John Kilcullen
Copyright (c) 1996, R.J. Kilcullen.
The reading for this week is rather long. I suggest you do as much of it as you can, write the tutorial paper, and then finish off the reading before you do next week's reading. My commentary on Capital may overrun this cassette on to the beginning of the next.
Marx's Capital is in the tradition of a French-British project of understanding the different stages of social history and how one stage is transformed into another. The French contributors to this include Montesquieu, St. Simon, and Auguste Comte. The British included Adam Smith and J.S. Mill. Recall Mill's idea, borrowed from French sources, that there are organic or stable states of society, each followed by transitional or unstable state that eventually settles into another organic state. Marx's Capital is about the transition from the Capitalist stage to the coming socialist stage. Marx's "revolution" corresponds to Mill's "transitional stage". The Capitalist stage is another phase of Adam Smith's "commercial society". You will recall that Adam Smith spoke of four stages of social development--the age of hunters, the age of herders or shepherds, the age of farmers and the commercial age.
In European history, according to Smith, these were the successive stages, but also in the world in the 18th century you could see these stages in different countries, e.g. red Indians in America were hunters, the nations of Asia Minor and Central Asia were shepherds, the people of China were mostly farmers and Britain was in the commercial stage. By the commercial stage Smith meant that most of their economic activity was oriented to buying and selling: shepherds and farmers and artisans in 18th century Britain did not produce for their own use, but for sale in a market, from which they would also buy what they needed. Obviously there were still farmers, herders, etc., but their farming was commercial, not for subsistence.
In Marx's terminology, in a commercial society most production is of "commodities" or things for sale. Commodity here has a broader sense than it often has these days; in Marx's terminology it covers even the most elaborately manufactured products. A "commodity" is anything produced with the intention of offering it for sale. Marx thought that since Adam Smith's time another stage, or sub-stage, had developed, Capitalism. Capitalism is a specific form of commercial society, i.e. a specific form of the kind of society in which most things are produced as "commodities". Capitalism is the species of commercial society in which most commodity production is carried on by people who are working as the paid employees of a relatively small number of people who own the tools, raw material and finished product, the capitalists. The idea of capitalism was not invented by Marx, it was commonplace at the time, and the word carried no unfavourable overtones. Mid-19th century British writers quite cheerfully referred to their society as capitalist, and factory owners were happy to describe themselves as capitalists.
Marx's book is an analysis of this specific kind of commercial society, and in particular a study of its dynamic, how it tends to develop and change. His practical purpose is to forecast the transition to the next stage, socialism, which is not yet clearly in existence but is already coming to existence within capitalist society, just as capitalism had developed within the social order that Adam Smith had described (though Smith did not predict it).
Capital is a very large book, consisting of three large volumes. Only the first volume was published by Marx himself. The other volumes were edited after Marx's death by Engels, out of Marx's drafts, and published some time later. It is volume 1 that had the big impact, and that is what we will read, or at least we will read excerpts from it. The first excerpt in the Readings is from chapter 6, and you need to understand various ideas introduced in the earlier chapters. So turn to the lecture on Marx in Articles, Chapters and Lectures, p.236 and read down to, and including, the first paragraph under the heading "How explain the possibility of capitalism?"
Some comments. In the first paragraph he is assuming a diagram, which you might write into the margin of your book: M->C->M1. Money is exchanged for some commodity, which is then exchanged again for money, but a larger sum, M1. The capitalist invests his money in something, which he then sells and gets a larger sum of money. Marx is assuming that in these exchanges no one is cheated: people often are, of course, but that can't be the basic explanation of the existence of a whole class of people who regularly make money out of this process of buying and selling. So, to explain how the capitalist's money grows, he says (in the middle of the first paragraph),
The change must therefore, take place in the commonly bought by the first act, M->C, but not in its value, i.e. its exchange value, for equivalents are exchanged and the commodity is paid for at its full value.No one is cheated, we're assuming. So the theory is that this commodity must be one that creates additional exchange value by being used. The only commodity that can do that is labour power (on the labour theory of value, human labour is the sole source of value). Notice that he says labour power, not just labour. The capitalist does not buy 10 hours of labour, because then if equivalents are exchanged and no one is cheated, he would have to give the equivalent of 10 hours of labour in return, and he would make no profit. What he buys is the right to use someone's labouring powers for the 10 hours, during which time the labourer does 10 hours labour, but is paid less than the equivalent of 10 hours labour because the right to use someone's labour powers for 10 hours is worth, even in strict justice, less than the equivalent of 10 hours labour, perhaps the equivalent of only 6 hours (we'll see shortly how Marx makes that out). The point of saying that the capitalist buys not labour but the right to use labour power is not to change the amount of labour he has bought (he gets his 10 hours either way), but to specify more exactly what it is he has to pay for--he has to give not the equivalent of 10 hours labour, but the equivalent of the right to use someone's labour power for 10 hours, which is less.
In paragraph 3, "But in order", he points out two conditions necessary before such a transaction can take place: first that the labourer be free to sell his services, and second that he be compelled by his circumstances to do so. If he were not compelled he wouldn't--he would work on his own account, producing more value that would belong to him. So there can be no capitalism until (a) slavery has been abolished, and (b) most people do not have the means to work on their own account (the means of production). On this second condition, re-read the 5th paragraph, "In order that a man..."
Read now pages 188-189, down to "We must now examine"
Marx is making the point here that capitalism is a specific stage of human society (underline "neither is its social basis one that is common to all historical periods"). He is also making the point that the concepts needed for analysing this stage are specific to the analysis of this stage of history. Underline the first sentence of the next paragraph, "the economical categories... bear the stamp of history". Notice in this paragraph the definition implied of commodity (underline "not... as the immediate means of subsistence of the producer"). Notice the suggestion that Smith's "commercial society" really only exists when capitalism has developed (underline "all products take the form of commodities... capitalist"). These and the points that follow are details of the theory so we won't linger.
Read pp. 195-6. On p.195, line 3, "usufruct" is a term originally of Roman law, meaning the temporary right to use another person's thing and to enjoy its fruits (its product), but without destroying its substance (so that it is handed back to its owner at the end of the period of usufruct undamaged).
End of this paragraph, "The secret of profit making": That is, the answer to the question how a surplus is possible, if buyers and sellers on average exchange equivalent values. The answer is that the right to use a worker's powers for a day, even if true value is paid, is worth less (say, the equivalent of 6 hours of labour) than the value of the products got by using it for the time for which it is hired (say, 10 hours).
4 lines into next paragraph, "Bentham": Unlike J.S. Mill, Jeremy Bentham supposed that no one ever does anything except in his own interest. For criticism, see J.S. Mill, Collected Works, vol.10, pp. 13-15.
This brings us to Part 3 of the book. Part 3 is entitled "Part 3. Production of Absolute Surplus Value".
Read pp.215-7
This should all be pretty clear. I will just translate two foreign language phrases: conditio sine qua non = a condition without which not--i.e. a necessary condition. The passage ends with a quotation for Voltaire's Candide, a satire upon Leibniz. It means: "All is for the best in the best of possible worlds".
Marx imagines the working day as being divided into two parts, the necessary working time and the surplus. The necessary part is the time (say 6 hours) during which the labourer produces the equivalent of the value of his hire for the day, i.e. produces the value equivalent of the day's share of the "necessities of life" (hence the term "necessary"), i.e. of what is necessary to bring him into the labour market and keep him able to work for a natural working life. The surplus is the rest of the working day; the surplus is not superfluous--it is the source of employer's profits.
In succeeding chapters (Chs. 13-15) Marx discusses various ways of increasing productivity: co-operation in labour (the bringing together of a larger number of workers), division of labour (specialisation--cf. Adam Smith), machinery. Cooperation and division of labour make production more social (i.e. associative); people have to work together. Social production these days has a capitalistic form, which, Marx suggests, is not essential to social production: there is no necessary reason why the work has to be planned and coordinated by an owner, it could be controlled by the workers themselves.
Read pp. 389-92.
This passage is about the division of labour, as one of the things that increases productivity. There is a contrast here between two ways in which the division of labour is organised. Within the factory or firm the manager allots different functions to different workers in the appropriate numbers according to some rational plan. But outside the individual firm, in the economy as a whole, there is no rational planning, no orderly allocation of functions: the allocation is done by the market, which does indeed tend to equilibrium, but equilibrium is never actually attained and maintained. The point of this contrast (which is perhaps overstated) is, of course, to recommend socialism, in which the division of labour in society as a whole is planned by a rational management, as happens already within the firm. Perhaps you should re-read the passage. Let me comment now on some details.
On p.390, 2/3 of the way through. The "iron law of proportionality" simply means that there has to be a certain proportion between the numbers of people preparing for some operation and those carrying it out--otherwise there will be bottlenecks, delays, waste of time.
On p.391, the contrast between a priori and a posteriori. A priori means "from earlier things", a posteriori "from later things". Or instead of "earlier" say higher principles, or say more fundamental or more basic principles. An a priori plan is one worked out from higher principles. A posteriori means shown by experience. In a factory the management works out a plan beforehand, whereas in the economy at large there is no determination of how many people are needed in an occupation except as experience shows how many can survive in the market.
Bellum omnium contra omnes is from the Latin version of Hobbes's Leviathan (he published the work in English, and then in Latin). It means "the war of all against all", applied here to the animal kingdom, perhaps in the light of Darwin's writings on the struggle for existence, in which the fittest survive.
"Enthusiastic apologists of the factory system": When factories were a new thing, writers produced books explaining how a factory was organised and what a wonderful thing it was. (Marx somewhere refers to a Dr Ure as "the Pindar of the automatic factory"; he wrote on the work of Richard Arkwright.) Marx is suggesting that it is inconsistent to admire the orderliness of a factory and yet reject socialism.
But notice his references to despotism in the factory: Socialists hoped to plan society in a rational but non-despotic way--not an easy thing to do.
Division of labour is one way of increasing productivity and thus reducing the necessary labour time, thereby increasing the surplus. Another method is to introduce machinery. This brings us to chapter 15, "Machinery and Modern Industry".
Marx distinguishes between "manufacture" and "modern industry". By manufacture he means production "by hand" (Latin manu, "by hand", facere, to make). Manufacture is exemplified by Adam Smith's pin makers: by division of labour their productivity is increased, but each worker works by hand with simple tools. Modern industry, by contrast, is production by machinery--the "tools" are applied by the machine. Marx notes that by the time he was writing, in the later 19th century, even the machines were made by machines.
Read pp. 405, 431, 440, 442.
This is clear enough. Notice the term "moral depreciation" (p.442). This has nothing to do with morality in the sense of ethics. I think the relevant sense is the customary, what is usual. When newer and better machinery becomes customary, the obsolescent ones are depreciated in value.
Read pp. 443-6. Some comments. On p. 444, 6 lines down, "Social value... individual value": By "individual" value here Marx means the amount of labour actually used to make this individual object. But its social value--i.e. its market value, exchange value--does not depend on how much labour was actually expended on this individual item, but on how much labour is needed on average to produce an item of this sort, by the socially prevailing normal methods. So when a new machine is introduced but has not yet become normal, those who use this machine can sell their products at the normal price although they can produce them with less than the normal labour: their surplus is increased.
Further down p.444, "variable" capital, "constant" capital. On the labour theory of value, only money spent buying the use of labour power can lead to an increase of value, since human labour is the sole source of value. Capital used to pay wages is variable in the sense that it expands during the process. He doesn't mean that the wages bill varies from month to month: he means that money spent hiring labour yields an increase. Constant capital is money spent on raw materials, machinery etc., which yields no surplus value. The number of labourers employed depends on the ratio of variable to constant capital: the more spent on raw material and machinery the less there is available to employ labour, and of course the machine replaces labourers in the production process. Hence the contradiction referred to on p.445. The introduction of a new machine leads in the short term to increased surplus for the capitalist, but once the machine is adopted throughout the industry and becomes normal, the surplus is reduced unless the working day is prolonged.
P.446, Aristotle on weaver's shuttles: Politics I.1, 1254a,32.
Read pp.461-6 Read the pp.239-40 paragraphs 1-3. That's clear enough. See lecture, "Laws of Motion"
Read pp. 468, 470-1
Employment constantly fluctuates--there are periods of prosperity, periods of depression. The unemployed are a "reserve army", waiting in poverty until employers need them, sometimes taken into an expanding industry, sometimes dismissed as an industry contracts.
Read pp. 532-6. Some comments. "Dispelling all fixity and security" (p.533): Modern industry requires fluency and mobility, but in its capitalistic form it does this by destroying all security in the situation of the labourers. If industry were organised by the whole society, it would be possible to switch workers from one activity to another in an orderly way, as in a single factory; but at present this is done by throwing them out of employment.
P.535, Ne sutor ultra crepidam: "Let not the shoemaker go beyond the shoe" ("a shoemaker should stick to his last"). Ne plus ultra: "There is nothing more beyond" ("the last word"). P.536 10 lines down, "Sweeping away the economic basis of parental authority": The power to support the family without requiring the children to undertake paid work.
Read p. 552. "Hastens the general conversion... large scale": Because the smaller and older workshops cannot meet the requirements of the Factory Acts.
Notice that Marx is suggesting that the way capitalism develops also prepares its own destruction.
We will pass over the rest of Part 5 on the strife between workman and machinery and all of part 6, and come to part 7 on the Accumulation of Capital.
Notice at the end of the passage the references to the origins of the process. Underline "some accumulation that took place independently of the unpaid labour of others". This is the notion of original accumulation, to which we will come later.
Read pp.623-5.
The point here is that if a capitalist is to remain one through time and keep his original capital intact and make more, then all the time he must be appropriating the work of his employees. Capital is not preserved, it is spent and used, but it is continually reproduced or replaced. On p.623, 2/3 through, he refers to "unpaid labour": strictly speaking what the employer pays for is not labour, but the right to use the labourer's powers for a whole day; no part of the day is paid for, none of it is unpaid, because what is bought and sold is not "the day" but the right to use the labourer's powers for the day. But often Marx speaks of the part of the day that is not necessary labour time as unpaid labour. You may have noticed that as the book goes on the language becomes more loaded with ethical implications.
Read pp.632-3. "Capitalist production... reproduces the separation": Since the surplus value always belongs to the capitalist, the labourer never accumulates enough to own his own means of production, and the capitalist always reproduces his capital and maintains his ownership of the means of production; the relationship between them is continually reproduced, the labourer's separation from the means of production is reproduced.
Read pp. 681-3. Note the definition of productivity that Marx assumes in this passage: how much labour moves how large a mass of the means of production. Would it not be more reasonable to define productivity in terms of how much is produced with a given amount of labour?
Marx seems to assume either that technology does not change, or that technological change always involves an increase in the mass or value of the means of production. On this assumption the quantity produced and the mass of the means of production will increase together.
Read pp. 686-7. As capitalism continues to develop the number of independent capitalists falls. He calls this the "centralisation" of capital, i.e., its concentration into the hands of fewer owners.
Read Lecture, pp.240-241, "Laws of Motion", points (4) and (5).
Marx predicts that as the amount of constant capital required steadily increases, unemployment will also steadily increase and the working class will become more miserable. The unemployed are the industrial reserve army.
Read pp. 690-1, 693-5, 699. This is Marx's comment on the gloomy presentiments of Malthus and Ricardo.
Read pp 708-9. Comment. Half way through the first paragraph: "The pressure of the labourers on the means of employment" is an allusion to the language of Malthus. In the second paragraph, "We saw in Part IV": i.e. that capitalist employers replace adult male labour with the labour of children and women, prolong the working day, intensify the labour demanded.
The rest of this chapter (p. 711-783) presents lengthy extracts from various sources (e.g. official inquiries) to illustrate the misery of the working class. As a specimen,
Read p. 726
Chapter 26. The Secret of Primitive Accumulation. Before a capitalist can set up a factory and start paying wages he must have capital. Once his business is going successfully it will add to his capital. But how did he accumulate capital in the first place? Some "primitive" or "original" accumulation is needed to get the capitalist system going. According to the usual story the original accumulation was by saving:
In times long gone by there were two sorts of people; one, the diligent, intelligent and above all frugal, elite; the other lazy rascals, spending their substance, and more, in riotous living... Thus it came to pass that the former sort accumulated wealth, and the latter sort had at last nothing to sell but their skins. And from this original sin dates the poverty of the great majority that, despite all its labour, has up to now nothing to sell but itself, and the wealth of the few that increases constantly although they have long ceased to work. Such insipid childishness is every day preached to us in the defence of property... In actual history it is notorious that conquest, enslavement, robbery, murder, briefly force, play the great part. (pp. 784-5)Read pp. 785-6
"The expropriation of the agricultural producer, of the peasant from the soil, is the basis of the whole process"; p. 787.
Chapter 27. Expropriation of the Agricultural Population from the Land. Marx traces the history of the process in England. Under the feudal system the lord was not the owner of the land, and serfs, as well as lords, had certain rights over the land. In the 16th century the lords usurped ownership and evicted peasants to make sheep runs, because of the high returns from wool. The reformation turned Church lands into private property and reduced church aid to the poor. After the restoration (1660),
the landed proprietors [in Parliament]... abolished the feudal tenure of land, i.e., they got rid of all its obligations to the State, "indemnified" the State by taxes on the peasantry and the rest of the mass of the people, vindicated for themselves the right of modern private property in estates to which they had only a feudal title, and, finally, passed those laws of settlement. (p. 794).(The laws of settlement required the poor to establish residency in a parish before claiming poor relief, which gave parishes an incentive to prevent them from establishing residence. Adam Smith criticised these laws.) The "glorious revolution" (1688) led to thefts of state lands: "These estates were given away, sold at a ridiculous figure..." (p. 798), to win support for the new regime. In the eighteenth century the commons were enclosed, i.e., converted into private property; this was a confiscation of peasants' rights. "The parliamentary form of the robbery is that of Acts for Enclosures of Commons, in other words, decrees by which the landlords [who were the Members of Parliament] granted themselves the people's land as private property"; p. 796. Finally there is a "clearing" of the large estates, "i.e. the sweeping men off them". Marx quotes descriptions of the clearing of estates in the Scottish highlands: the clan chiefs made themselves the private owners of traditional clan lands and dispossessed the clansmen and evicted them to make deer forests. In short, the "original accumulation" happened when the powerful classes used their power to confiscate the means of livelihood of the weaker classes.
(On the expropriation of the English peasantry Marx was following the economic historians of the time. Compare J.S. Mill, who endorses another author's summary of the process of the dispossession of the peasantry:
Confiscation of their ancient rights of common...; confiscation to a large extent of their separate lands themselves, by a long course of violence, fraud and chicane...; the destruction of country towns and villages...; the construction of a legal system... in the interest of great landed families...; the loss... of all political power [from the lower classes]... and, by consequence, the establishment and maintenance by the great proprietors of laws most adverse to their interests;... the administration by the great landowners of their own estates in such a manner as to impoverish the peasantry still further. (Mill, Essays on Economics and Society, in Collected Works (B/1602/.A2), vol. 5, p. 680.)Whether the wealth thus obtained by the landowners was the source of industrial capital is another question, on which modern economic history should be consulted.)
Chapter 28. Bloody Legislation Against the Expropriated. Legislation against begging, idleness, vagabondage, legislation to control wages, against trades unions.
We will omit chs.29-31.
"Universal mediocrity": Marx does not desire a return to the earlier stage.
"The old social organisation fetters them": Similarly Marx thinks that the capitalist social organisation (i.e. the ownership of factories by private individuals) is a fetter upon the further development of the productive resources that have been developed under capitalism.
"By the action of the immanent laws of capitalistic production": Capitalism itself "socialises" the process of production (i.e. makes them more and more a matter of the association together of various kinds of working people), and thereby prepares a socialist revolution.
Chapter 23. The Modern Theory of Colonisation. This chapter is about the Wakefield scheme (which was followed in South Australia). This was a scheme for establishing capitalism in the colonies by making it artificially difficult for immigrants to set up as independent farmers. Land was sold not at its low market price but at an artificially high price, so that working people would find it hard to become landowners, and the proceeds were used to bring more immigrants to the colony, thus depressing wages.
This is the end of Capital Volume 1.
2. According to Marx, the possibility of capitalism cannot be explained by the practice of buying cheap and selling dear. Why not? What does explain the possibility of capitalism?
3. According to Marx, one part only of the worker's labour is paid, and the other unpaid. How does he make this out? Does it imply that the worker is being treated unjustly?
4. What are the laws of motion of capitalism?
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