The Logic and Scope of Capital, Volumes II and III from Raya Dunayevskaya's 1978 pamphlet Marx’s Capital and Today’s Global Crisis.
THE LOGIC AND SCOPE OF CAPITAL, VOLUMES II AND III
“All science would be superfluous if the appearance, the form and the nature of things were wholly indentical.” (CAPITAL, Vol. Ill).
Political economy has produced two theories between which it oscillated: (1) that production creates its own market; and (2) that it is impossible for the worker “to buy back” the products he himself produced. Marx's great contribution consisted in dialectically combining these. The dominant feature remained the fact that production did create its own market. But this did not negate the existence of under-consumption. It merely showed that within capitalistic production there resides a disregard for the limits of consumption.
The outstanding characteristic of Volume II, whose subject is the process of circulation, is its demonstration that “realizing surplus value,” that is, selling, is not the problem. The significance of the first two parts dealing with the metamorphoses and turnover of capital lies in the analysis that the very continuity of the process of circulation involves the sphere of reproduction. Thus, even when Marx’s point of departure is the market, reproduction is of the essence.
Reproduction, he states, must be posed “in its fundamental simplicity,” that is to say, it is necessary not to get lost in “a vicious circle of prerequisites”–of constantly going to market with the products produced and returning from market with commodities bought.
1) The Two Departments of Social Production: Means of Production and Means of Consumption
To cut through the tangle of markets, Marx divides the entire social product into two, and only two, main departments: Department I produces means of production, and Department II produces means of consumption.1 The division is symptomatic of the class division in society. Marx categorically refused to divide social production into more than two departments, for example, a third department for the production of gold, although gold is neither a means of production nor a means of consumption, but rather a means of circulation. That is an entirely subordinate question, however, to the basic postulate of a closed society in which there are only two classes and hence only two decisive divisions of social production. It is the premise that decides the boundaries of the problem. The relationship between the two branches is not merely a technical one. It is rooted in the class relationship between the worker and the capitalist.
Surplus value is not some disembodied spirit floating between heaven and earth, but is embodied within means of production and within means of consumption. To try to separate surplus value from means of production and from means of consumption is to fall into the petty-bourgeois quagmire of underconsumptionism. It is impossible to have the slightest comprehension of the economic laws of capitalistic production without being oppressively aware of the role of the material form of constant capital. The material elements of simple production and reproduction–labor power, raw materials and means of production–are the elements of expanded reproduction. In order to produce ever greater quantities of products, more means of production are necessary. That, and not the “market,” is the differentia specifica of expanded reproduction.
Marx established that the social product cannot be “either” means of production “or” means of consumption. There is a preponderance of means of production over means of consumption. Marx’s point here is that the bodily form of value predetermines the destination of commodities: iron is not consumed by people but by steel; sugar is not consumed by machines but by people. Value may be indifferent to the useful form which holds it, but it must be incorporated in some use-value to be realized. Just because the capitalist is only interested in surplus value (profit) doesn't mean that he can disembody it from the article in which it is embodied.
The division of the whole product into but two departments is not a hypothesis. It is a fact. It not only is so. It must be so, for the use-values produced are not those used by workers, nor even by capitalists, but by capital. We can see this most clearly in this country, for example, where ninety per cent of pig iron is “consumed” by the companies which produce it; fifty per cent of the “market” for the products of the steel industry is the transportation industry. Where all utilitarian economists were floundering in talking of use-values because they were talking of articles for consumption, Marx shows that the use-value of the means of production shows how important is “the determination of use-value in the determination of economic orders.”2 Under capitalism, the means of production form the greater part of the two departments of social production and, therefore, also of the “market.” That is what Marx called “the real being of capital,” and that is why the market was not the problem.
The consumption market is limited to the luxuries of the capitalists, and the needs of the workers, paid at value. It cannot be larger. The only market that can expand beyond the limits of the workers paid at value is the capital goods market. Means of production literally shoot up to the sky. To illustrate this for both simple and expanded reproduction, Marx devised his famous formulas which show constant capital to be greater than variable capital and surplus value.
To understand the formulas one must comprehend the premise upon which they are built: a closed capitalist society, that is, an isolated society dominated by the law of value. For Marx, the fundamental conflict in a capitalist society is that between capital and labor; all other elements are subordinate. If this is so in life, then the first necessity in theory is to pose the problem as one between the capitalist and the worker, purely and simply. Hence, the assumption of a society consisting only of workers and capitalists. Hence, the exclusion of “third groups” and, as he states repeatedly, the exclusion of foreign trade as having nothing to do fundamentally with the conflict between the worker and the capitalist.
A capitalist society is distinguished from all previous societies by being a value-producing society. The law of value has nothing in common with the fact that in other class societies the worker was paid his means of subsistence. Under capitalism the thirst for unpaid hours of labor comes from the very nature of production and is not limited by the gluttony of the master. Value, the socially necessary labor time needed to produce commodities, is constantly changing due to the unceasing technological revolutions in production. This is a never-ending source of disturbance in the conditions of production as well as in the social relations, and distinguishes capitalism from all other modes of production. Marx’s isolated capitalist society is dominated by this law of value, and Marx does not let us forget that this law is a law of the world market. “The industrialist always has the world market before him, compares and must continually compare his cost prices with those of the whole world, and not only with those of his home market.”3
Thus, while Marx excludes foreign trade, he nevertheless places his society in the environment of the world market. These are the conditions of the problem.
Marx’s formulas were designed to serve two purposes: (1) on the one hand, he wished to expose the “incredible aberration” of Adam Smith, who “spirited away” the constant portion of capital by asserting that “in the final analysis” it dissolved itself into wages; (2) on the other hand, Marx wanted to answer the underconsumptionist argument that continued capital accumulation was impossible because of inability to sell, that is, because of “overproduction.”
Smith's “fundamentally perverted analysis”4 became part of the dogma of political economy because it dovetailed with the class interests of the capitalists to have that error retained. If, as Smith maintained, the constant portion of capital “in the final analysis” dissolved itself into wages, then the workers need not struggle against a “temporary” appropriation of the unpaid hours of labor. They need merely wait for the product of their labor to “dissolve” itself into wages. Marx proved the contrary to be true. Not only did the constant portion of capital not “dissolve” itself into wages, but it became the very instrumentality through which the capitalist gained the mastery over the living worker. Utopian socialists who didn’t grasp this freed themselves of the actualities of the class struggle.
Each of the two departments of social production comprises three elements: (1) constant capital; (2) variable capital; and (3) surplus value. Just as the division of social production into two main departments was not merely technical, so this was not a merely technical division. It was rooted in the relationship of worker to capitalist, and was inseparable from the inherent laws of capitalist production. “It is purely a tautology to say that crises are caused by the scarcity of solvent consumers, or of a paying consumption. The capitalist system does not know any other modes of consumption but a paying one, except that of the pauper or of the ‘thief’ .... But if one were to attempt to clothe this tautology with a semblance of profounder justification by saying that the working class received too small a portion of their own product, and the evil would be remedied by giving them a larger share of it, or raising their wages, we should reply that crises are precisely always preceded by a period in which wages rise generally and the working class actually get a larger share of the annual product intended for consumption. From the point of view of the advocates of ‘simple’ (!) common sense, such a period should rather remove a crisis.”5
Marx spent a seemingly interminable time in exposing the error of Smith. This was so because this was the great divide not alone between bourgeois economics and Marxism, but also between petty-bourgeois criticism, utopian socialism, and scientific socialism. There is not the wealth of statistical and historical material in Volume II, which Marx did not live to complete for publication, that there is in Volume I, which he prepared for the printer himself. This has given rise to as many misrepresentations among Marxists as among anti-Marxists. The chief objection is directed against Marx’s thesis that production creates its own market. The objectors say that this implies a “balance” between production and consumption. The truth is that the proportional relationship between Departments I and II, in the Marxian formula, means the exact opposite. Marx based himself on the laws of accumulation which he analyzed in Volume I when he showed that constant capital keeps on expanding. The exact relationship to variable capital that he gives it is seven to one. It should therefore have been clear that the “balance” that exists in the formulas–which were built on the most extreme assumptions of “an isolated nation” with no foreign trade, nor with the ordinary headaches of sales–exists solely because of the production relations under capitalism which resulted in this fantastic proportion of seven to one. That is why Marx’s categories are so immutable for capitalism and apply to no other society. They assume that what is produced is consumed because it is capitalist production, and capitalist production is the production of capital and hence is consumed by capital. Marx built his theory of capitalist breakdown on this. To deduce from the formulas that there was “no disproportion” in an ideal capitalism with no market troubles, is enough to make Marx turn in his grave.
What Marx did, in disproving the underconsumption theory was to demonstrate that there is no direct connection between production and consumption. As Lenin phrased it, in the most profound analysis that Volume II ever received: “The difference in view of the petty-bourgeois economists from the views of Marx does not consist in the fact that the first realize in general the connection between production and consumption in capitalist society, and the second do not. (This would be absurd.) The distinction consists in this, that the petty-bourgeois economists considered this tie between production and consumption to be a direct one, thought that production follows consumption. Marx shows that the connection is only an indirect one, that it is connected only in the final instance, because in capitalist society consumption follows production.” 6
The preponderance of production over consumption was considered to mean the “automatic” collapse of capitalist society. Where the classicists saw only the tendency toward equilibrium, the petty-bourgeois critics saw only the tendency away from equilibrium. Marx demonstrated that both tendencies were there, inextricably connected. Volume II is both a critique of bourgeois and petty-bourgeois thought, and an analysis of the actual movement of capitalist production. As Trotsky put it, when Stalin suddenly “discovered” that the formulas also “apply to a socialist society,” “Marx's formulas,” Trotsky wrote, “deal with a chemically pure capitalism which never existed and does not exist anywhere now. Precisely because of this, they revealed the basic tendency of every capitalism but precisely of capitalism and only of capitalism.”
2) Appearance and Reality
Volume II of CAPITAL was published posthumously, in 1885, by Marx's lifelong collaborator, Frederick Engels. This posthumous publication hit a blank wall in the Second International. It seemed to pass by both the reformists and the revolutionaries within the International. In fact, the greatest revision came from the revolutionary martyr, Rosa Luxemburg. As for Karl Kautsky, the theoretical leader of the Second International, he wrote sophomoric essays on Volume II. The sole exception to this common obtuseness was Lenin. It was not because Lenin was “smarter” than Kautsky that he knew how “to apply” the concepts Marx developed in Volume II to the actual development of the Russian economy. In Russia, the question whether capitalism could develop without foreign markets was not the theoretical question it was in Germany, where imperialist expansion was conquering new markets daily. In backward Russia, which could not successfully compete for the world market, there arose a whole school of theoreticians, the Narodniki (Populists) who maintained that “since” capitalism could not exist without a market, and “since” Russia had come too late on the historic scene to secure one, Russia could “therefore” skip capitalism and go directly from the mir (peasant commune) to communism. Lenin hit out against them theoretically and practically. He combined both attacks in a most profound study of The Development of Capitalism in Russia. It cleared the ground for Marxism.
The main burden of Luxemburg’s critique of Marx’s theory of accumulation was directed against his assumption of a closed capitalist society. She gave this assumption a twofold meaning: (1) a society composed solely of workers and capitalists; and (2) “the rule of capitalism in the entire world.”
Marx, however, did not pose the rule of capital in the entire world, but its rule in a single isolated nation. When Luxemburg’s critics7 pointed this out to her, she poured vitriolic scorn upon them. To speak of a single capitalist society, wrote Luxemburg in her Anticritique,8 was a “fantastic absurdity” characteristic of the “crassest epigonism.” Marx, she insisted, could have had no such stratospheric conception in mind. Nevertheless, as Bukharin pointed out, Luxemburg was not only misinterpreting Marx’s concept, but misreading the simple fact, which Marx had most clearly put on paper: “In order to simplify the question (of expanded reproduction) we abstract foreign trade and examine an isolated nation.”9
Rosa Luxemburg falsely counterposed reality to theory. She argued that a “precise demonstration” from history would show that expanded reproduction has never taken place in a “closed society,” i.e., in isolation from the world market, but rather through distribution to, and expropriation of “non-capitalistic strata and non-capitalist societies.” Her critique flowed theoretically from this one fundamental error of falsely counterposing reality to theory. She was betrayed by the powerful historical development of imperialism that was taking place, to substitute the relationship of capitalism to non-capitalism for the relationship of capital to labor. This led her to deny Marx’s assumption of a closed society. Once she had given up this basic premise of the whole of Marxist theory, there was no place for her to go but to the sphere of exchange and consumption.
This is most clearly revealed by Luxemburg herself. Some of her best writing in Accumulation, occurs where she describes the “real” process of accumulation through the conquest of Algeria, India, the Anglo-Boer war, the carving up of Africa, the opium wars against China, the extermination of the American Indian, the growing trade with non-capitalist societies, and her analysis of protective tariff and militarism. Marx gave at least as graphic a description of primitive accumulation as Rosa did of imperialist exploitation of backward lands. Though “capital comes dripping from hand to foot, from every pore with blood and dirt,” nevertheless, primitive accumulation created only the conditions for real capitalism. It now had a certain accumulation of capital, propertyless workers, and a lot of subordination of labor to capital. However, it still remained merely “formal.” As Marx put it, so long as “variable capital preponderated greatly over constant,” there was "as yet no specific capitalist character.”10
Luxemburg denied that this preponderance of constant over variable capital was inherently capitalistic. To her it was merely “capitalistic language” for the essential elements of production in any society. She offered to demonstrate this by taking up the relations of capitalism to non-capitalist lands. She began by supplementing CAPITAL. She ended by revising it.
Where Luxemburg maintained that Marx’s formulas of expanded reproduction were incorrect in theory and did not correspond to real life in any one living nation, Lenin said they held in life and were correct in theory. Russia, even as America, however, seems to have the perfect soil for all sorts of theories of “exceptionalism” from “skipping capitalism” to having “communism” under totalitarianism. When Lenin argued theoretically, his critics said he didn't know Russia. When he showed from exhaustive Russian statistics that capitalism was indeed coming to Tsarist Russia, they said he didn’t understand theory. When he both won on the theoretical front and routed the Narodniki on the organizational front as well, the ideological children of the Narodniki, present-day economists, state that it wasn’t, after all, such a great feat for it was not Marxism but irrefutable economic facts which won out. Precisely. That is the logic of Volume II.
It is necessary to bear in mind, that the passage, in Volume I of CAPITAL, which deals with the ultimate development of the centralization of capital in the hands of a single capitalist or single capitalist corporation, did not appear in the early edition of the work. He added this passage only after the Paris Commune, which was the period when he discussed with Engels the concentration of all capital in the hands of the State.11 Volume I, on which Marx never stopped working until the day of his death in 1883, is the one complete volume we have from his own hand. In a note to the French edition, and in all subsequent editions incorporating these changes, he asked the readers to acquaint themselves with these additions because they “possessed scientific value independent of the original.”12
Because our epoch has had concretely to face the problems posed only theoretically by Marx, we can see the reason why Marx built Volume II on what, in the 1870’s was certainly a nonexistent, fantastic society. Under such a society, he was saying, we would expect to see the following:
(1) The worker will be paid at value. Well-intentioned planners may, during the Depression, have wondered whether it wouldn’t be possible to raise the standard of living of the workers–not of some Stakhanovites, but of the working class as a whole–if all capital were concentrated in the hands of the State and thus easily planned. But Russian totalitarianism is with us to puncture that grand illusion. For, the moment that working standards are raised, the cost of production of a commodity goes up above the cost of the surrounding world market and then the production inside the country is undersold by the product from a value-producting society, which means that the society cannot indefinitely continue. The jet plane would cost so much more to build that the competing countries on the world market would be able to defeat the particular country in the present form of capitalist competition, which is total war. It is not a question of simple competition or sale.13 If the United States has the H-bomb and atomic energy and Automation, Russia had better discover them too, or be destroyed. She discovered these soon enough.
(2) The means of production will far outdistance the means of consumption. Because value production automatically limits the consumption goods of a community to the luxuries of the capitalist class plus the amount which the worker can buy when paid at value, and because the material form of production the world over shows that means of production outdistance means of consumption, Marx assumed the capitalist world as “one nation.” It will be impossible, over a historic period, to avoid unemployment because the society will be straining every nerve to bring its plants to the level of the more advanced productive system. The only way “to stay in the race” is to pay the worker as little as possible and to have him produce as much as possible.
The fundamental error of those who cannot understand that a single capitalist society is governed by the same laws as a society composed of individual capitalists is that they simply will not understand that what happens in the market is merely the result and the consequence of the inherent difficulties in the process of production itself. Where Marx kept us in the process of production throughout Volume I, and there reached the ultimate limit of capitalist development into a closed, single capitalist company controlling everything, they seem to think that a single capitalist society will have a limitless market. The single capitalist–call him “Collective Leadership under Khrushchev, Inc.,” if you will–will have, at a certain stage, a magnificent plant, completely automatized, or a jet bomber, but he cannot stop to raise the standard of the masses of workers. He may be able to avoid the more extreme forms of ordinary commercial crises, but even within the community itself he cannot escape the internal crisis of production. The Plan at no stage can stop to improve the conditions of the masses. Capital does not allow it. That is why Marx, throughout CAPITAL, insists that either you have the self-activity of the workers, the plan of freely associated labor, or you have the hierarchic structure of relations in the factory and the despotic Plan. There is no in-between.
The only possibility of avoiding capitalist crises is the abrogation of the law of value. That is to say, planning must be done according to the needs of the productive system as a human system. A system where human needs are not governed by the necessity to pay the laborer at minimum and to extract the maximum abstract labor for the purpose of keeping the productive system, as far as possible, within the lawless laws of the world market, dominated by the law of value.
It may seem that all this would not apply to a capitalist society of a “really” advanced stage of development, like the United States. If, for the sake of argument, we were to imagine the United States becoming a single capitalist society, even this, far from improving the conditions of the workers, would worsen them. It would then be a given capitalist society, which means the rest of the world market would exist. Thereupon, Europe and the Far East would probably combine against it, and the struggle for the capitalist world market would result in a war which would either end in (1) a single capitalist state; (2) socialism; or (3) the destruction of civilization altogether. Backward country or advanced, the absolute law of capitalism, as analyzed by Marx, would hold good even if all capital were concentrated in the hands of one single capitalist or one single capitalist corporation. What to Marx was theory is a most concrete problem now. Russia is proof of the fact that the logic and scope of Marxian theory are as integrally connected as are appearance and reality in life.
The “mystic” Hegel saw clearer the relationship of the dialectic to life than our present pragmatists who laugh at the dialectic and meet each fact of life as an “unforeseen” phenomenon. “Wherever there is movement, wherever there is life, wherever anything is carried into effect in the practical world, there Dialectic is at work. It is also the soul of all knowledge which is truly scientific.”14
3) The Breakdown of Capitalism: Crises, Human Freedom, and Volume III of CAPITAL
"At last we have arrived at the forms of appearance which serve as the starting point in the vulgar conception: ground rent, coming from the earth, profit (interest) from capital, wages from labor .... Finally, since these three (wages, ground rent, profit (interest)) constitute the respective sources of income of the three classes of landowners, capitalists, and wage laborers, we have in conclusion the class struggle, into which the movement of the whole Scheisse is resolved.”-Marx to Engels15
Marxist textbooks, for generations, have repeated the following truisms: (1) Capitalism is a form of society in which the means of production and the land are the private property of the capitalists. (2) The worker is compelled to sell his labor power at the cost of his production and reproduction in order to be able to live. (3) The motive force of this mode of production is the desire of the capitalist for profit. This profit is gained in the following manner: capitalist production produces commodities; commodities are sold for money. The money contains what the capitalist spent plus a surplus, part of which is his profit.
In order that the society may be looked upon as capitalist, it seems essential to have this process of money in the pocket of the private capitalist; the buying of labor power and means of production; the production of commodities; the selling of the commodities on the market for more money; etc. All this is true, but it is not the whole truth. Marx did not have to spend forty years to prove that.
Marx’s primary theory is a theory of what he first called “alienated labor” and then “abstract” or “value-producing” labor. He analyzed commodities and showed that the exchange of commodities is an exchange of certain quantities of labor. Commodities in general had been exchanged more or less sporadically for centuries before capitalism. Capitalism begins when the capacity to labor becomes a commodity. As we saw in Volume I, production becomes capitalist commodity production from the moment when the direct producer must “instead of a commodity, sell his own capacity to labor, as a commodity.”16 Hence, it is more correct to call the Marxist theory of capital not a labor theory of value, but a value theory of labor.
Marx repudiated entirely the idea that the sale and purchase of labor power is the essential mark of capitalist society. In Volume I he showed how this pertained only on the surface; that it was only “an apparent exchange. . . . The relation of exchange subsisting between the capitalist and the laborer becomes a mere semblance pertaining to the circulation, a mere form, foreign to the real nature of the transaction and only to mystify it. The ever-repeated purchase and sale of labor power is now mere form; what really takes place is this-the capitalist again and again appropriates without equivalent, a portion of the previously materialized labor of others and exchanges it for a greater quantity of living labor.”17
In Volume II, he wrote: “The peculiar characteristic is not that the commodity, labor power, is saleable, but that labor power appears in the shape of a commodity.” This perversity is due to the perverse nature of capitalism where dead labor dominates over living labor and where relations between men appear as if they were relations between things: “It is, however, quite characteristic of the bourgeois horizon, which is entirely bounded by the craze for making money, not to see in the character of the mode of production the basis of the corresponding mode of circulation, but vice versa.”18
In Volume III he stated: “The way in which surplus value is transformed into profit via the rate of profit is but a continued development of the perversion of subject and object taking place in the process of production.”19
And again: “We have the complete mystification of the capitalist mode of production, the transformation of social conditions into things, the indiscriminate amalgamation of the material conditions of production with their historical and social forms. It is an enchanted, perverted, topsy-turvy world, in which Mister Capital and Mistress Land carry on their goblin tricks as social characters and at the same time as mere things.”20
Indeed he says these same things in a thousand different ways throughout his work. That is the content and form, the essence and the absolute of the whole analysis.
It is obvious from the very nomenclature that the primary feature of commodities in general is that they are sold on the market. It should be equally obvious that the fundamental feature of labor power as a commodity is not that it is bought or sold on the market, but the specific function it performs in the process of production, where it is “a source not only of value, but of more value than it has itself.” This is the issue. This is the hub around which all Marxist economic theory-“production" (Volume I), “circulation” (Volume II), and “forms of the process as a whole” (Volume III)-revolves.
Marx develops his analysis of capitalism on different levels of abstraction and each level has its own dialectic. In Volume I, the categories which enabled us to comprehend the realities of production were: constant and variable capital (labor power).
In Volume II, where we are on the surface of society, the categories which disclose the inner mechanism are: means of production and means of consumption. In Volume III, it is the decline in the rate of profit, “the general contradiction of capitalistic production that reveals its law of motion and points to its collapse.”
It took the crash of 1929 to open the skulls of the academic economists to Marx’s analysis of the breakdown of capitalism. It then became a popular pastime to say that if Marx had only shed his “Hegelianism,” taken off the “mysticism” with which he enveloped the concept of value, and begun instead with Volume III where he deals with “real life,” that is to say the surface phenomena of competition, profit, rent, etc., his “prophecies” of Big Business and cyclical crises would have been easy to see and they would have learned “much” from him. Marx dealt with that type of argumentation a half century before. That is why he pointed out that: “The annual process of reproduction is easily understood so long as we keep in view merely the sum total of the year’s production. But every single component of this product must be brought into the market as a commodity, and there the difficulty begins. The movement of the individual capital, and of the personal revenue, cross and intermingle and are lost in the general change of places, in the circulation of wealth and society; this dazes the sight and propounds very complicated problems for solution.”21 He not only pointed to the difficulty. We find that he warned against the easy way out, such as beginning with the surface phenomena of profit rather than the production reality of surplus value: “We shall show in Book III that the rate of profit is no mystery so soon as we know the laws of surplus value. If we reverse the process we cannot comprehend either the one or the other.”22
The third volume, which presumably best meets the taste of the academic economists, analyzed life in the capitalist market as it really is. We learn that commodities sell, not at value, but at price of production; that surplus value is not an abstraction, congealed unpaid labor, but that its real form is threefold: (1) profit for the industrialist; (2) rent for the landlord; and (3) interest for the banker; that capital is not only a social relation of production, but that it has a bodily form of money-capital. Here we study the role of credit and even get some glimpses into swindling.
And what is the grand result of learning all the facts of life? How have they changed the laws that arise from the strict process of production which the academic economists call “abstract”? Not at all. Not at all. At the end of all these intricate transformations of surplus value into ground rent, interest and profit, as well as the conversion of values into prices, rate of surplus value into rate of profit, etc.-at the end of it all, Marx takes us back to that on which it is based: production of value and surplus value. He shows us that in the final analysis the sum of all prices is equal to the sum of all values. Where the worker has created nothing, the capitalist manipulator can get nothing. Profit, even as surplus value, comes not from "ownership" but from production. To get at the real cause of crises Marx makes an abstraction of “the bogus transactions and speculations which the credit system favors.”23
Nothing fundamental has changed; nothing whatever. Labor power, which is the supreme commodity of capitalist production because it alone creates capital, is still a commodity, sold at value, and-still in the process of production and not in the process of exchange or the market—creates a greater value than it itself is.
Note the far-reaching insight of Marx into the doom of value production out of its own inherent laws of development: “In order to produce the same rate of profit, when the constant capital set in motion by one laborer increases ten-fold, the surplus labor time would have to increase ten-fold, and soon the total labor time, and finally the fully twenty-four hours a day would not suffice, even if wholly appropriated by capital.'' (Vol. III, p. 468; Pelican p. 523)
Even the concept of a single capitalist society pales before the concept of appropriating the value of “fully twenty-four hours a day.” Marx makes this extreme assumption because in no other way can he express the fundamental movement. What Marx is saying is that even if the worker learned to live on air and could work all twenty-four hours a day, this ever-expanding monster of machine production could not keep on expanding without collapsing, since living labor is the only source of this value and surplus value. Since that is exactly what is constantly being cut relatively to the ever greater machines that are being made and used, there just wouldn’t be sufficient surplus value to keep the thing going.
“The real barrier of capitalist production,” Marx concludes, “is capital itself. It is the fact that capital and its self-expansion appear as the starting and closing point, as the motive and aim of production; that production is merely production for capital, and not vice versa, the means of production mere means for an ever expanding system of the life process for the benefit of the society of producers.”24 In opposition to this he points to the fact that “the realm of freedom does not commence until the point is passed where labor under the compulsion of necessity and external utility is required. In the very nature of things it lies beyond the sphere of material production in the strict meaning of the term.”25
The constant revolutions in production, and the constant expansion of constant capital, writes Marx once again, necessitate, of course, an extension of the market. But as he has explained over and over again, both theoretically and practically, the enlargement of the market in a capitalist nation is limited by the fact that the worker is paid at value. This is the supreme manifestation of his simplifying assumption that the worker is paid at value. In Volume III, we see that this is the innermost cause of crisis—that in production, not in the market, labor creates a value greater than it is itself. The worker is a producer of overproduction. It cannot be otherwise in a value-producing society, where the means of consumption, being but a moment in the reproduction of labor power, cannot be bigger than the needs of capital for labor power. That is the fatal defect of capitalist production. On the one hand, the capitalist must increase his market. On the other hand, it cannot be larger.
The crisis that follows is not caused by a shortage in “effective demand.” On the contrary, it is the crisis that causes a shortage in “effective demand.” The worker employed yesterday is unemployed today. A crisis occurs not because there has been a scarcity of markets. As we saw in theory, and as 1929 showed in practice, the market is largest just before a crisis. From the capitalist viewpoint, however, there is occurring an unsatisfactory distribution of “income” between recipients of wages and those of surplus value or profits. The capitalist decreases his investments and the resulting stagnation of production appears as overproduction. Of course, there is a contradiction between production and consumption. Of course, there is “inability to sell.” But the inability to sell manifests itself as such because of the fundamental antecedent decline in the rate of profit, which has nothing whatever to do with inability to sell.
Marx considered the theory of the declining rate of profit to be the “pons asini” of the whole political economy, that which divides one theoretic system from another. The classical political economists felt it, but they couldn't understand it, because they could not conceive that the capitalist system, which they considered not a historical, transitory system, but a permanent one, had something in its vitals that would doom it. When Marx showed that decline in the rate of profit was due to the fact of the relative ever-smaller use of living labor, which is the only source of surplus value, to ever-greater use of machines, the capitalist pointed instead to the mass of products and hence the mass of profits. They thought thereby to forget the fall of the rate. Even some Marxists considered that the tendency for the decline in the rate of profit had so many counteracting tendencies in the mass of profits from mass production and in imperialist expansion that it was central to no one’s, not even Lenin’s, thinking before 1929. Only then people began to see that this was not theory but reality. They then began to look for solutions everywhere except in the reorganization of the process of production itself by the laborer himself.
What Marx is describing, in his analysis of what he calls “the general contradiction of capitalism,” is (1) the degradation of the worker to an appendage of a machine; (2) the constant growth of the unemployed army; and (3) capitalism’s own downfall because of its inability to give greater employment to labor. Since labor power is the supreme commodity of capitalist production, the only source of its value and surplus value, capitalism’s inability to reproduce it dooms capitalism itself. As we saw from the beginning, Marx’s critique of capitalist society was based primarily on the perverse, inverted relation of dead to living labor at the point of production, and extended to the surface of society where the fetishism of commodities made the relations between people assume “the fantastic form of the relations between things.” Now, in Volume III, he says the very existence of commodities, and especially of commodities as products of capital, “implies the externalization of the conditions of social production and the personification of the material foundation of production, which characterize the entire capitalist mode of production.” Over and over again, Marx categorically asserts that since all labor under capitalism is forced labor, Plan can be nothing but the organization of production under the domination of the machine. As he told Proudhon from the first, to try to bring order into the anarchy of the market of a society based on the factory Plan, could only mean subjecting society to “one single master.” Marx warned then: not to see the plan inherent in the activity of the revolutionary proletariat must force one to pose an external factor to do the planning. He dismissed, with great contempt, Proudhon's Plan to do away with exchange. In “Unravelling the Inner Contradiction,” Marx shows that in capitalism’s “disorder is its order.”
Proudhon was neither the first nor the last of the Planners, as our age knows much better than Marx’s. Planning is not limited to idealists. The abstract materialist who views technological development outside of the class relationship also slips back into considering the capitalistic factors of production as mere factors of any social form of production. That is why Marx created new categories to describe the manner in which machines and labor unite under a capitalistic economy. Marx developed his analysis of capitalist production in opposition to all Planners—abstract materialist as well as idealist.
In Volume I of CAPITAL, the nature of the cooperative form of the labor process is held out in sharp contrast to the hierarchic structure of capitalist control. In Volume II, Marx isolates the capitalist nation and analyses it as a unit: ". . . we must not follow the manner copied by Proudhon from bourgeois economics, which looks upon this matter as though a society with a capitalist mode of production would lose its specific historical and economic characteristics by being taken as a unit. Not at all. We have in that case to deal with the aggregate capitalist.”26
As we saw, the whole of Volume II is built, not on individual, private capital, but on aggregate, national capital. In Volume III,
Marx returns to the creative plan of the workers as the plan “most adequate to their human nature and most worthy of it”: “Just as the savage must wrestle with nature in order to satisfy his wants, in order to maintain his life and reproduce it, so civilized man has to do it, and he must do it in all forms of society and all possible modes of production. With his development the realm of natural necessity expands, because his wants increase; but at the same time the forces of production increase by which these wants are satisfied. The freedom in this field cannot consist of anything else but of the fact that socialized man, the associated producers, regulate their interchange with nature rationally, bring it under their common control, instead of being ruled by it as by some blind power; that they accomplish their task with the least expenditure of energy under conditions most adequate to their human nature and most worthy of it. But it always remains a realm of necessity.
“Beyond it begins that development of human power which is its own end, the true realm of freedom, which, however, can flourish only upon the realm of necessity as its basis. The shortening of the working day is its fundamental premise.”27
Thus we see that it isn’t only the young Marx but the mature Marx to whom the creative role of labor is the key to all else. It isn’t only that this creative plan of the workers, in opposition to the authoritarian Plan of the capitalist, permeates all three volumes of CAPITAL. It is that the actual necessity of revolt will arise out of the fact that capitalism, as conditions, activity, and purpose, is destroying society. The only force which can overcome this necessity therefore is a freedom which in itself and for itself inseparably combines objective conditions, subjective activity and purpose. In the Grundrisse Marx said that, once the productive process “is stripped of its antagonistic form,” “the measure of wealth will then no longer be labor time, but leisure time.”28 The free time liberated from capitalist exploitation would be for the free development of the individual's powers. The conception of freedom that the young Marx had when he broke from bourgeois society as a revolutionary Hegelian remained with him throughout his life.
Essentially Marx said what he wanted to say. This is true not only of Volumes II and Ill, which Engels edited with scrupulous care and presented exactly as Marx had written, but even Book IV, with the structure of which Karl Kautsky did tamper when he published it as Theories of Surplus Value. The reason is that Volume I, published by Marx is not only, as he put it, a whole in itself. It is the whole.
He reorganized29 the last part, “Accumulation of Capital,” in order to show (1) where Volumes II and III (including Theories of Surplus Value as Book IV of Volume Ill) belong logically: (2) how they are dialectically connected with Volume I; and (3) what is the law of motion of capitalism in general and the dialectic of his analysis in particular. The “Historical Tendency of Capitalist Accumulation” thus ends with the two absolute opposites—capital accumulation and the revolt of the workers headed for a clash and at the same time going in opposite directions—the first to its collapse, the second creating “the new passions and forces” for reconstructing society on new, socialist-humanist beginnings.
There are theoreticians who are willing to say that the analysis holds for Russia, but not in the exceptional soil of America. If it wasn’t the American frontier that made America different, it was the American pragmatic character; and if not that, it is that the American workers “aren't class conscious.” Be that as it may, the economists now do give Marx credit for understanding “history.” Some even admit that economic theory has indeed been running a losing race with history, except in the case of Marx. One has even gone so far as to “admire” Marx for his “idea of theory” and his ability to transform historic narrative into “historic raisonne.”30 But none have the slightest conception that Marx's “idea of theory” is as profound as it is only because he had broken with the bourgeois conception of theory and placed the worker in the center of all his thinking. There is no other source for social theory.
It isn't that Marx “glorified” workers. It is that he knew what is their role in production. Just as history has not discharged theory from its mission of criticizing existing society, so the workers, on whose back all the exploitation occurs must—to straighten up to the height of men—throw all this off their backs and therefore can criticize it and overcome it and see ahead.
It isn't that Marx vilified capitalists and their ideologists. It is that he knew their role in production and how limited, therefore, their outlook. Because they were satisfied, they couldn’t grasp all of reality, and therefore their ideology was false.
Marx, when he began, didn't know all the implications of his materialistic conception of history. Thus, although he saw the mode of production as determinant for ideology, he thought all that needs to be done to demonstrate the bankruptcy of bourgeois thought is to show that the bourgeoisie can no longer be scientific and that with the development of the class struggle their economic science has become “vulgar” and their ideologists “prize fighters.” He, on the other hand, would show the decline, and then the workers as changing the world which had long had its interpreters. It was only in the 1860’s, that he changed the very structure of CAPITAL and placed theories at the end of all volumes. As we saw, it was in that period that he gave the explanation that what was written first was put last because that is the ordinary way a theoretical work develops. That is to say, as an intellectual he needed to clear his own mind first. Only then comes the creative part with the workers themselves not only as activists but as thinkers. Thus, in the same way in which the “Primitive Accumulation of Capital,” was placed at the end of Volume I, so the “History of Theory” (or, Theories of Surplus Value, as Kautsky renamed it) was put at the end of Volume III, that is to say, at the end of the entire work.
This is the outline of work as Marx set it down when Volume I was going to press:
Book I: Process of Production
Book II: Process of Circulation (both of these books were intended as Volume I, but only Book I was published by Marx during his lifetime)
Book III: Forms of the Process as a Whole
Book IV: History of Theory
The entire work had been completed when the first Volume went to press. After the second edition of CAPITAL, Volume I, Marx reworked Volume II. It is the last piece of work we have from his pen. If there is any truth at all to the incomplete state in which Volumes II and III were published, it is the exact opposite of what is implied by those who are so anxious to stress the incomplete state of the manuscripts. Marx himself tells us how he. intended to change the manuscripts, or rather the extent to which he would have changed them, had he lived to edit them himself. He says, in his letter to Danielson, the Russian translator of Volume I, not to wait for Volume II:31 “First of all I would under no circumstances consent to publish the second volume before the present English industrial crisis has reached its limit ... it is necessary scrupulously to follow the present development of events to their full maturity before you are in a position ‘to utilize’ these facts ‘productively,’ I mean ‘theoretically’ . . . .
“Meanwhile—strikes and disturbances everywhere.
"Secondly a tremendous mass of material received by me not only from Russia but also from the United States, etc., gives me a pleasant excuse to continue research instead of definitively working over for publication.
“The United States at present have overtaken England in the rapidity of economical progress, though they lag behind in the extent of acquired wealth; but at the same time the masses are quicker and have greater political means in their hands to resent the form of a progress accomplished at their expense. I need not prolong the antitheses.”
It is clear that Russia and America were to play the role in Volumes II and III that England played in Volume I. Lenin filled it out for Russia. In their attitude to Automation, the American workers are concretizing this for America.
Marx removed the question of value from a dispute among intellectuals and transformed it into a question of the struggle of the proletariat for a new society. The material and the ideal were never too far apart.32 He best summarized his own social vision when he defined the new social order as a society in which “the free development of each is the condition for the free development of all,” and that never again would the rights of the State be counterposed to that of the individual. Human freedom is the principle toward which he worked and his philosophy can be most fittingly called a New Humanism.
There was no difference between Marx the Hegelian and Marx the revolutionary, nor between Marx the theoretician and Marx the practical organizer. He finished CAPITAL and turned to the Paris Commune not merely as “activist” and “materialist” but as idealist. As we saw, he himself summed up most profoundly the fact that the ideal is never far from the real when he wrote that the Communards “have no ideals to realize but to set free the elements of the new society.”
- 1It wasn't only the Marxists who saw that this division had more theoretic sense than all that political economy has produced on the question of the “market,” After the 1929 crash, some academic economists realized that if they were going to get any distance in understanding the crisis, they would have to understand production better. By 1942, Joan Robinson asserted that with this division of total output into two, and only two major groups, Marx had devised “a simple and penetrating argument.” (Cf. Joan Robinson, An Essay on Marxian Economics, p. 51.)
- 2Theories of Surplus Value, Vol. I, Part II, p. 170, Russian ed.
- 3CAPITAL, Vol. Ill, p. 396. Pelican, p. 455.
- 4CAPITAL, Vol. I, p. 647. Pelican, p. 736.
- 5CAPITAL, Vol. II, pp. 475-6. Pelican, p. 486-7.
- 6Chapter I of V.I. Lenin, The Development of Capitalism in Russia, Russian edition. This chapter has been omitted from the English edition. My translation of this chapter appears in New International, October, November, and December, 1943, available in the Raya Dunayevskaya Collection, on deposit with the Labor History Archives of Wayne State University, Detroit, Michigan.
- 7What complicated the argument was that most of her critics were reformists. She, however, attacked both reformists and revolutionaries indiscriminately, and labeled all her critics "epigones."
- 8Page 401, Russian edition.
- 9Theories of Surplus Value, Vol. II, Part II, page 161, Russian edition.
- 10CAPITAL, Volume I, page 810. Pelican, p. 900.
- 11Engels, Herr Eugen Dühring’s Revolution in Science. A shortened and popular version of it, “Socialism, Utopian and Scientific,” is included in Selected Works, Vol. II.
- 12CAPITAL, Vol. I, p. 842, the Dona Torr, International Publishers edition. Pelican, p. 105.
- 13Nothing is simple these days. In 1931 Russia found out that, although she had complete monopoly of everything including sales, her tractors just couldn't “compete,” that is to say, stand up in production. To buy tractors from Ford meant, however, to pay in gold-standard money at a time when the agricultural crisis in her country made it impossible to have agricultural products to sell to get the money. At another time when she wanted to dump wheat on the international market she found doors closed there. See Part V.
- 14Hegel, “Logic,” Paragraph 81, p. 148.
- 15Letter of July 11, 1868.
- 16CAPITAL, Volume I, page 59. Pelican, p. 142.
- 17CAPITAL, Volume I, p. 708. Pelican, p. 798.
- 18CAPITAL, Volume II, pp. 132-133. Pelican, p. 114.
- 19CAPITAL, Volume III, p. 58. Pelican p. 136.
- 20CAPITAL, Volume III, page 966. Pelican, p. 969.
- 21CAPITAL, Vol. I, p. 647. Pelican, p. 737.
- 22CAPITAL, Vol. I, p. 239. Pelican, p. 324, ftn. 3.
- 23CAPITAL, Vol. Ill, p. 568. Pelican, p. 615.
- 25CAPITAL, Vol. III, pp. 954-955. Pelican, p. 958-9.
- 26CAPITAL, Vol. II, p. 503.Pelican, p. 509.
- 27CAPITAL, Vol. III, p. 955. Pelican, p. 959.
- 28Grundrisse, p. 596, German only, (see footnote 58). [Pelican, p. 708.]
- 29Originally, Marx had intended to end Volume I with a Chapter VI, entitled, "The Direct Results of the Process of Production," which would have summed up the volume simply and made the transition to Volume II without anticipating its problems and results. Then, both because of health and because of his deepened comprehension of the subject, he rewrote the last part as the "Accumulation of Capital." It was this section, again, which had undergone the greatest revision for the second edition of CAPITAL. The original ending can be found in the Archives of Marx-Engels, Vol. II (VII), both in the original German and in Russian translation. The best way to follow the changes in "Accumulation of Capital," is to get the Dona Torr edition which singles out the changed passages and publishes them separately at the end of the volume. The Kerr edition, which is the standard edition and which has been used here, publishes the French edition as corrected by Marx, but the changes are not singled out.
Marx's "Accumulation of Capital," in Volume I, anticipates Volumes II and III, in the same manner in which the "Absolute Idea," in Hegel's Science of Logic, anticipates the Philosophy of Nature, and Philosophy of Mind, which ultimately completed his philosophic system. Marx's letter to S. Meyer, April 30, 1867, on his health, says: "I laugh at the so-called 'practical' men and their wisdom. If one chose to be an ox one could of course turn one's back on the agonies of mankind and look after one's own skin. But I should really have regarded myself as unpractical if I had pegged out without completely finishing my book, at least in the manuscript."
- 30Joseph A. Schumpeter, A History of Economic Analysis.
- 31Letter of April 10, 1879; Letters on Capital, Russian edition.
- 32[ed note: pamphlet forget this footnoted, added in from the book]In this Hegel was not as far distant as would appear at first sight. Cf. his: “The idea is not so impotent as merely to have a right or an obligation to exist without actually existing.” Hegel’s Logic, p. 12.