Capital, the working class and Marx’s critique of political economy

Posted: March 21, 2013 by Admin in capitalist crisis, Capitalist ideology, Class Matters, Commodification, Economics, Imperialism and anti-imperialism, Marxism, State capitalism, Workers' rights

imagesby Frank Richards

Marx’s critique of political economy is a critique of the categories through which the bourgeoisie perceives the world.  Marx’s method is of central importance in the struggle against reactionary politics.  Marx himself noted that “no credit is due to me for discovering either the existence of classes in modern society or the struggle between them.”[1]  The existence of class struggle was well known to bourgeois historians.  They had merely to take into account the reality around them.  What was distinctive about Marx was his method of analysis, which for the first time revealed that capitalist relations inevitably lead to the struggle between classes and that this struggle “necessarily leads to the dictatorship of the proletariat”.[2]

1. Marx’s method in Capital

In Capital Marx shows that the social forms of bourgeois society obscure the real relations of capitalist production.  Through his theory of the fetishism of commodities, Marx shows that a “definite social relation between men” assumes “the fantastic form of a relation between things”.[3]  The fetishism of commodities originates in the character of social labour under capitalism.

Under capitalism labour has a dual character.  Firstly, it is labour which is concrete, creative not of value but rather of objects of use.  However, in this concrete form, the labour of individuals does not become part of the labour of society.  Labour becomes socialised through exchange, a process in which the specific type of concrete labour is disregarded.  In this way, the second aspect of labour, abstract, exchange-value-positing labour, comes to the fore.  The fact that labour only becomes social through the exchange of commodities is the basis for the fetishism of commodities:

“In other words, the labour of the individual asserts itself as a part of the labour of society, only by means of the relations which the act of exchange establishes directly between the products and indirectly, through them, between the producers.  To the latter, therefore, the relations connecting the labour of one individual with that of the rest appear, not as direct social relations between individuals at work, but as what they really are, material relations between persons and social relations between things.”[4]

Social relations between producers present themselves in forms in which the social character of labour appears as the objective character of the commodities themselves.  These forms are but a materialised expression of these relations.  The material forms of value – rent, profit, interest – disguise its origin in social labour.  This materialisation of social relations is no mere illusion.  The appearances are “what they really are, material relations between persons and social relations between things.”[5]

Marx noted that the mystifying character of social forms increases with the complexity of the production relations expressed in them.  In the act of simple exchange, the social character of the transaction is fairly clear.  However, once the value of a commodity is expressed in the money form, its social character is further concealed.[6]  With the rise of paper money and credit, things get even more complicated.  As capitalism develops, the connection between production relations and the complex forms in which they are expressed is increasingly lost.

In order to unravel the links between various production relations Marx begins the presentation of his analysis of capital with the simplest social form in which labour presents itself – the commodity.  From this starting point, Marx presents a dialectical reconstruction of capital from its simplest to its more complex forms.  Through the analysis of a series of social forms of increasing complexity, Capital presents the logical connection between the outward forms of things and their inner source.  In this investigation Marx analyses capital from two basic levels of abstraction: capital in general and many capitals.

In order to bring to light what is essential to the capitalist social relation Marx first analyses capital in general and presents what is common to all capitals.[7]  Capital in general is an abstraction from the different forms of capital.  It abstracts from these forms what all capitals have in common, “the quality of being capital”.[8]  The presentation of the general nature of capital must precede the investigation of its concrete movement.  In this way Marx sought to present the inner mechanism of capital in abstraction from phenomena which obscured it.

The analysis of many capitals relates to the concrete forms which arise out of the movement of capital.  It considers the relationship between individual capitalists, the relationship of one capitalist to another, that is, competition.  The nature of capital in general must be grasped before the relationship between individual capitalists can be understood.  Capital can only exist as many capitals – in the competitive interaction of individual capitalists.[9]  As a result it is competition that appears as the basic capitalist relation and the inner nature of capital remains concealed.[10]

For the individual, experience of competition is the starting point for a comprehension of capitalism.  Social production is understood merely as the interaction between individual capitalists and ‘economics’ becomes a study of competition.  Yet competition explains little; competition itself must be explained.  Marx’s method of presentation shows the logical connection between the basic capital relations and the forms they assume on the surface of society in competition.  That is how Marx establishes why the bearers of capitalist relations comprehend their system of production in the way they do.[11]

(a) The standpoint of the individual capitalist

The bourgeois conception of capitalism is based on surface appearances; it derives from the experience of capitalist relations in the sphere of competition.  Here we want to show why this superficial bourgeois view is plausible.

In the investigation of capital in general the relationship of surplus-value to the appropriation of unpaid labour is ‘fairly simple’.  The only problem is to discover how unpaid labour is appropriated with no equivalent, yet without violating the law of commodity exchange.[12]  Thus in the immediate process of production the relationship between the appropriation of surplus-value and unpaid labour is reasonably clear.  However, this relationship becomes less and less direct once we consider capital in the sphere of circulation.  Now the determination of surplus-value cannot simply be related to labour-time.  The circulation time of capital now assists in the determination of the mass of surplus-value produced in a given time – “an element foreign to labour-time seems to have entered.”[13]

The relationship between surplus-value and labour-time is further obscured when we look at capital as the unity of the circulation and production processes.  Surplus-value now appears in a separate form – as profit.  The individual capitalist receives profit for a definite period of circulation of capital; a period which is distinct from labour-time.  In addition, profit, a converted form of surplus-value, is measured not over the capital expended in the purchase of labour-power for a definite period of time, but over total capital.  Profit is not determined by the relationship of unpaid to paid labour, but by the relationship of unpaid labour (surplus-value) to the sum of the capital expended on living labour (variable capital) and on the means of production (constant capital).[14]  Therefore the capitalist sees the sum of both parts of his/her invested capital as the source of their profit and “lumps them all together in his imagination”.[15]  The origin of profit in the exploitation of the labourer alone is lost.

Through competition an average rate of profit is formed.[16]  This equalisation of profit rates completely masks the relation of profit to labour-time.  Commodities are exchanged not merely as commodities but as products of capital.  Marx showed that the individual capitalist participates as part of total capital in the exploitation of the working class.  The capitalist’s profit, his/her share of the total surplus-value of society, is determined by the magnitude of his/her capital relative to those of other capitalists.  The origin of profit in the appropriation of unpaid labour in the sphere of production is “completely obliterated”:

“It is quite obvious that capitals of the same magnitude which set in motion very different amounts of labour, thus commanding very different amounts of surplus labour and consequently producing very different amounts of surplus-value, yield the same amount of profit.  Indeed, the basis itself – the determination of the value of commodities by the labour-time embodied in them – appears to be invalidated as a result of the conversion of values into cost-prices.”[17]

In the alienated form of profit capital appears more and more as a thing rather than as a social relation.  Indeed capital seems to be a technical relation in which “the capital appears as a relation to itself, a relation in which it, as the original sum of value, is distinguished from a new value which it generated”.[18]

The increasingly fetishistic character of social forms finds its ultimate expression in interest-bearing capital.  The division of profit into interest and industrial profit suggests that capital exists in isolation from the process of production.  The interest-bearing capitalist can apparently expand his capital without it having any relation to production.  Money-capital, not living labour, becomes the goose that lays the golden egg.  Yet in reality interest as capital is a means of appropriating other people’s labour:

“But it presents this character of capital as something belonging to it apart from the production process itself and by no means as resulting from the specific determinate form of the production process itself.  Interest presents capital not in opposition to labour, but on the contrary, as having no relation to labour. . .”[19]

The apparent autonomy of interest from capitalist production relations shows the growing materialisation of social relations in the unfolding of capital.[20]  Through its various social forms, capital acquires a “fictitious life and independent existence”.  This development is not just an illusion.  On the contrary, the independence of capital “is the form of its reality, or rather its real form of existence”.[21]  In its apparently independent forms, capital expands, it seems, because of its material property as capital.  Money begets more money because of its properties as money.  The ultimate conclusion drawn from these appearances is that wealth is not the result of the exploitation of living labour, but is the product of the material properties of land, labour and means of production.

(b) Competition and the individual capitalist

Chance and conjunctural factors, not general laws, appear to govern reality in the sphere of competition.[22]  But in fact the immanent laws of capital are established prior to competition.  Competition simply allows these laws to be realised:

“Competition generally, this essential locomotive force of the bourgeois economy, does not establish its laws, but is rather their executor.  Unlimited competition is therefore not the presupposition for the truth of the economic laws, but rather the consequence – the form of appearance in which their necessity realizes itself.”[23]

Bourgeois analysis begins with the superficial phenomenon of competition without attempting to understand its origins in capital accumulation.

Because the individual capitalist only experiences capitalism through competition he takes his competitive struggle for the process of accumulation itself.  The formation of an average rate of profit means that the ‘rate of return’ of the individual capitalist bears little relationship to the amount of living labour that he employs.[24]  Indeed, it is immaterial to the individual capitalist how much living labour he sets in motion.  Though he may increase or decrease his workforce he will still realise a profit which corresponds to the total magnitude of his invested capital.[25]

From the standpoint of the individual capitalist, profit appears to be independent of exploitation.[26]  His profit appears to be limited, not by the process of value expansion, but by competition.  As far as the capitalist is concerned he is an autonomous agent; his decisions determine the outcome of the competitive struggle.[27]  He may try to raise his rate of profit by cornering the market or by fixing his prices above the average.[28]  From his efforts to increase profits via interaction with his rivals, the individual capitalist concludes that profits arise out of competition.[29]

In fact competition cannot create additional surplus-value.  No matter how lucky or cunning he is, the individual capitalist cannot conjure up value that has not been previously appropriated by some other capitalist.  If a capitalist receives a rate of profit higher than the average, this represents the loss of a part of another capitalist’s profits.  For example, a capitalist in a monopoly position “would merely transfer a portion of the profit of other commodity-producers to the commodities having the monopoly price.  A local disturbance in the distribution of the surplus-value among the various spheres of production would indirectly take place, but it would leave the limit of this surplus-value itself unaltered”.[30]  Competition alters the distribution of surplus-value but not the quantity of surplus-value already produced.[31]

Competition redistributes total surplus-value.  The individual capitalist experiences this redistribution as the process through which his profit is created.  This is why relations of distribution assume fundamental importance to the capitalist.  Production is taken as given, as a technical process.  The relations of distribution that arise from competition appear as the distinctive capitalist relations.[32]

Capitalist relations of production present themselves as relations of distribution.  It appears that the different parts into which total value is distributed – interest, rent, wages – are themselves the source of value.  To this fetish, which arises from the sphere of competition, Marx gave the name the trinity formula.[33]  The different forms of value (interest, rent, wages) exist in apparent separation from each other and it seems that the material properties of land, capital and labour determine capitalist relations.  These fetishised forms dominate the thinking of the individual capitalist: “The different relations and aspects not only become independent and assume a heterogeneous mode of existence, apparently independent of one another, but they seem to be the direct properties of things; they assume a material shape.”[34]

The inner connections of capital become extinguished in this apparent autonomy of social forms.  The sphere of distribution is the whole world of the individual capitalist.  In his fetishised world of supply and demand the production of wealth is governed by subjective intentions.  Social relations are reduced to the interactions that take place in the distribution of surplus-value.  The world view of the bourgeois is shared by his vulgar socialist critics.  The sphere of distribution is the starting point too of the reformist analysis of capitalism.

(c) Exploitation as a technical relation

In capitalist society the clamorous conflicts of the marketplace, the sphere of distribution, take attention away from the discreet exploitation of wage-labour by capital in the process of production.  This basic social relation is hidden in the forms in which it appears.  Capital appears to have the character of capital because of its material properties.  But in fact capital only acts as capital through the wage-labour/capital social relation: “Capital is productive of value only as a relation, in so far as it is a coercive force on wage labour, compelling it to perform surplus-labour, or spurring on the productive power of labour to produce relative surplus value.”[35]

In competition there appears to be little relationship between unpaid labour and surplus-value.  This illusion is further nurtured by the division of total value into interest, rent, profit and wages.  In the interaction between industrial capital and money capital it is the moneyed capitalist who appears as the real capitalist.  The mere ownership of capital enables the money capitalist to realise value (as interest); he does this while remaining outside the production process.  Interest “is something due to capital as such, to the ownership of capital, to the owner of capital. . .  industrial profit on the other hand, appears to be the result of their labour.”[36]  Ironically, the industrial capitalist appears as a wage worker – a well-paid worker who pays his own wages.  On the other hand, the moneyed capitalist, who plays no direct role in production, appears as the capitalist.

To elaborate on the above.  The division of profit presents interest as the “price of capital” and industrial profit as the “rate of return” on entrepreneurship.  The form of interest gives the other part of profit “the qualitative form of industrial profit, of wages for the labour of the industrial capitalist not in his capacity as a capitalist, but as a worker (industrialist).”[37]  In other words, the profit of the industrial capitalist appears “not as appropriation of other people’s labour, but as the creation of value by one’s own labour. . .  The work of the exploiter is identified here with the labour which is exploited.[38]  The division of profit into different forms of revenue transforms the capitalist into an industrial manager.  The exploitation of wage-labour becomes a technical matter.

The obliteration of the social character of capitalist production turns it into a technical operation.  The process of exploitation appears as an ordinary labour process.[39]  Insofar as the term exploitation is used, it is as a moral objection to the cheating and grabbing of the money-capitalist.  Thus the fundamental antagonisms between labour and capital are removed from the process of exploitation and are understood as antagonisms that arise in the sphere of distribution.[40]

The moneyed capitalist is the caricature set up by vulgar bourgeois economists and vulgar socialists alike.  From the point of view of the bourgeoisie this is not surprising.  Interest-bearing capital is the form in which the contradictory nature of capital is totally hidden: “no contradiction to labour is evident.”[41]  Attacks on this irrational form of capital are safe for the bourgeoisie.  The obviously shady character of interest-bearing capital makes it a target for the moralistic left too because it is the form in which capital “is at its most irrational” and because it “provides the easiest point of attack for the vulgar socialists.”[42]

The labour process exists in all societies.  Once capital is seen in a technical and ahistorical manner the specific features of capitalist production are lost.  The antagonisms between labour and capital are transferred from the realm of production to a distributive relation between rich and poor.  The object of attack becomes not capital, but speculators, property sharks and shifty financiers.  The distinctive character of capitalist exploitation is ignored.

2. The nature of capitalist domination

(a) Capital as social power

Vulgar socialists think that the working class is dominated in bourgeois society as a result of the activity of certain individuals or social groups.  For reformists bad laws, bad institutions and bad politicians are the villains.  In reality the problem lies elsewhere.

As we have seen, capitalist production leads to the materialisation of social relations.  The productive power of social labour appears as the material property of capital, which assumes an independent form.  In this way “social action takes the form of the action of objects, which rule the producers instead of being ruled by them.”[43]  The social character of productive activity confronts individuals as an autonomous power.[44]  This is the real problem facing the working class – the domination of capital.

The domination of capital over all sections of society advances with the development of capitalist production.  Capital as self-expanding value expresses itself in laws which drive on the process of surplus-value extraction.  Capital itself provides the compulsion to accumulate:

“the development of capitalist production makes it constantly necessary to keep increasing the amount of capital laid out in a given industrial undertaking, and competition makes the immanent laws of capitalist production to be felt by each individual capitalist, as external coercive laws.  It compels him to keep constantly extending his capital, in order to preserve it, but extend it he cannot, except by means of progressive accumulation.”[45]

Through competition the need to produce surplus-value is imposed as a coercive law on the individual capitalist.  The competitive struggle forces the individual capitalist to intensify exploitation and expand the scale of production under the “penalty of ruin”.

The expansion of capital gives it more and more power over the real producers:

“Capital comes more and more to the fore as a social power, whose agent is the capitalist.  This social power no longer stands in any possible relation to that which the labour of a single individual can create.  It becomes an alienated, independent social power, which stands opposed to society as an object, and as an object that is the capitalist’s source of power.”[46]

It is capital as social power that confronts and dominates the working class and compels the individual capitalist to produce surplus-value on an extended scale.  But the fact that capital dominates does not mean that capitalists are able to rule and regulate the process of production.  The capitalist has no choice but to accumulate.  The laws of capital accumulation confront him more and more as natural laws “working independently” and becoming “ever more uncontrollable”.[47]

The capitalist holds power only as the personification of capital.[48]  The capitalist “does not rule over his labourer through any personal qualities he may have, but only in so far as he is ‘capital’; his domination is only that of materialised labour over living labour, of the labourer’s product over the labourer himself.”[49]  This is a further expression of the fetishism of commodities – the personification of things and the materialisation of persons.  Only as the agent of the power of capital is the capitalist able to hold power.  Capital is social power and its domination cannot be reduced to the actions of its individual agents.

(b) Confusions caused by the forms of capitalist domination

We have seen how the antagonisms inherent in capitalist social relations are expressed in money-capital, which seems to be independent of the production process.  Capitalist property in the form of money represents power, apparently in complete independence from exploitation.[50]  The existence of capital as a property relation, as manifest in the division of profit into different forms of revenue, obscures the distinctive character of capital as a social relation.  This leads to the separation of the juridical aspect of capitalist property, the private ownership of money as rent and interest, from its economic aspect, the power to expand value through the appropriation of surplus-value in production.

The distinguishing feature of capitalist private property, compared with previous forms of property, is that it is not merely “property” but represents a claim on the unpaid labour of society.  This becomes particularly clear in the case of interest-bearing capital.  Here we have “capital as property as distinct from capital as function.”[51]

Private property is the basis of capitalist production.  But the existence of capitalist property in separation from production suggests to the reformist the possibility of separating the capitalist from capitalist production.  The role of capital in production appears purely technical.  The direction of the labour process can be entrusted to managers and technicians.[52]  If capitalist production is understood in this narrow way it can be concluded that “we do indeed require capital but not capitalists”.[53]  And indeed this is the conclusion drawn by many radical critics of capitalism.  However the capitalist is not a mere illusion: capital can only exist through capitalists.[54]  The confusion of vulgar socialists arises from seeing the role of capital n production as a technical function and not as a social relation.

The personification of capital in the capitalist stems from the accumulation process.   Capital can only exist as many capitals; the laws of capitalism are realised through their competitive interaction.  Since value forms the foundation of capital and since capital “necessarily exists through exchange” it is clear that the reciprocal relation between capitals “is already contained in capital as realised exchange value”.[55]  To suggest that capital could exist without the capitalist is to mistake a social relation for a bundle of material goods.  Marx replied to the vulgar socialists by pointing out that the elimination of the capitalists would require that “the means of production cease to be capital”.[56]

Capital exercises its control over society through the process of accumulation.  The invisible hand of accumulation ensures that in general capital does not require physical coercion:

“. . . accumulation reproduces the capital-relation on a progressive scale, more capitalists or larger capitalists at this pole, more wage workers at that.  The reproduction of a mass of labour-power, which must incessantly re-incorporate itself with capital. . . which cannot get free from capital, and whose enslavement to capital is only concealed by the variety of individual capitalists to whom it sells itself, this reproduction of labour-power forms, in fact, an essential of the reproduction of capital itself.”[57]

As capitalist relations are spontaneously reproduced it is only in rare instances that capital appears as what it really is – a relation of domination.[58]

Production relations seem to be free and voluntary.  Under capitalism – unlike previous modes of production – there is generally no need to exercise force on producers of surplus.  Capitalist exploitation assumes the fetishistic form of a free and purely ‘economic’ affair.[59]

The wage-labour/capital relation seems to be governed by natural laws rather than by the social power of capital over the working class.  The capitalist social relations which perpetuate the conditions for exploitation are veiled by the contractual form of wage-labour.[60]  Formally, people are free to buy and sell and compete with one another in the labour market as in any other market.  The illusory nature of this equality and liberty only emerges through analysis of the exploitation that is concealed by the superficial forms of exchange.  In production the apparent equality between wage-labour and capital turns into an exploitative relation where the capitalist appropriates the unpaid labour of the worker.[61]  The freedom of the worker to sell his labour-power is the condition for the freedom of capital to exploit it: “property turns out to be the right, on the part of the capitalist, to appropriate the unpaid labour of others, and to be the impossibility, on the part of the labourer, of appropriating his own product.”[62]

We can now see that capital accumulation is at the same time a process of domination.  This domination is social.  The capital/labour relation is a “free” and “voluntary” one and capital does not generally need political agents to enforce the process of surplus-value extraction.  In fact, the bourgeoisie cannot rely on the spontaneous movement of capital alone to guarantee the maintenance of its system of production.  But when it is forced to resort to different instruments of coercion this appears as an exceptional measure – one not necessarily related to the needs of capital.

When the domination of capital involves the erosion of relations of equality and the oppression of the working class this appears as a political act.  Political oppression is seen as the result of abuses of property or the manipulations of some external political agency,  Often political oppression seems to fly in the face of the freedoms ‘guaranteed’ by capitalist society.  Because production is understood as a technical, non-exploitative process, oppression seems to arise from forces outside production.  The inherently coercive powers of capital are mediated by free economic relations, which make politics appear as something autonomous from capital.  The separation of social forms under capitalism leads to the separation of politics from economics.  More specifically the separation of capital as property from capital as economic function expresses itself in the separation of political from economic domination.

The apparent autonomy of politics from economics provides the starting point for vulgar socialists.  For them socialism means more ‘political’ freedom.  Marx criticised those radicals who saw socialism as the realisation of the bourgeois ideals of freedom and equality – and for whom the original relations of capital were “perverted by money, capital, etc.”[63]  For reformists, oppression and injustice are not the inevitable consequence of the existing relations of production, but ‘abuses of power’ that could be put right through ‘politics’, through the extension of democracy.

3. Capital and the state

The state has existed in all class societies.  The bourgeois state is the institution which enforces the wage-labour/capital relationship.  In mediating between subjects who are equal before the law, it provides the conditions for the maintenance of property.  The bourgeois state guarantees the right of the capitalist to appropriate the unpaid labour of others.

State intervention has been necessary from the dawn of capitalist production.  Certain social conditions are necessary to allow capital accumulation to take place.  The state must assist in the destruction of all social and political barriers to capital.  Complete freedom of trade and the removal of all obstacles to the movement of capital are necessary.  Labour must be subjugated to capital and legal barriers to the free movement of workers must be removed.[64]

The state is not only necessary to establish the basis for capital accumulation.  It is also required to guarantee the conditions for the continued expansion of capital.  Driven on by the compulsion to produce more surplus-value, the individual capitalist cannot perform the social functions necessary for the maintenance of capitalist relations.[65]

The ability of capitalists to function as capitalists already presupposes the existence of the general social relations of capital.[66]  Marx noted that capital in general is an abstraction, but that “capital in general, as distinct from the real capitals, is itself a real existence.[67]  It is the interests of capital in general that are represented by the bourgeois state.

The state takes on tasks which are unprofitable from the point of view of the individual capitalist, but necessary for the reproduction of capital in general.  It establishes the basic infrastructure and other material conditions for production.  These social functions are paid out of revenues deducted from total surplus-value.  Thus the capitalist state arises, not independently of capital, but as an institution essential to the enforcement of its general interest.

The state plays a vital function in the reproduction of capitalist social relations.  In representing the interests of capital in general it is not subject to the same constraints imposed on the individual capitalist by value relations.[68]  The state can do what no capitalist can – represent the interest of total capital.  It can regulate competition and enforce the general interest of capital against the excesses of a particular individual capitalist.  In Engels’ words, the state of the capitalists is “the ideal personification of the total national capital”.[69]  However the state cannot escape the laws of capital; it merely expresses these laws in a modified way.

As noted previously the domination of the working class by capital is exercised through the accumulation process.  This method of domination is usually adequate to capital’s needs.  However, when class antagonisms come to the fore the bourgeoisie is forced to resort to ‘political’ means.  The exercise of class violence by private armies would make the inherently coercive nature of capitalist relations too obvious.  Therefore the bourgeois state acquires a monopoly over force.  It is through the state that the capitalist class as a whole confronts the working class.

The individual capitalist cannot represent the interest of capital in general against the working class.  He reproduces the wage-labour/capital relation only in relation to his own workers; he constantly attempts to restrict their wages and thus their capacity to consume.  But he regards the rest of the working class as potential consumers: he wishes them to consume as much of his product as possible.[70]  The laws of capital accumulation ensure that the activities of each capitalist in relation to his own workers lead to increases in the rate of exploitation of the whole working class.  But while the reproduction of capital can take place through the activities of individual capitalists, it is only through the state that these capitalists can enforce the relation of capital in general to labour.

(a) The fetish of state autonomy

The reproduction of capitalist social relations results in the formal separation of economic and political power.  As the mediator of the domination of capital, the state appears to lead an autonomous existence.  The state appears to be independent of the laws that govern social production.  It even seems that the state can regulate and organise the process of production.

The apparent autonomy of the state is reinforced by its activity.  Though it often pursues an overtly class policy, it must also mediate between individual capitalists.  For example, state legislation – even after the ‘new right’ reforms – curbs the individual capitalist’s drive to exhaust his workers, limits capital’s plunder of natural resources and regulates financial and property transactions.  The state presents itself as a force above classes.  The fact that economic power is not directly related to politics strengthens the view that the state can express the interests of society as a whole.

Once the state is seen as an autonomous or relatively autonomous institution, its activities appear to be determined by distinct laws of politics.  Indeed the state itself comes to be seen as the product of the subjective interaction of social groups.[71]  The essential character of the state as the embodiment of the interests of capital in general is glossed over.  It is regarded as a convention between classes – as an institutionalised social contract.  In the realm of politics it is the subjective interaction of individuals or classes that is held to determine events; state policy is seen as the outcome of this conflict:

“Where political parties exist, each party sees the root of every evil in the fact that instead of itself an opposing party stands at the helm of the state.  Even radical and revolutionary politicians seek the root of the evil not in the essential nature of the state, but in a definite state form, which they wish to replace by a different state form.”[72]

Radical critics of the state do attack political institutions: even vulgar socialists are prepared to call the state a class institution.  But this conception is based on a narrow political view of the state.  The separation of politics from economics accepted, the state is portrayed as a purely political institution.  For vulgar socialists the state is not a product of the contradictory movement of capital but an external influence on ‘the economy’.  The capitalist character of the state is confirmed by the social links of political agents with big business; particular state policies are interpreted as the result of the influence of a particular fraction of capital – say, the financiers or the monopolists.[73]  The essential nature of the state as the form that maintains the general conditions for capitalist production is seen only through the subjective interaction of its political agents.  Reformists fail to understand that the domination of capital through the state cannot be reduced to its individual agents.  The existence of the capitalist state already presupposes the domination of capital through the wage-labour/capital relation: the state merely provides the general conditions for the reproduction of that social relationship.

The fetishised form of the state has important political consequences.  Insofar as the bourgeois state is seen as a class state, its class features are held to be the product of the political bias of its agents.  From this it is concluded that the direction of the state could be altered by political bias of a different kind. The neutral character of the state is affirmed.  Now, the state must be able to respond to political pressure because, as we have seen, the conditions necessary for capitalist production do not arise spontaneously.  But reformists see in the state’s responsiveness to pressure proof of the correctness of their political strategy.  In fact, the state responds to pressure only within limits set by capital accumulation.  The example of unemployment benefits illustrates this.

The accumulation of capital leads to the establishment of a reserve army of labour.  It is a matter of indifference to the individual capitalist what happens to the unemployed.  It is not, however, a matter of indifference to capital in general.  Capital in general seeks to avoid social instability and prevent the destruction of potential labour-power.  Hence society “undertakes for Mr Capitalist the business of keeping his virtual instrument of labour – its wear and tear – intact as a reserve for later use”.[74]  The state steps in and provides the bare minimum for the subsistence of the living labourer.

The fact that social legislation is enacted and enforced as a result of working class pressure strengthens the view that the state can encroach on capital and serve the interests of the proletariat.[75]  In this way legislation necessary to the maintenance of the wage-labour/capital relation appears as a concession to the working class.  When the state nationalises a particular industry against the opposition of a group of capitalists reformists will often celebrate the occasion as a victory for the labour movement.  Yet class pressure which accepts the legitimacy of the bourgeois state is no threat to capital.  On the contrary, it reconciles the working class to the continued domination of capital and limits it simply to defending its interests within the capital relation.

The antagonism between labour and capital finds only a particular expression on the political level.  This antagonism is not simply a political one.  It is inherent in capital itself: “what is overlooked, finally, is that already the simple forms of exchange value and money latently contain the opposition between labour and capital.”[76]  Whether this antagonism takes a more or less intense form on the level of politics depends on particular circumstances.  But one thing is clear: the struggle for the emancipation of the working class is not ‘politics’ separated from ‘economics’.  It is a struggle against capital as social power – it is a social revolution.  It cannot be directed against this or that group of capitalists or politicians.  It can only be directed against the social power of capital which is enforced through the state.

What is distinct about revolutionary politics is that it is directed not against political relations but against social relations.  It is the recognition of the oppression of the working class as not merely political but social that constitutes the basis for the Marxist’s rejection of all reformist strategies.  The destruction of the bourgeois state is one moment in the fight to overthrow capitalist social relations.  It is the precondition for the social emancipation of the working class.

4. Capital in the epoch of imperialism

“From all that has been said in this book on the economic essence of imperialism, it follows that we must define it as capitalism in transition, or, more precisely, as moribund capitalism.” (Lenin)[77]

In the imperialist epoch capital accumulation can only continue by modifying its own laws.  The rise of monopolies and the tremendous increase in state intervention in the economy led many to reject Marx’s analysis of capital and Lenin’s theory of imperialism.  There is a crucial relationship between Marx’s analysis of capital and Lenin’s theory of imperialism as an era of transition.

Marx’s analysis shows the logical development of capital towards its transitional phase.  He shows that free competition, the free movement of capital, is “the adequate form of the productive process of capital”.[78]  In Marx’s materialist method, abstractions, such as the abstraction of free competition from the general laws of capital, always “point to a further definite concrete historical basis”.[79]  Marx’s analysis of the relationship between the movement of capital and the development of capitalism is a historical-logical one:

“As long as capital is weak, it still itself relies on the crutches of past modes of production, or of those which will pass with its rise.  As soon as it feels strong, it throws away the crutches, and moves in accordance with its own laws.  As soon as it begins to sense itself and become conscious of itself as a barrier to development, it seeks refuge in forms which, by restricting free competition, seem to make the rule of capital more perfect, but are at the same time the heralds of its dissolution and of the dissolution of the mode of production resting on it.”[80]

Once capital overcame the obstacles to its free movement it expanded spontaneously.  As soon as this stage was reached in the nineteenth century, capital became conscious of itself as a barrier to development and was forced to restrict free competition.  Marx derived the tendency for capital to contradict and modify its own laws from the general nature of capital.  Capital “must seek refuge in forms” other than free competition in its efforts to overcome the barriers to accumulation.

Marx demonstrates that the development of the productive forces comes into conflict with the social relations of capitalist production.  The tendency to increase the productivity of labour comes into conflict with the requirements of profitability.  This central contradiction is expressed in the tendency of the rate of profit to fall.  This tendency reveals that “beyond a certain point, the development of the powers of production becomes a barrier for capital; hence the capital relation a barrier for the development of the productive powers of labour.”[81]  The very development of the productive process becomes a barrier for capital.  The inability of capital to develop the forces of production systematically and its inherent tendency towards crisis – as expressed in the tendency of the rate of profit to fall – bring to light the transient nature of capitalist society.  It was for this reason that Marx described the law of the tendency of the rate of profit to fall as “in every respect the most important law in modern political economy”.[82]  The more capital comes into conflict with its own barriers the more it is forced to seek ways of overcoming them.  The role of the state and that of monopolies are vital to this.

(a) Free competition and monopoly

The fall in the rate of profit intensifies the competitive struggle between individual capitalists.  This leads to the growing concentration and centralisation of capital.[83]  Credit speeds up the process of centralisation.  Through credit, capital tries to overcome the limitations imposed on the individual capitalist and thus allows an “enormous expansion of the scale of production and of enterprises, that was impossible for individual capitals”.[84]  Credit is a lever for redistributing capital from the weaker to the stronger capitalists.  The process of centralisation is not limited “by the absolute limits of accumulation”.  Capital can “grow into powerful masses in a single hand because there it has been withdrawn from many hands”.[85]

As credit develops joint-stock companies emerge.  These huge units of production further accelerate the pace of capital accumulation.  To protect themselves from their competitors they seek to restrict free competition by establishing monopolies and cartels.  But monopolies cannot overcome the laws that govern capital accumulation.  They can only transfer a part of the profit of other capitalists to themselves – through the redistribution of total surplus-value.[86]

Monopolies seek to overcome the barriers the barriers to profitable production by altering the form in which an average rate of profit is realised.  Monopolies cannot be counterposed to competition, either historically or logically.  They suppress free competition but not competition as such.  Marx derived the tendency towards centralisation and monopoly not from an analysis of a particular historical period but form the general nature of capital.  Monopoly capitalism as a scientific concept is based on the analysis of the laws of motion of capital.  Derived from capital itself, the tendency towards monopoly has been realised in the historical period characterised as imperialism.

With the concentration and centralisation of capital the social character of production acquires a growing independence from the individual capitalist.  Credit stimulates the socialisation of ownership and endows capital “with the form of social capital (capital of directly associated individuals) as distinct from private capital”.[87]  Marx described this process as “the abolition of capital as private property within the framework of capitalist production itself.”[88]  The new forms of competition put the socialisation of production onto a higher level.  It is in this sense that they “constitute the form of transition to a new mode of production.”[89]  At the same time monopolies and joint-stock companies express the contradictions inherent in capitalism in a new form.  They show that capital must modify its own laws and that the “conditions of competition, ie of production founded on capital, are already felt and thought of as barriers, and hence already are such. . .”[90]

For Marx, the rise of joint-stock companies, credit and monopolies was an important sign of the transient nature of capitalist production.  The separation between the ownership of capital and its control that had been indicated by Marx became increasingly realised in the historical development of capital.  Marx pointed to the transformation of “the actually functioning capitalist into a mere manager, administrator of other people’s capital and of the owner of capital into a mere owner, a mere money capitalist”.[91]  Marx considered that the joint-stock companies represented the ultimate development of capitalist production.  They were a “necessary transitional phase towards the reconversion of capital into the property of the producers.”[92]

Capital does not overcome its antagonistic nature in this phase of transition.  Nor does ‘transition’ imply the transcendence of capitalist relations of production.  The forms of transition indicate the inability of capital to develop the productivity of social labour in accordance with its own laws.[93]  The revisers of Marx believe that these new forms contradict the essential laws of capital.

(b) Free competition and the state

In order to overcome the obstacles to capital accumulation the bourgeoisie increasingly comes to rely on state intervention in the economy.  For Marx, state intervention represented a sign of capitalist stagnation.  Or, conversely, the more limited the intervention of the state in production, the more developed is the capital relation.[94]  The highest development of capital exists when the general conditions of the process of social production are not paid out of deductions from the social revenue, the state’s taxes. . . . but rather out of capital as capital.”[95]  In the imperialist epoch the conditions the conditions for capital accumulation can be maintained only through a major expansion of state intervention.  The contradictions immanent in the capitalist accumulation process have led to restrictions on free competition – restrictions imposed by state intervention.

As capital develops, every new barrier to accumulation necessitates further state intervention in the economy.  Capital “forces on more and more the transformation of the vast means of production, already socialised, into state property.”[96]  This tendency has reached massive proportions in the imperialist epoch.  State intervention promotes the tendency towards the socialisation of production.  This is possible because the state is not subject to the limitations of the individual capitalist.  It is, however, constrained by value relations, by the total quantity of surplus-value produced.  Most recently, the state has operated companies of its own as a capitalist.  Thus the socialisation of production carried out by the state is always limited by capitalist social relations.

(c) Capitalism in transition or moribund capitalism

Marx’s analysis of the transitional forms of capital acquires a new force in Lenin’s analysis of imperialism.  In the epoch of imperialism, capital can no longer develop in accordance with its own laws.  Monopolistic competition and state intervention replace free competition and the increasingly social character of production is revealed by the growing separation of the ownership of firms from their control – in joint-stock companies and state enterprises.  The need for capital to adapt these new forms shows that imperialism is an epoch of transition.  The fact that the socialisation of production can only proceed through these forms indicates the material possibility of socialism.

Marx’s analysis shows that the barriers to accumulation force capital to modify its own laws and ‘seek refuge’ in transitional forms.  Once capital reaches its highest point on the basis of its own laws, further development has a regressive character: “As soon as this point is reached, the further development appears as decay, and the new development begins from a new basis.”[97]  It is in this sense that we can characterise imperialism as an epoch of decay, of moribund capitalism.  The spontaneous movement of capital becomes less and less able to overcome the barriers to accumulation contained within capital itself.

Revisionism seizes upon the social forms which signify the moribund nature of capital and interprets them as no longer capitalist, and often progressive.  Features of imperialism which, for Lenin. indicated the necessity for the rule of the working class, are used to erase the distinction between capitalism and socialism and to justify the abandonment of the tasks of socialist revolution.  The revisionists adopt the standpoint of the individual capitalist and imagine that society is regulated by the conscious actions of the state and the monopolies.  They reject the more barbaric features of capital in the imperialist epoch and seek to use the bourgeois state to build socialism.

Lenin characterised the imperialist epoch as one of stagnation and decay but also indicated the increasing unevenness of this process, acknowledging the possibility of episodes of expansion within the general tendency towards decline.[98]  He argued that “on the whole capitalism is growing far more rapidly than before; but this growth is not only becoming more and more uneven in general, its unevenness also manifests itself, in particular, in the decay of the countries which are richest in capital (Britain)”.[99]  The tendency towards decay is revealed on a world scale in the restricted basis for the expansion of capital.  The continuous drive to divide and redivide the world only postpones the assertion of the tendency to capitalist collapse.

What characterises this epoch of transition is that the counteracting tendencies to the falling rate of profit prove increasingly inadequate in overcoming the barriers to accumulation.  More and more, capital has to use ‘extra-economic’ means to regulate production and to discipline the working class.  Wars, major defeats of the working class and the mass destruction of capital values have been the means by which profitable production has been restored.

Lenin’s analysis of imperialism as the epoch of transition demonstrated that socialism was not merely possible, but necessary for the defence of the independent interests of the working class.


[1] Marx, letter to Wedermeyer, March 5, 1852, in Marx and Engels, Selected Correspondence, London, Lawrence & Wishart, 1975, p64.

[2] Ibid.

[3] Karl Marx, Capital vol 1, London, Lawrence & Wishart, 1974, p77 (all references to Capital are to this edition except where stated otherwise).

[4] Ibid, p78.

[5] Ibid.

[6] “This mystification is still a very simple one in the case of a commodity.  Everybody understands more or less clearly that the relations of commodities as exchange-values are really the relations of people to the productive activities of one another.  The semblance of simplicity disappears in more advanced relations of production.  All the illusions of the Monetary System arise from the failure to perceive that money, though a physical object with distinct properties, represents a social relation of production.”  Karl Marx, A contribution to the critique of political economy, Moscow, Progress Publishers, 1970, pp34-5.

[7] The concept capital in general is an “abstraction which grasps the specific characteristics which distinguish capital from all other forms of wealth. . .  These are the aspects common to every capital as such, or which make every sum of values into capital.  And the distinctions within this abstraction are likewise abstract peculiarities which characterise every kind of capital. . .”  Karl Marx, Grundrisse, Harmondsworth, Pelican Books, 1973, p449 (all references are to this edition).

[8] Ibid.

[9] “Conceptually, competition is nothing other than the inner nature of capital, its essential character, appearing in and realised as the reciprocal interactions of many capitals with one another, the inner tendency as external necessity.  Capital exists and can only exist as many capitals. .  .”  Ibid, p419.

[10] “Thus everything appears reversed in competition.  The final pattern of economic relations as seen on the surface, in their real existence and consequently in the conceptions by which the bearers and agents of these relations seek to understand them, is very much different from, and indeed quite the reverse of their inner but concealed essential pattern and the conception corresponding to it.”  Marx, Capital, vol 3, p209.

[11] Ibid, p25.  The various forms of capital developed in this book “thus approach, step by step, the form which they assume on the surface of society, in the action of different capitals upon one another, in competition, and in the ordinary consciousness of the agents of production themselves.”  Ibid.

[12] This problem was resolved by Marx’s development of the category labour-power.

[13] Karl Marx, Theories of surplus-value (TSV), part three, London, Lawrence & Wishart, 1972, p482 (all references to TSV are to this edition unless otherwise noted).

[14] The fundamental distinction between constant and variable capital disappears when surplus-value takes the form of profit.  The portion of capital invested in the purchase of labour-power is a definite quantity of value, but the exploitation of labour-power in the process of production makes this variable capital.  That part of capital represented by the means of production does not undergo any quantitative alteration of value in the production process and is called constant capital.  See Capital, vol 1, pp164, 188, 202, 206.

[15] Capital, vol 3, p42.

[16] The analysis of the formation of an average rate of profit through the transformation of values into prices of production is one of the main ways in which the analysis of capital in general and that of many capitals can be linked.  See Capital, vol 3, chapter 9.

[17] TSV, part 3, p483.

[18] Capital, vol 3, p48.

[19] TSV, part 3, p494.

[20] “The further we follow the process of self-expansion of capital, the more mysterious the relations of capital will become, and the less secret of its internal organism will be revealed.” Capital, vol 3, p48.

[21] TSV, part 3, p483.

[22] “But in reality this sphere is the sphere of competition, which, considered in each individual case is dominated by chance; where, then, the inner law, which prevails in these accidents and regulates them, is only visible when these accidents are grouped together in large numbers, where it remains, therefore, invisible and unintelligible to the individual agents in production.”  Capital, vol 3, p828.

[23] Grundrisse, p552.

[24] “His profit appears to him as something outside the immanent value of the commodity.”  Capital, vol 3, p168.

[25] “How could living labour be the sole source of profit, in view of the fact that a reduction in the quantity of labour required for production appears not to exert any influence on profit?  Moreover, it even seems in certain circumstances to be the nearest source of an increase of profits, at least for the individual capitalist.”  Capital, vol 3, p170.

[26] It appears so because the transformation of profit into average profit and of values into prices of production divorces the average prices of commodities from their values.  See Capital, vol 3, p828.

[27] Ibid, p253.

[28] In fact it is through the individual capitalist’s drive for higher profits that an average rate of profit is established.  In competition, each capitalist “naturally tries to secure more than the average rate of profit, which is only possible if others secure less.  It is precisely as a result of this struggle that the average profit is established.”  TSV, part 3, p83.

[29] Capital, vol 3, p827.  This view is reinforced by the fact that the surplus-value contained in commodities must first be realised in the circulation process and hence appears to arise out of exchange.

[30] Ibid, p861.

[31] Writing about exchange, Marx stated, “The total surplus-value, as well as the total profit, which is only surplus value itself, computed differently, can neither grow nor decrease through this operation, ever; what is modified thereby is not it, but only its distribution among the different capitals.”  Grundrisse, p760

[32] Marx wrote of John Stuart Mill: “A more advanced, more critical mind, however, “admits the historically developed character of distribution relations, but nevertheless clings all the more tenaciously to the unchanging character of production relations themselves, arising from human nature, and thus independent of all historical development.”  Capital, vol 3, p878.

[33] “Thus land, capital and labour on the one hand – insofar as they are the sources of rent, interest and wages and these are the constituent elements of commodity prices – appear as the elements which create value, and on the other hand, insofar as they accrue to the owner of each of these means for the production of value, ie insofar as he derives the portion of the value created by them, they appear as sources of revenue, and rent, interest and wages appear as forms of distribution.” TSV, part 3, p499.

[34] TSV, part 3, p514.

[35] TSV, part 1, London, Lawrence & Wishart, 1969, p93.

[36] TSV, part 3, p477.

[37] Ibid, p495.

[38] Ibid, our emphasis.

[39] Capital, vol 3, p382.

[40] The preoccupation of reformists and even much of the radical left with the unfair distribution of wealth and the unscrupulousness of financiers stems from this moral understanding of exploitation.

[41] TSV, part 3, p467.

[42] Ibid.

[43] Capital, vol 1, p79.

[44] Grundrisse, p157.

[45] Capital, vol 1, p555.

[46] Capital, vol 3, p264.

[47] Ibid, p245.

[48] “Thus the productive power of social labour and its special forms now appear as productive powers and forms of capital, of materialised labour, of the material conditions of labour – which, having assumed this independent form, are personified by the capitalist in relation to living labour.  TSV, part 1, p389.  See also Capital, vol 3, p264.

[49] TSV, part 1, p390.

[50] Capital, vol 3, p555.

[51] Ibid, p379.

[52] TSV, part 3, p496.

[53] See “Results of the immediate process of production”, in Capital, vol 1, Penguin edition, 1976, p999.

[54] “The concept of capital contains the capitalist”, Grundrisse, p512.

[55] Ibid, p421.

[56] TSV, part 3, p296.  Marx argued, “Of course, socialists sometimes say, we need capital but not the capitalist. . . . I may well separate capital from a given individual capitalist, and it can be transferred to another.  But, in losing capital, he loses the quality of being a capitalist.  Thus capital is indeed separable from an individual capitalist, but not from the capitalist, who, as such, confronts the worker.”  Grundrisse, p303.

[57] Capital, vol 1, pp575-6.

[58] It should be pointed out that this refers to the developed capitalist world; in the Third World, class relations and the rule of capital tend to be more brutal.

[59] “. . . on the basis of capitalist production, the mass of direct producers is confronted by the social character of this production in the form of strictly regulating authority and a social mechanism of the labour-process organised as a complete hierarchy – this authority reaching its bearers however, only as the personification of the conditions of labour in contrast to labour, and not as political or theocratic rulers as under earlier modes of production – among the bearers of this authority. . . there reigns complete anarchy within which the social interrelations of production assert themselves only as an overwhelming natural law in relation to individual free will.” Capital, vol 3, p881.

[60] In reality, the labourer belongs to capital before he has sold himself: “His economic bondage is both brought about and concealed by the periodic sale of himself, by his change of masters, and by the oscillations in the market-price of labour-power.” Capital, vol 1, p542.

[61] Ibid, p547.

[62] Ibid.

[63] Grundrisse, p248.

[64] Capital, vol 3, p196.

[65] See Elmar Altvater’s useful remarks on this question in “Some problems of state interventionism”, Kapitalistate, no 1, 1973, p98.  See also Guy Alexander, “The State and Capital” on this blog:

[66] Capital, vol 3, p351.

[67] Grundrisse, p449.

[68] Marx characterised the relation between capital and the state as “a specific relation of capital to the communal, general conditions of social production, as distinct from the conditions of a particular capital and its particular production process.”  Grundrisse, p533.

[69] Frederick Engels, Anti-Duhring, p330.

[70] Grundrisse, p420.

[71] A sophisticated example of this idealist school was Nicos Poulantzas, Fascism and Dictatorship, London, New Left Books, 1977.  Attempts to reconcile Marxism with political sociology were made by Eurocommunist theoreticians with great vigour.

[72] Karl Marx, “Critical Marginal Notes on the Article ‘The King of Prussia and Social Reform.  By a Prussian.’”  Marx and Engels, Collected Works, vol 3, p197.

[73] Vulgar sociology reduces the rule of capital to its individual agents.  It presents the policies of capital as those of a particular interest group – for example, the monopolists.  In this way, the interest of the capitalist class is depicted as the interest of a particular fraction of capital.  This superficial approach leads to the conclusion that basic contradictions exist between different fractions of capital.  In this way the sociologists obscure the essential nature of the capital/wage-labour relationship – that it is total capital that exploits the whole of the working class and that every individual capitalist is but an individual element of the capitalist class.

[74] Grundrisse, p248.

[75] See W. Muller and C. Neussus, “The illusion of state socialism and the contradictions between wage labor and capital”, Telos #25, 1975.  Muller and Neussus provide a useful line of analysis of the questions under consideration here.  See also Guy Alexander, “Capital and the State”, on Redline, here.

[76] Grundrisse, p248.

[77] Lenin, Collected Works, vol 22, p302.

[78] Grundrisse, p651.

[79] Marx and Engels, Selected Correspondence, p99.

[80] Grundrisse, p651.

[81] Ibid, p749.

[82] Ibid, p748.

[83] The concentration of capital pertains to the “increasing concentration of the means of production” that arises out of accumulation.  It is “only another name for reproduction on an extended scale”.  The centralisation of capital relates to the growing destruction of one capitalist by another.  Unlike concentration, “it only presupposes a change in the distribution of capital already to hand, and functioning; its field of action is therefore not limited by the absolute growth of social wealth, by the absolute limits of accumulation.” Capital, vol 1, pp586-7.

[84] Capital, vol 3, p436.

[85] Capital, vol 1, p587.

[86] Capital, vol 3, p861.

[87] Ibid, p436.

[88] Ibid,

[89] Ibid, p441.

[90] Grundrisse, p652.

[91] Capital, vol 3, p436.

[92] Ibid, p437.

[93] “This simply demonstrates the fact that the self-expansion of capital based on the contradictory nature of capitalist production permits an actual free development only up to a certain point, so that in fact it constitutes an immanent fetter and barrier to production which are continually broken through by the credit system.”  Capital, vol 3, p441.

[94] “The separation of public works from the state, and their migration into the domain of works undertaken by capital itself indicates the degree to which the real community has constituted itself in the form of capital.”  Grundrisse, p531.

[95] Ibid, p532.

[96] Engels, Anti-Duhring, p332.

[97] Grundrisse, p541.

[98] Marx anticipated the imperialist epoch.  See, for instance, Grundrisse, pp650-1.

[99] Lenin, CW 22, p300.

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