extracting from the unpaid labour of the worker, no matter what his job may be. Also, production is a communal effort. Automobiles are not produced by auto workers alone but by a myriad of workers in society that extract, transport, and refine raw materials and they, in turn, are supported by a host of support workers, and so on. Even the merchants’ workers are involved in the process even though, as reported above*, commercial capital does not produce surplus value.
” It is only by way of its function in the realization of values that commercial capital functions as capital in the reproduction process, and therefore draws, as functioning capital, on the surplus-value that the total capital produces. For the individual merchant, the amount of his profit depends on the amount of capital that he can employ in this process, and he can employ all the more capital in buying and selling the greater the unpaid labour of his clerks. The very function, by virtue of which the commercial capitalist’s money is capital is performed in large measure by his employees, on his instructions. Their unpaid labour, even though it does not create surplus-value, does create his ability to appropriate surplus-value, which, as far as this capital is concerned, gives exactly the same result; i.e. it is its source of profit. Otherwise the business of commerce could never be conducted in the capitalist manner, or even on a large scale.”
(Capital, Volume III, page 407, Penguin Classics edition)
Exploitation of labour
– On the exploitation of labour, Marx writes,
“ What is a working day? What is the length of time during which capital may consume the labour-power whose daily value it has paid for? How far may the working day be extended beyond the amount of labour-time necessary for the reproduction of labour-power itself? We have seen that capital’s reply to these questions is this: the working day contains the full 24 hours, with the deduction of the few hours of rest without which labour-power is absolutely incapable of renewing its services. Hence it is self-evident that the worker is nothing other than labour-power for the duration of his whole life, and that therefore all his disposable time is by nature and by right labour-time, to be devoted to the self-valorization of capital. Time for education, for intellectual development, for the fulfillment of social functions, for social intercourse, for the free play of the vital forces of his body and mind, even the rest time of Sunday (and that in a country of Sabbatarians!) – what foolishness! But in its blind and measureless drive, its insatiable appetite for surplus labour, capital oversteps not only the moral but even the merely physical limits of the working day. It usurps the time for growth, development and healthy maintenance of the body. It steals the time required for fresh air and sunlight. It haggles over the meal times, where possible incorporating them into the production process itself, as coal is supplied to the boiler, and grease and oil to the machinery.”
(Capital Volume III, pages 375/ 376).
Marx continues in this vein with some damning and important points – worth reading. If anyone tells you that the worker is not explited, perhaps you can quote from these pages and point out that the vile conditions are still alive and well around the world and heading back in that direction in the ‘rich’ countries!
On productivity, Marx writes,
“ The value of a commodity is determined by the total labour-time contained in it, both past and living. The rise in labour productivity consists precisely in the fact that the share of living labour is reduced and that of the past labour increased, but in such a way that the total sum of labour contained in the commodity declines; in other words the living labour declines by more than the past labour increases.
The past labour embodied in the value of a commodity – the constant portion of capital – consists partly of the wear and tear of the fixed capital and partly of the circulating constant capital that goes completely into the commodity; raw and ancillary materials.
The portion of value deriving from raw and ancillary materials must fall with the [rising] productivity of labour, since, as far as these materials go, this productivity is precisely expressed in the fact that their value has fallen. And yet it is precisely a characteristic of rising labour productivity that the fixed portion of the constant capital should experience a very sharp increase and with this also the portion of value that it transfers to the commodity as wear and tear.
For a new method of production to prove itself as a genuine advance in productivity, it must transfer a smaller additional share to the individual commodity for depreciation of the fixed capital than the portion of value that is deducted because less living labour is spared; it must in other words reduce the value of the commodity.”
(Capital Volume III, pages 369/370).
This process is a key to successful capitalist production – the constant striving for productivity to reap not just surplus-value but relative surplus value in addition, i.e. that s-v that is won by the first enterprise to use particular method of production before his competitors catch up. It is just one more alienation of labour from the product.
The rate of profit
On the rate of profit,
“ The rate of profit, i.e. the relative growth in Capital, is particularly important for all new off-shoots of capital that organize themselves independently. And if capital formation were to fall exclusively into the hands of a few existing big capitals, for whom the mass of profit outweighs the rate, the animating fire of production would be totally extinguished. It would die out.
It is the rate of profit that is the driving force in capitalist production, and nothing is produced save what can be produced at a profit. Hence the concern of the English economists over the decline in the profit rate.
If Ricardo is disquieted even by the very possibility of this, that precisely shows his deep understanding of the conditions of capitalist production. What other people reproach him for, i.e. that he is unconcerned with ‘human beings’ and concentrates exclusively on the development of the productive forces when considering capitalist production – whatever sacrifices of human beings and capital values this is bought with – is precisely his significant contribution.
The development of the productive forces of social labour is capital’s historic mission and justification. For that very reason, it unwittingly creates the material conditions for a higher form of production.”
(Capital Volume III, p 368).
Thus profit before people’s needs is the lifeblood of capitalism; capitalism has done its job; now is the time for ‘ a higher form of production’, i.e. socialism.