Part 7: The Process of Accumulation of Capital
Chap 23: Simple Reproduction
Whatever the social form of the production process, it has to be continuous. Every social process of production is at the same time a process of reproduction. It does this by reconverting part of its products into means of production, or elements of fresh production. If production has a capitalist mode, so too will reproduction.
The purchase of labor-power is the prelude to the production process. The worker produces not only surplus value used by the capitalist for himself, but also variable capital, the fund out of which he himself is paid before it flows back to him in the form of wages. Marx calls this the labor fund.
This characteristic is true in constant renewal, but had, of course, to start somewhere. The capitalist originally had to have some fund accumulated which allowed him to enter the market as a buyer of labor-power. But this simple reproduction brings about remarkable transformations that seize hold not only of variable, but total capital.
Marx makes much of the fact that the capitalist constantly gains, while the worker leaves with nothing more than he started, and is further deprived of any way of accumulating wealth for himself. He constantly produces wealth, only to be exploited and dominated by the capitalist.
The individual consumption of the worker remains an aspect of the production and reproduction of capital. The fact that the worker performs acts of individual consumption in his own interest, and not to please the capitalist, is something entirely irrelevant to the matter. The maintenance and reproduction of the working class remains a necessary condition for the reproduction of capital.
The capitalist process of production, therefore, seen as a total, connected process (of production, reproduction), produces not only commodities and surplus value, but the capital-relation itself: on one hand the capitalist, and on the other, the wage-laborer.
Chap 24: The Transformation of Surplus-Value into Capital
1. Capitalist Production on a Progressively Increasing Scale. The Inversion which Converts the Property Laws of Commodity Production into Laws of Capitalist Appropriation
2. The Political Economists’ Erroneous Conception of Reproduction on an Increasing Scale
3. Division of Surplus Value into Capital and Revenue. The Abstinence Theory
4. The Circumstances which, Independently of the Proportional Division of Surplus Value into Capital and Revenue, Determine the Extent of Accumulation, namely, the Degree of Exploitation of Labor Power, the Productivity of Labor, the Growing Difference the Amount between Capital Employed and Capital Consumed, and the Magnitude of the Capital Advanced.
5. The So-Called Labor Fund
In the first section, Marx intends to show how the progressively larger scale of capitalist production are demonstrated by an inversion which converts the property laws of commodity production into laws of capitalist appropriation.
Capital arises from surplus value. Accumulation simply takes what was made before and adds to it progressively.
The property laws of commodity production Marx seems to refer to are the laws of private property, or appropriation. The original form of exchange was an exchange of commodities between two workers who produced a useful and desired item. In that arrangement, the worker had exclusive rights to the product of his own labor. But when money is exchanged for labor, the wage hides the fact that unpaid labor is being given to one side. The laws of exchange were that one side sold his labor, and the other buys it. But this application of the law allows the capitalist to appropriate surplus value to himself. This allows the capitalist to progressively grow his capital, while the worker remains rooted in subsistence.
In the second section, Marx confronts the notion by Smith and Ricardo that the accumulated wealth is subsequently spent in the consumption of the surplus by productive workers. Marx finds this preposterous because it doesn’t bother to delve into the difficulties we are left with when we accept this conclusion.
In this section, Marx states that he had, in a previous chapter, treated surplus capital as a fund for satisfying the capitalist’s individual consumption requirements, this is called ‘revenue’. In this chapter so far, it is treated as a fund for accumulation, this is called ‘capital’. But it is both, and the ratio of what is used for his pleasure and what is saved is according to his will. The capitalists is only tangentially concerned with the enjoyment of use value; he is mainly concerned with the acquisition and augmentation of exchange value. In laymen’s terms, he cares a little about using his money to enjoy himself, but he cares most about stacking up the amount so he can brag about it. The struggle for accumulation also leads to the capitalist considering that his own usage is money out of his accumulation. However, as his riches grow, the capitalist gets rich, not out of his own restricted consumption (abstinence), but by squeezing as much as possible from workers and compelling them to abstain from all enjoyments of life.
In the fourth section, Marx treats the circumstances which will determine the extent of accumulation apart from the ways the capitalist uses his own surplus. Marx outlines 4 separate ways: how much labor is exploited; how productive labor is; the growing difference between how much capital is employed and how much used, and finally the amount of capital advanced.
The exploitation of labor hardly needs more verbiage here. But Marx insists that if labor is more productive, it cheapens labor, and even if real-wages are rising, they never rise in proportion to the productivity of labor. Even in machinery, old forms are replaced by newer, more productive forms. An English spinner and a Chinese spinner may put in the same intensity and length of hours in spinning. But the English spinner’s product will be far greater because he is working an immense machine, whereas the Chinese spinner is working with a spinning wheel.
Marx notes that current means of production are results of past exploitation of labor. These are nonetheless disguised as means of production, which adds to the increasing difference between capital employed and capital used.
The last point is that given the degree of exploitation of labor power, the mass of surplus-value is determined by the number of workers exploited, therefore, the magnitude of capital advanced to buy labor power will proportionately increase the surplus value generated by the increased number of laborers.
The last section covers the labor fund, which is the term Marx gives to that portion of variable capital used for employing the labor force. Marx confronts the statement by some economists that the labor fund was of some sort of fixed size. Apparently there was a belief, at least as Marx outlines it, that said the labor fund could only be increased at the expense of the revenue of the rich.
Chap 25: The General Law of Capitalist Accumulation
1. A Growing Demand for Labor-Power Accompanies Accumulation if the Composition of Capital Remains the Same
2. A Relative Diminution of the Variable Part of Capital Occurs in the Course of the Further Progress of Accumulation and of the Concentration Accompanying it
3. The Progressive Production of a Relative Surplus Population or Industrial Reserve Army
4. Different Forms of Existence of the Relative Surplus Population. The General Law of Capitalist Accumulation.
5. Illustrations of the General Law of Capitalist Accumulation
(a) England 1846 to 1866
(b) The Badly Paid strata of the British Industrial Working Class
© The Nomadic Population
(d) Effect of Crises on the Best Paid Section of the Working Class
(e) The British Agricultural Proletariat
(f) Ireland
The first point Marx wants to make is that accumulation of capital will grow demand for more labor. This growth of capital will have an impact on the working class. Marx divides capital into constant capital- the value of the means of production; and variable capital- the wages for labor. The demand for labor will increase as capital grows. If the demand for labor outstrips supply, wages will rise. But despite this, labor must be reproduced and grow. It cannot get free of capital, and its “enslavement to capital is only concealed by the variety of individual capitalists to whom it sells itself”. Accumulation of capital is therefore multiplication of the proletariat. Marx calls this an “eternal relation”.
The second point is that the amount of capital reserved for purchasing labor must diminish as accumulation concentrates. One of the ways this is achieved is through the accumulation of machines that render the individual worker more productive. The more machines can do, the less labor is needed to produce the same amount. Marx calls this a law of progressive growth of the constant part of capital (constant being his term for the portion set apart to means of production), in comparison with the variable part (wages set aside for labor).
Marx looks at the societal-wide picture and notes that accumulation occurs independently in lots of individual capitalists. Some even offshoot and grow apart from the original capitalists. These all compete. But at the same time, this fragmentation is countered by their attraction. Capitalists will subsume others and eventually concentrate in fewer hands.
While Marx says he can’t elucidate more here, he does give a few basics: competition is fought by cheapening commodities. Smaller producers can’t manufacture at the scale of the larger, and will therefore always lose to the larger. Marx notes that the credit system here plays a part too.
Marx also notes a distinction between centralization and concentration.
Concentration is accumulation of capital into ever larger amounts, whereas centralization is the absorption of smaller capital into larger scale business. The effect of this on labor is the absolute reduction of the need for labor given the concentration in the already more mechanized and therefore less labor intensive large-scale factories.
In the third section, the result of the accumulation and centralization of capital is a larger surplus of excess labor. This translates to a lot of people out of work and hungry to find any kind of job. They are ripe for exploitation. Marx also notes here the boom/bust cycles built into this mode of capitalist production. But the reason why this surplus of labor is so important to capitalism, is precisely to take advantage of the boom/bust cycles. They can take advantage of it when times are good, so they can weather the times that are bad.
The general movement of wages is exclusively regulated by the expansion and contraction of the labor market.
The fourth section tackles the different forms that the surplus population takes: floating, latent, and stagnant.
Floating is when workers are put out of work, then called back, depending on the demands of capital. But that’s not to say they are the same workers. Capital likes ’em young, so they are employed until maturity, then let go. They tend to move and follow capital where they can get work.
The flow of workers from rural to towns supposes there is a latent population that exists, only evident when opportunity opens up.
The third is the stagnant population, with very irregular employment. These are the lowest paid, and most overworked and will take nearly anything. It constantly recruits from the segments that have found themselves redundant. This segment of the population is an ever growing, self-perpetuating and self-reproducing element.
The lowest element is the sphere of pauperism. Apart from vagabonds, prostitutes, and criminals, this strata consists of three categories: those able to work, orphans and pauper children, and those unable to work.
Capitalism is a system in which the worker does not employ the means of production, but the means of production employ the worker. The law is that a constantly increasing quantity of means of production by a decreasing expenditure of human power completely inverts: the higher the productivity of labor, the greater the pressure on their means of employment, the more precarious the condition of their existence.
As capital accumulates, the situation for labor grows worse. The accumulation of misery is a necessary condition to the accumulation of wealth.
The fifth section is a series of illustrations of what Marx has been saying, taken from different places and times. It contains 68 pages of charts and evidence that would be way too detailed to cover in a short recap like this.