Marx’s analysis of capitalism
Rashed Rahman

The initial chapter of Karl Marx’s major work Capital Vol 1 first deals with commodities, after which he proceeded to show how money is transformed into capital. If equal values exchange against equal values in commodity circulation, how can the moneyed man buy commodities at their value and sell them at their value and nevertheless receive greater value than he gave? He can do this because under prevailing social relations he finds a commodity of such a peculiar nature on the commodity market that its consumption is a source of new value. That commodity is labour-power.
It exists in the shape of the living worker, who needs a certain quantity of foodstuffs and other necessities for the maintenance of his own life and that of his family, the latter guaranteeing the perpetuation of living labour-power after he has passed away. The labour-time necessary to produce this quantity of foodstuffs and other necessities represents the value of labour-power. However, this value, which is paid in the form of wages, is much less than the value the purchaser of labour-power is able to extract from it. The surplus-labour of the worker, over and above the labour-time necessary to replace the value represented by his wages is the source of surplus-value, the source of the ceaselessly growing accumulation of capital. This unpaid labour of the worker is distributed amongst all the non-labouring members of society, and the whole social system in which we live is based on it.
Unpaid labour is certainly not an exclusive characteristic of modern bourgeois society. As long as possessing and dispossessed classes have existed, the latter have always had to perform unpaid labour. As long as one section of society possesses a monopoly of the means of production, the worker, whether free or unfree, will have to work longer than the time necessary to maintain his own existence in order to provide foodstuffs and other necessities of life for the owners of the means of production. Wage-labour is only a particular historical form of the system of unpaid labour, which has existed since the division of society into classes.
In order to be able to transform his money into capital, the moneyed man must find free workers on the market, free in the double sense that first of all they are free to dispose of their own labour-power as a commodity and that they have no other commodities to dispose of, and free in the sense that they possess none of the means necessary to apply their labour-power independently. This is a relation with no basis in the laws of nature, for nature does not produce on the one hand the owners of commodities, of money, and on the other hand those who own nothing but their labour-power. It is further not a social relation common to all periods of history, but the result of a long period of historical development, the product of many economic changes and of the decline and disappearance of a whole series of earlier forms of social production.
Commodity production is the starting-point of capital. Commodity production, commodity circulation and developed commodity circulation, i.e., trade, form the historical conditions under which capital develops. The history of modern capital dates from the creation of modern world trade and of the modern world market in the 16th century. The worker ceased to belong to the category of the means of production like the slave and the serf, but he also ceased to possess the means of production like the peasant or artisan working on his own account.
The great mass of the people was deprived of land, food and the means of production by a series of violent and brutal measures, which Marx describes in detail on the basis of English history. In this way the free worker needed by the capitalist mode of production was created. Capital came into the world oozing mud and blood from every pore, and as soon as it was able to stand on its own feet it not only maintained the separation of the worker from the means necessary to apply his labour-power, but it reproduced this separation on an ever-increasing scale.
Wage-labour differs from earlier forms of unpaid labour as a result of the fact that the movement of capital is boundless and its voracious appetite for surplus-labour insatiable. In societies in which the use-value of a commodity is more important than its exchange-value, surplus-labour is limited to a more or less wide circle of needs, but the nature of this form of production does not result in an unlimited demand for surplus labour. Where the exchange-value of a commodity is more important than its use-value, the situation is different. As a producer with alien labour-power, as a sucker of surplus labour and an exploiter of labour-power, capital outdoes all previous modes of production based on direct forced labour in point of energy, recklessness and effectiveness. The main thing for capital is not the labour process, not the production of use-values, but the process of utilisation, the production of exchange-values from which it can extract a greater value than it put in. The demand for surplus-value knows no satiety. The production of exchange-values knows no such limits as are drawn for the production of use-values by the satisfaction of immediate needs.
Just as a commodity is a combination of use and exchange values, so the process of commodity production is a combination of the labour process and the value-creating process. The value-creation process lasts up to the point where the value of labour-power paid in wages is replaced by an equal amount of value, and beyond this point it develops into the process of producing surplus-value, the process of utilisation. As a combination of the labour process and the process of utilisation, it becomes the process of capitalist production, the capitalist form of commodity production. In the labour process, labour-power and the means of production work together. In the process of utilisation the same capital components appear as constant and variable capital. Constant capital is transformed in the process of production into means of production, raw materials, auxiliary materials and tools of production, and does not change its value. Variable capital is transformed in the process of production into labour-power and its value changes: it reproduces its own value and then produces a surplus over and above that value, a surplus-value that may vary in volume and be larger or smaller according to circumstances. Marx thus clears the way for an examination of surplus-value, which appears in two forms, relative and absolute surplus-value, which have played a different, but each a decisive role in the history of the capitalist mode of production.
Absolute surplus-value is produced when the capitalist causes the worker to work beyond the time necessary for the reproduction of his labour-power. If the capitalist had his way the working day would comprise 24 hours, for the longer the working day the more surplus-value it produces. On the other hand, the worker has the justifiable feeling that every hour of labour-time that he is compelled to perform over and above that necessary to reproduce his wages is unfairly extracted from labour-time. The struggle between capitalist and worker concerning the length of the working day began with the first historical appearance of free workers on the market. The capitalist fights for profit, and, whether he is personally a good fellow or a blackguard, the competition of his fellow capitalists compels him to do everything possible to extend the working day to the limits of human endurance. The worker, on the other hand, fights to maintain his health and to secure a few free hours a day in which he can engage in other human activities apart from working, eating and sleeping. Marx describes powerfully the 50 years of civil war between the working class and the capitalist class in England from the birth of large-scale industry, which drove the capitalists to break down every limit placed on the exploitation of the proletariat by nature and custom, age and sex, and day and night, up to the passing of the Ten Hour Bill, won by the working class in the struggle against capital as a powerful social obstacle preventing the workers selling themselves and their kind into death and slavery by free contract with capital.
Relative surplus-value is produced when the labour-time necessary for the reproduction of labour-power is reduced to the benefit of surplus-labour. The value of labour-power is reduced by an increase in the productivity of labour-power in those industries whose products determine the value of labour-power, and to this end a constant revolutionisation of the mode of production, of the technical and social conditions of the labour process is necessary.
Marx not only shows that machinery and large-scale industry have created greater misery than any previous mode of production known to history, but also that in their ceaseless revolutionisation of capitalist society they are preparing the way for a higher social form. Factory legislation was the first conscious and methodical reaction of society to the unnatural form of its own process of production. When society regulates labour in factories and workshops it appears for the moment only as an interference with the exploiting rights of capital.
However, the force of circumstances soon compels society to regulate household labour also and to interfere with parental authority. With this it recognises that large-scale industry liquidates the old family relations together with the economic basis of the old family system and the family labour that corresponded to it.The machine that degrades the worker to its mere appendage creates at the same time the possibility of increasing the productive forces of society to such an extent that all members of society without exception could enjoy the same possibilities of a development worthy of human beings, a consummation for which all former societies were too poor.
After examining the production of absolute and relative surplus-value Marx then proceeds to develop the first rational theory of wages known to the history of political economy. The price of a commodity is its value expressed in money, and wages represent the price of labour-power. Labour itself does not appear in the commodity market, but the living worker who offers his labour-power for sale, and labour appears only in the consumption of the commodity labour-power. Labour is the substance and the immanent measure of values, but it has no value itself. However, labour appears to be paid for in wages because the worker receives his wages only after he has performed his labour. The form in which wages are paid effectively conceals every trace of the division of the working day into paid and unpaid labour-time. With slaves it is exactly the opposite. The slave appears to be working for his master all the time even when he is working to reproduce the value of his own foodstuffs, etc., and all his labour appears to be unpaid labour. With wage-labour, however, all the labour, including even the unpaid labour, seems to be paid. In the one case the property relation conceals the fact that the slave is working part of the time for himself, whilst in the other case the money relation conceals the fact that the wage-worker is working part of the time for nothing. Marx points out that we realise therefore the decisive importance of the transformation of the value and price of labour-power into the form of wages, or into the value and price of labour itself. All the legal conceptions of both the capitalists and the workers, all the mystifications of the capitalist mode of production, all its illusions of freedom and all the extenuating humbug of vulgar political economy are based on this appearance, which conceals the real state of affairs and suggests exactly the contrary.
The two chief forms of wages are time-wages and piece-wages. On the basis of the laws governing time-wages Marx demonstrates the emptiness of the contentions that the shortening of the working day must lower wages and shows that exactly the contrary is true: a temporary shortening of the working day lowers wages, but a permanent shortening raises wages. The longer the working day, the lower the wage.
Piece-wages are nothing but a changed form of time-wages, and they are the form of wages best suited to the capitalist mode of production. This form of wages spread widely during the actual manufacturing period, and in the storm and stress period of English large-scale industry it served as a lever to lengthen the working day and thereby lower wages. Piece-wages are very advantageous for the capitalist because they render supervision of the workers almost unnecessary and at the same time offer many opportunities for making deductions from wages and practicing other forms of cheating. On the other hand, this form of wages possesses many big disadvantages for the worker: physical exhaustion as the result of excessive efforts to raise the level of wages, efforts that in fact tend rather to lower wages, increased competition amongst the workers with the resultant weakening of their solidarity, the appearance of parasitic elements between the capitalists and the workers, of middle-men who pocket a substantial part of the workers’ wages, and similar disagreeable phenomena.
The relation of surplus-value and wages causes the capitalist mode of production to reproduce constantly not only the capital of the capitalist, but also the poverty of the worker. On the one hand there is the capitalist class owning all the foodstuffs and other items of life, all the raw materials and means of production, and on the other hand there is the working class, the great mass of human beings, who are compelled to sell their labour-power to the capitalists in return for that quantity of food and other essential items of existence that in the best case is sufficient to maintain them in working condition and permit the production of a new generation of working proletarians. But capital does not merely reproduce itself, it increases its volume constantly.
Not only does surplus-value result from capital, capital results from surplus-value. A part of the annually produced surplus-value that is distributed amongst the possessing classes is consumed by them as income, and another part is accumulated as capital. The unpaid labour that has been extracted from the workers now serves as a means to extract still further unpaid labour from them. In the stream of production all the originally advanced capital becomes a vanishing quantity compared with the directly accumulated capital, i.e., that surplus-value or surplus-product that is changed back into capital, whether it is functioning in the hands of him who originally accumulated it or in the hands of another. The law of private property based on commodity production and commodity circulation transforms itself into its direct opposite, thanks to it own internal and inevitable dialectic. The laws of commodity production seem to justify a property right in individual labour. Commodity owners with equal rights face each other. The means to obtain the other commodity is only the sale of one’s own commodity, and one’s own commodity can be produced only by labour. Property, on the side of the capitalist, now appears as the right to appropriate the unpaid labour of others or its produce, and on the side of the worker as the impossibility of appropriating his own product.
The general law of capitalist accumulation is as follows: the growth of capital includes the growth of its variable section, or that part that is changed into labour-power. If the composition of capital remains unchanged, if a certain quantity of the means of production demands always the same quantity of labour-power to set it into motion, then obviously the demand for labour-power will grow in proportion with the growth of capital, as will also the subsistence funds of the workers; the quicker capital grows the quicker they must grow also. As simple reproduction constantly reproduces the capital creation itself, so accumulation reproduces the capital relation on a larger scale: more capitalists or bigger capitalists on the one hand, and more wage-workers on the other. The accumulation of capital is therefore the increase of the proletariat also, and in the case supposed, this increase takes place under the most favourable conditions for the workers. A larger part of their own increasing surplus-product, which increasingly changes into capital, returns to them in the form of means of payment so that they are able to increase their consumption and to equip themselves more generously with the necessary items of existence. However, their relation of dependency towards the capitalist does not change in any way, just as a slave does not cease to be a slave if he is well-fed and well-clothed. They must always provide a certain quantity of unpaid labour, and although this may diminish, it can never do so to an extent seriously endangering the capitalist character of the process of production. If wages rise above this point then the profit incentive is blunted and the accumulation of capital slackens until wages sink again to a level corresponding to the needs of its utilisation.
Only when the accumulation of capital takes place without any change in the relation between its constant and variable components can the golden chain that the wage-worker himself forges grow lighter and less irksome, but in reality the process of accumulation is accompanied by a great revolution in what Marx calls the organic composition of capital. Constant capital grows at the expense of variable capital. The growing productivity of labour causes the mass of the means of production to increase more quickly than the mass of labour-power embodied in them. The demand for labour-power does not rise proportionately with the accumulation of capital, but sinks relatively. The same effect is produced in another form by the concentration of capital that takes place, quite apart from its accumulation, owing to the fact that the laws of capitalist competition lead to the swallowing up of the smaller capitalists by the larger ones. Whilst the supplementary capital formed in the process of accumulation demands fewer and fewer workers in comparison with its quantity, the old capital that is reproduced in a new composition disposes more and more of the workers formerly employed by it. In this way there develops a relative surplus mass of workers, relative that is to the needs of the utilisation of capital, an industrial reserve army that is paid below the value of its labour-power in bad or middling business periods, which is employed irregularly and which at other times is dependent on public assistance, but which at all times serves to lower the resistance of the employed workers and to depress their wage standards.
This industrial reserve army is a necessary product of the process of accumulation, or of the development of wealth on a capitalist basis, and at the same time it develops into a lever of the capitalist mode of production. With accumulation and the accompanying development of the productivity of labour, capital’s power of sudden expansion also grows and demands large masses of workers who can be employed at a moment’s notice in new markets or in new branches of production without interrupting the work of production in other spheres. The characteristic course of modern industry in the form of a decennial cycle (broken only by minor vacillations) of periods of average activity, production at high pressure, of crisis and stagnation is based on the continuous formation, the greater or lesser absorption, and reconstitution of the industrial reserve army. The greater social wealth, the amount of capital at work, the extent and energy of its growth, and the greater therefore the absolute size of the working population and the productivity of its labour, the greater is relative over-population or the industrial reserve army. Its comparative size increases with the increase in wealth. The larger is the industrial reserve army in relation to the active industrial army, the larger are those sections of workers whose poverty is in inverse ratio to their labour torment. And finally, the larger is the active section of the working class and the larger is the industrial reserve army, the greater are the numbers of those who are officially acknowledged paupers. This is the absolute general law of capitalist accumulation.
The historical tendency of capitalist accumulation develops from this law. Hand in hand with the accumulation and concentration of capital develops the cooperative form of the labour process on a steadily growing scale, the conscious technological application of science to production, the organised and joint cultivation of the land, the transformation of the means of production into forms usable only jointly, and the economising of the means of production by their use as joint means of production of combined social labour. With the steadily diminishing number of those capital magnates who usurp and monopolise all the advantages of this process of transformation, there is a corresponding increase in the volume of misery, oppression, slavery, degradation and exploitation, but at the same time also in the indignation of the working class, which steadily grows in size and is trained, united and organised by the mechanism of the capitalist process of production itself. The monopoly of capital becomes a fetter to the mode of production that has grown up with and under it. The centralisation of the means of production and the socialisation of labour reach a point where they become incompatible with their capitalist shell. The knell of capitalist private property sounds and the expropriators are expropriated.
Individual property based on individual labour is restored, but on the basis of the achievements of the capitalist era, as the cooperation of free workers and as their common property in the land and the means of production produced by labour. Naturally, the transformation of capitalist property, which is already practically based on a social mode of production, into social property is by no means as wearisome and difficult as was the transformation of scattered property based on individual labour into capitalist property. In the one case it was the expropriation of the masses of the people by a few usurpers, and in the other case it will be the expropriation of a few usurpers by the masses of the people.
(To be continued)