Chapter 25 is the culmination of, if not of the entire argument in Vol I, at least of the trajectory beginning with the principle of cooperation (Ch. 13); moving through the division of labour, into machinery, and now the logical explication of the dynamics of these various factors within capitalism encapsulated in the concepts of technical composition, value composition, and organic composition of capital. As Andy has already discussed at length, Marx directly states that there is a contradictory tendency working within capitalism’s dynamics whereby, as the organic composition of capital rises (i.e. C=constant V=variable, C/V, thus an increasing ratio of constant capital reducing the amount expended on variable capital), then, if we take the rate of profit as P=s/v over 1+c/v, you have a falling rate of profit as the organic composition rises.
Here, the falling rate of profit is declared a “law”, but in Volume Three it is reduced back to a “tendency” – something that has produced a massive amount of debate within Marxian economics. If one takes the ‘Falling Rate of Profit’ thesis at face value, as an IMMANENT law within capitalism, one of its EMMINENT collapse, then you have a teleology that can inform a politics (if you could call it that, maybe a ‘faith’ is more appropriate) where the conclusion is already prefigured in the present. But, as Harvey argues at the end of lecture 11, it is important to note that Marx is working through an abstract logic of capitalism, through the concepts that political-economy of the time had developed, to show that, at a certain level of abstraction, if the market operated as Smith and others theorized, we would get the polarization of wealth / pauperism within in its own terms. Ricardo and others recognized a ‘Falling Rate of Profit’ as well, but located it outside of capitalism, in population, in natural resource depletion, etc., while Marx located it within the very dynamics outlined by classical political economy.
This, I think, is one productive way of reading this chapter; that rather than a descriptive analysis of how capitalism has developed historically, and re-ordered social production in time and space, it is, at one level, a working through of the discourse of political economy. This is NOT however, to separate political economy as (subjective) discourse from the real social developments as objective reality with no inter-relation between the two. Marx seems to be moving towards the objective (in his terms) through the concepts developed by the appearances that actually shape social reality – remember throughout the text Marx constantly argues that political-economy has taken the concepts from everyday life, from the appearances that capitalism requires. Thus fetishism is a necessary aspect of the logic of the system, and working through this fetishism is necessary to see how the system actually works. We could discuss how much Marx assumes an epistemological possibility that is equal to a coming-into-consciousness…something that one could read, as in the following passage:
“Thus as soon as the workers learn the secret of why it happens that the more they work, the more alien wealth they produce, and that the more the productivity of their labour increases, the more does their very function as a means for the valorization of capital becomes precarious; as soon as they discover that the degree of intensity of the competition amongst themselves depends wholly on the pressure of the relative surplus population; as soon as, by setting up trade unions, etc., they try to organize planned co-operation between the employed and the unemployed in order to obviate or to weaken the ruinous effects of this natural law of capitalist production on their class, so soon does capital and its sycophant, political economy, cry out at the infringement of the ‘eternal’ and so to speak ‘sacred’ law of supply and demand. (p. 793)”
Two interesting points about this passage: (1), yes, unionization, political activism, etc is assumed to be predicated upon an ‘understanding’ of this system – which of course can be easily countered by the labor politics that embody the very logic of capital, and; (2) the necessary appearances of capitalism that political economy assumes – the very concepts that Marx takes-up based on an assumption their social effectivity – are reduced to mere ‘ideology’ of the capitalists.
Ok, so back to the chapter. As Harvey outlined in the lecture, there are two models of accumulation explicated in this chapter; one expresses the falling rate of surplus-value that can be re-capitalized due to the absorption of labor reserves and thus a rise in wages, and another where technological innovation enters into the circuit, reducing the demand for labour, produces a surplus population, increases the rate of exploitation and thus increases the rate of accumulation. Here are the sequences:
Accumulation of Surplus Value » Portion of S.V. re-capitalized » Generates increase demand for labour power » Absorption of Surplus Population » Rising Wages » Less Surplus Value » Less Surplus Value Accumulated for Recapitalization
Accumulation » Portion of S.V. re-capitalized » New Technologies » Reduces Demand for Labour » Produces Surplus Population » High-Rate of Exploitation » Increase in Capital Accumulation
So what is being expressed is that through the organizational and technological innovations that are driven by the drive to accumulate, you can have a reduction in labour, yet its rate of exploitation increases from the pressure of the industrial reserve army produced by the process. Marx notes that this is yet another contradiction of the logic – that labour produces capital and thus drives the process of accumulation that constitutes capitalism, and yet, through this process, creates the conditions for its increasing superfluity. Abstracted from this, then, is the general contradiction that Andy discussed, the polarity of increasing wealth with increasing poverty.
Again, however, we return to the importance of reading this as an internal tendency if the logic is isolated in its own abstract terms. Harvey argues that the “external interactions” interrupt this logic so much that one can never state a general law with any certainty. What he means by ‘external’ interactions, and something that opens into a whole other set of interesting questions, is that the two models mentioned above seem to be within a firm, or within, lets say a branch of industry, which allows for us to trace a singular circuit. But Marx himself moves into questions of concentration/centralization (see Andy’s helpful summary of this discussion below) that brings in the question of multiple interactions, the pressure of competition, the fluidity of interactions, etc into the analysis.
Thus Harvey notes multiple ways in which both the (1) rising organic composition of capital and (2) the falling rate of profit can easily be impinged and rectified. Thus these laws or models are not the end-all of the analysis, but are ways through which Marx locates specific tendencies at certain levels of the system, that then can be utilized in sociological or historical analysis, but only in relation with multiple other factors. For a great example of what these ‘other’ factors are, check out the last 20 minutes of the Harvey lecture when he discusses the absorption of the latent population within the last thirty-years which, when viewed in specific locations, actually inverted the organic composition of capital. In other words, these tendencies could never fully express themselves; they only 'appear' at a level of abstraction, both within the fetishisms of the everyday and the economic utopia of political economy. This does not require us to throw out the baby with the bathwater, because these are tendencies, ones that can be located in capitalism’s history, but again, ones that have to be taken in relation to other factors, tendencies, obstacles, etc.
Ok, lets finish this bastard. Onto the last chapters.