Real and Formal, again

Randomly found this old NLR article from Ben Fine:

New Left Review I/109, May-June 1978

Ben Fine
"On the Origins of Capitalist Development Remarks"

Eventually he reaches a discussion of relative and absolute surplus-value in the history of capital and makes a claim that takes some fucking guts:

In short, whilst the production of relative surplus-value can develop as soon as capitalist relations are established, it can only fully flower aftereffective legislation to limit the length of the working day. In Britain, only by 1870, fully one hundred years after the industrial revolution associated with the textile industry, can it be argued that socially the real subsumption of capital to labour had been accomplished.

This is what I want to see more of. More guts to actually talk about history and Marxian theory together.

Vol II, Part Three via Secondary Literature

Since I had a hard time trying to tease out the main points from these last two sections, I’ve decided to turn to secondary literature in order to assist in contextualizing or highlighting what is at stake in Part Three. As Andy’s post below does an excellent job of working through both chapters, I will focus more on the secondary literature here – pointing to themes that intersect with issues raised by Andy. Now, the main point of contention in the secondary literature can be reduced to, I believe, a debate over if the principle of “equilibrium” drives Marx’s division of the total social capital in to two departments. At a superficial level it appears that Marx is developing his own specific reproduction schema from which to counter the fallacies of political economy - in other words, we are looking at one level (though not comprehensive) of how the capitalist economy reproduces itself and what necessary conditions need to be met for accumulation/expansion to occur – i.e., a balance between the use-values AND exchange-values between one sector that produces means of production and another sector that produces consumption goods (Dept I and II). The schema, embedded with what Harvey calls ‘restrictive assumptions’, does indicate a balance, and thus the question becomes how we situate this within the larger conceptual apparatus and analytical dynamic of Capital? Some will extrapolate and extend the modular form of these chapters into quantifiable, algebraic formulas, and temporarily side step the question of contradiction or crises (or even a dialectic) by displacing these outside of the operations of the balance between departments. In other words, these two chapters are taken up as providing a schematic model upon which to develop a fuller economic model of the capitalist economy.

Now, on one level, I think this is in fact what is going on here: that Marx had to necessarily deal with circulation and exchange at the level of social capital, and that within capitalism’s dynamic an internal basis of reproduction (equilibrium) had to be necessarily presumed within the total social capital in order to theorize accumulation/expansion. But if we fetishize these last two chapters, we are led into the realm of pure economic theory (of circulation only) – endlessly trying to quantify reproduction and locate the co-efficient that indicates a systemic crisis at the level of exchange. Harvey provides a corrective to this tendency, as he both (1) notes the ‘restrictive assumptions’ in order for balance to be posited within the moment of circulation, and; (2) how these chapters sit within Marx’s larger project. I will finish this post with a discussion of some of the points Harvey raises, but first, let me start with Moseley, since his discussion of money capital is important (tying this to Andy’s discussion below of hoards) – and more importantly it opens into a larger question of where one locates crisis in regards to the Dept. I/II schema.

Fred Moseley – Schemes of the reproduction of Money Capital
In his chapter “Marx’s Reproduction Schemes and Smith’s Dogma” in The Circulation of Capital: Essays on Volume Two of Marx’s Capital, (New York:1998) Moseley argues that Part III of Vol. II is specifically targeted to debunking the fallacy that Smith posits – that the “ price of the total social product is entirely resolved into revenue” – i.e., wages plus profit and rent. Moseley works through this by arguing that Marx’s schema between Dept. I and II is not of physical quantities of inputs and outputs (resources, means of production, etc) but rather are concerned with the “reproduction of quantities of money capital. (Moseley, p. 160)” This moves beyond any material or technological conditions of production and returns the total operation of multiple industrial cycles to the question of the accumulation (augmentation) of capital itself (and the money form of capital – Vol. I). The historically specific concept of money (i.e., within the categorical matrix and dynamics of capitalism) – as M-C-M’ – is contrasted to revenue which is used to purchase commodities for individual consumption; i.e., ‘revenue’ – categorically – does not entail a specific function (prior, operative, anticipated) of augmentation that is specific to capitalist accumulation.

At first I thought Moseley was pushing the money emphasis too far, but upon reflection this section – more than any other – emphasizes the necessary function of money; as potential capital in a hoard, of capital advanced (indicating capital ‘set-free’ into credit and other financial services), consolidated (joint-stock), as well as the continual lubrication of the process as variations in turnover times do not all converge on one reflux point (think Part II, Vol. II). In essence, the difficulty of reproduction, a collective process of multiple turnover rates internal and between a wide-variety of capitals, is assisted by the function of money and its fluid forms. Moseley highlights that one of the main assumptions of this section – one that is fundamental for this schema to operate – is that the difficulties in the discontinuous reinvestment in the replacement of means of production (Dept I) is answered by hoards built up by capitals in other sectors. Following Andy’s emphasis below, for Moseley, Marx is not emphasizing equilibrium per se, but rather is locating the methods through which the system overcomes its own inherent tendencies towards disequilibria.

One aspect that Moseley does not cover in this chapter (though one that necessarily under-girds his analysis of the magnitude of money) is the functions specific to the money form (emphasis on form – returning to Vol. I). In this regard I want to point to one section from Part III that makes the distinction clear and what it then allows to be understood. Marx argues that:

“the variable capital functions as capital in the hands of the capitalist and as revenue in the hands of the wage-labourer…The variable capital first exists in the hands of the capitalist as money capital; it functions as money capital in so far as he buys labour-power with it. As long as it persists in his hands in the money form, it is nothing more than given value existing in that form….(Vol. II, p. 514)”

Further down on the same page Marx argues that:

“the money that functions firstly as the money form of variable capital for the capitalist now functions in the hands of the worker as the money form of his wage which he converts into means of subsistence; i.e. as the money form of the revenue that he receives from the ever repeated sale of his labour-power….We have here the simple fact that the money of the buyer, here the capitalist, passes from his hands into those of the seller, in this case the seller of labour-power, the worker. It is not the variable capital that functions twice over, as capital for the capitalist and as revenue for the worker, but simply the same money, which exists first in the hands of the capitalist as the money form of his variable capital, hence as potential variable capital, and which, once the capitalist has converted it into labour-power, serves in the hands of the worker as the equivalent for the labour-power he has sold. However, the fact that the same money serves one purpose in the hands of the seller and another in the hands of the buyer is simply a phenomenon inherent in all purchases and sales of commodities. (Vol II, p. 515)”

Returning to Moseley’s main theme – that Marx’s intention is a critique of Smith – Moseley argues that to Marx, “if Smith’s dogma were true and the total price of the total commodity product were resolved entirely into revenue, then the constant-capital consumed could not be recovered, from which it follows that the physical means of production could not be repurchased and production could not continue on the same scale. (Moseley, p. 172)” In other words, each cycle would be starting from scratch – non-accumulation (remember Marx’s critique of Smith wherein Smith had to sneak in the ‘fourth’ category of ‘capital’ in order to set his three-forms of revenue into motion). Thus, as Moseley argues, Marx’s model provides a standpoint (a counter-economic model) to flesh out the inconsistencies of the-then contemporary political economy. But has this schema proven useful in locating a more general systemic or social contradiction?

This all hinges on whether this is a schema of equilibrium – since taken in isolation, it does appear to be so (even in the chapter of accumulation). All secondary literature that I read were in unison, arguing that this is most definitely not positing equilibrium (such as how the later Neo-Keynesians would see these models as indicating equilibrium – via effective or aggregate demand). However, with the exception of Harvey, most did not try to think through social contradiction into, or along with, the Dept I/II model. Duncan Foley (1986), in his chapter on these schema, excuses social reproduction and focuses solely on the intricacies of Marx’s Dept I/II model, wherein the mathematical equations he produces seems to suggest that capitalism, though faced with crises of aggregate demand, appears to be able to sustain itself and expand. In other words, crisis needs to be found elsewhere. Fine and Saad-Filho (1988) mark a division between social reproduction and capitalist reproduction – noting contradictions in both. In the latter, they note that there are “uncertainties” that seem to point to disequilibrium in capitalist reproduction/accumulation – (1) uncertainty about the ability to extract surplus value from labour (this uncertainty obviously falls outside of the scope of Part III as we are concerned here with circulation/exchange between departments), (2) how much surplus value can be realized (actualized in the market), (3) competition leads to ever-increasing technical changes of production, (4) finance/credit allows for the overexpansion of accumulation, and (5) trading in money leading to speculation, etc. But we don’t find a direct engagement with what the balance between Dept I/II tells us about a more general crisis, one that ostensibly would be visible primarily in social contradictions.

David Harvey, Limits to Capital:
Harvey (1982), however, is much more sensitive to the how the Dept I/II schema sits within Marx’s overall project as well as the necessary assumptions that automatically foreclose a much more complicated approach to the overall social capital. In regards to the latter, the main assumption is that commodities are exchanged at their values, which entails ignoring the effects of capitalist competition (leading to innovation, higher rate of exploitation, technological innovation, etc) and that commodities are sold at prices of production and not their value (this also includes labour-power). Additionally, fluctuations in the money/credit market are also set aside. More importantly however, is that Harvey emphasizes that this schema points to crises that obtain from the SOCIAL relations of capitalism:

“[Marx] wants to disentangle the contradictions embodied in such a process [of aggregate social capital]. So he fashions a device that allows him to identify the proportionate growth rates in the different departments, in production quantities, in value exchanges and in employment which, if they are not fulfilled, will result in crises. The reason for taking so much trouble to define equilibrium is, as always, to be better able to understand why departures from that condition are inevitable under the social relations of capitalism. (Harvey, p.169-170)”

Thus the necessary assumptions (what Harvey calls ‘restrictive’) in the economic models displaces the contradictions that appear in the social – in other words, Harvey emphasizes the social relations of production in relation (or delimitation) to this schema. He notes multiple discrepancies between what this schema indicates and Marx’s more general project:

1) The necessary balances (reproduction) of inputs/outputs run counter to seeing capital as a continuous process in motion. Harvey argues:
“By modeling accumulation in highly simplified stock terms, Marx gains greatly in analytical tractability. But the price he pays is a departure from the very basic but much more difficult flow conception which he sought to hammer out in preceding chapters, particularly those dealing with circulation of variable capital and surplus value. (Harvey, p. 170)”

2) That Marx failed to stay true to his purpose of understanding circulation between departments as an inseparable dynamic-dialectic of use value and exchange value. In other words, exchange values (circulation) have to be balanced out with use values (the basis of the disaggregation of social capital into two sectors of production). This lines up with both Moseley, who wanted to emphasize this was not a balance of material inputs/outputs but rather one of magnitudes of money, as well as Andy’s discomfort with the seeming arbitrariness of the two department distinction (see below). This then opens into a more extended discussion of the important concept of “viable technology” and a contradiction that emerges between its function (to balance use and value exchanges between departments) and technologies role in accumulation in general (see p. 170-171).
This is where Harvey’s work really answers a lacunae in most of the economic literature that I read on Part III of Vol II. Here Harvey emphasizes that this model of reproduction has to be read along with the model of social reproduction from Vol I., wherein the capitalist production process produces the capitalist social relations (wages laborers need to sell their labour power and purchase commodities on the market; capitalists require others’ labour power, accrue more potential capital for reinvestment and are driven by competition into innovation and higher rates of exploitation). Thus we should not isolate this model of economic reproduction (a tendency that many Marxian economists have followed to a greater or lesser degree) but try to see how it intersects with the process of social reproduction and the reproduction of social classes. Thus we can examine class relationships through these exchange-schema:

“Capital circulates, as it were, through the body of the labourer as variable capital and thereby turns the labourer into a mere appendage of the circulation of capital itself. The capitalist is likewise imprisoned within the rules of circulation of capital, because it is only through the observance of these rules that the reproduction and expansion of constant capital and the production of further surplus value is ensured. We are, in short, looking at the rules that govern the reproduction on a progressive scale of whole social classes. (175)”

Obviously this is not some type of circulation-centered emphasis (where the contradictions and thus political possibility is located merely in the realm of exchange and distribution); I think that Harvey is merely showing that though one can locate and analyze class dynamics at the level of exchange, that exchange is inseparable from (though as we will see below, in contradiction with) production – the primary site within which the social relations are reproduced. One interesting issue that Harvey points to in this regard is that the reproduction of classes glossed at the level of circulation (here through the schema) seems to posit a balance much like the economic-models of many Marxian economists. But Harvey, after pointing to Rosa Luxemburg’s critical departure from the incompleteness of the Dept I/II schema, notes that what Marx forces us to do is:

“to consider the stark contrast between the rules regulating accumulation in the realm of production and those that regulate balanced accumulation in the realm of exchange. Read in the context of Marx’s overall project, the reproduction schemas yield most of the theoretical insights we need. Balanced accumulation through exchange is indeed possible in perpetuity, provided that technological change is confined within strict limits, provided that there is an infinite surplus of labour power which always trades at its value….[etc.] Put simply, the conditions that permit equilibrium to be achieved in the realm of production contradict the conditions that permit equilibrium to be achieved in the realm of exchange….(Harvey, p. 176)”

And this contradiction between the twin-equilibrium required within the realm of production and exchange opens into a much more complex social dimension - one that is foreclosed when a circulation balance between departments is reified into algebraic equations. With his attempt to read social relations, social crisis, relations of production, within and through the level of circulation (accumulation schema), Harvey, I think, provides the most fruitful way to situate these last chapters into a larger Marxian framework, one that does not reproduce the fetishistic quality of some of the Marxian economic models glossed from the Dept I/II model.

Other points that emerge from this section:

1) Logic at the individual circuit is generalized and/or contrasted at the general societal level:
“The product of an individual capital, i.e. each independently functioning fraction of the social capital endowed with its own life, may have any natural form whatsoever. The only condition is that it really should have a use form, a use-value, that stamps it as a member of the commodity world capable of circulation.” “It is different with the product of the total social capital. All material elements of the reproduction must be parts of this product in their natural form…On the assumption of simple reproduction, therefore, the value of the portion of the product that consists of means of production must be equal to the [consumed] constant portion of the value of the social capital. (Marx, 508)”


2) Notes on Crises and their relation to a Rise in Wages (Andy also notes this):
“It is a pure tautology to say that crises are provoked by a lack of effective demand or effective consumption. The capitalist system does not recognize any forms of consumer other than those who can pay, if we exclude the consumption of paupers and swindlers. The fact that commodities are un-sellable means no more than that no effective buyers have been found for them, i.e. no consumers (no matter whether the commodities are ultimately sold to meet the needs of productive or individual consumption). If the attempt is made to give this tautology the semblance of greater profundity, by the statement that the working class receives too small a portion of its own product, and that the evil would be remedied if it received a bigger share, i.e., if its wages rose, we need only note that crisis are always prepared by a period in which wages generally rise, and the working class actually does receive a greater share in the part of the annual product destined for consumption. From the standpoint of these advocates of sound and ‘simple’ (!) common sense, such periods should rather avert the crisis. It thus appears that capitalist production involves certain conditions independent of people’s good or bad intentions, which permit the relative prosperity of the working class only temporarily, and moreover always as a harbinger of crisis. (p. 487)”

3) Overproduction and the possibility of Planning:
“Once we dispense with the capitalist form of reproduction, then the whole problem boils down to the fact that the magnitude of the part of fixed capital that becomes defunct and has therefore to be replaced in kind varies in successive years (here we are dealing simply with the fixed capital functioning in the production of means of consumption). If it is a very large one year (if the mortality is above the average, just as with human beings), then in the following years it will certainly be so much the less. The mass of raw materials, work in process, and ancillaries needed for the annual production of means of consumption – assuming that other circumstances remain the same – does not diminish on this account; and so the total production of the means of production would have to increase in one case, and decrease in the other. This can only be remedied by perpetual relative over-production; on the one hand a greater quantity of fixed capital is produced than is directly needed; on the other hand, and this is particularly important, a stock of raw materials etc. is produced that surpasses the immediate annual need….Over-production of this kind is equivalent to control by the society over the objective means of its own reproduction. Within capitalist society, however, it is an anarchic element. (544-545)”

Ok, onto Volume III……..

A brief note during the interlude

I'm not sure when we'll start Volume III, but we're definitely going to get there. In the meantime, I thought I'd take some time to review some notes and ideas that have forced me to revisit Volume I.

The basic concern is the distinction between Formal and Real Subsumption. This can be broken down in the following way:

Absolute : Relative ::
Labor-extensive : Labor-intensive ::
Formal subsumption : Real Subsumption ::
pre-capitalist production : capitalist production

The basic narrative arc is: capital encounters pre-existing modes of production and subsumes those workers to the demands of capital but without changing the nature of work itself. Any extra surplus-value is generated by working harder, or longer (what some economists call an "industrious revolution," see Kenneth Pomeranz). Once capital becomes the central, organizing motor of economic production, however, it begins to repeatedly revolutionize production by introducing techniques such as enlarged scale, machinery, overseer systems, etc. This is capitalist production proper.

And so a few things to consider:

1) This demonstrates that within Marx's conception, a set of producers can belong to capitalist competition and circulation without technically operating under terms of capitalist production. We saw this many times in Volume II: an individual, non-capitalist producer that belonged to a total social capital marked by a mode of production that was capitalist in the proper form. E.g. slavery in the American south competing with cotton produced by wage laborers elsewhere around the world.

2) What does it mean to be subordinated to capital? One could always say that merchants have always existed, middlemen have always existed. What marks them as specifically capital at any one moment, if the rest of the features of capitalist production are missing? This is what I'm trying to figure out. Marx will occassionally reference how even family production that owns the means of production still can produce for merchant capitalists. This is in fact the premise of Kautsky's The Agrarian Question. Still, the majority of "formal subsumption" passages assume a separation of wage laborer from means of production.

3) The most thorough explanation is in the Appendix to the Penguin edition of Volume I, entitled "Results of the Direct Production Process." It's also part of the 1861-1863 Manuscripts, which is where most Marxist scholars attribute the concept to. So I didn't read this section the first time around reading Volume I, but I re-read it recently.

http://www.marx.org/archive/marx/works/1864/economic/index.htm

4) There are hints of history here. Besides the modular nature of Marx's descriptions, there are references to encounters between capital and pre-capital:

Despite all this, the change indicated does not mean that an essential change takes place from the outset in the real way in which the labour process is carried on, in the real production process. On the contrary, it is in the nature of the matter that where a subsumption of the labour process under capital takes place it occurs on the basis of an existing labour process, which was there before its subsumption under capital, and was formed on the basis of various earlier processes of production and other conditions of production. Capital thus subsumes under itself a given, existing labour process, such as handicraft labour, the mode of agriculture corresponding to small-scale independent peasant farming. If changes take place in these traditional labour processes which have been brought under the command of capital, these modifications can only be the gradual consequences of the subsumption of given, traditional labour processes under capital, which has already occurred. The fact that the labour becomes more intensive, or the duration of the labour process is prolonged, that the labour becomes more continuous and more systematic under the eyes of the interested capitalist, etc., none of these things changes the character of the real labour process itself, the real mode of labour. This therefore forms a great contrast to the specifically capitalist mode of production (labour on a large scale, etc.) which, as has been shown, takes shape as capitalist production progresses, and which revolutionises the kind of labour done and the real mode of the entire labour process, simultaneously with the relations between the various agents of production. It is in order to mark the contrast with the latter mode of the labour process that we call the subsumption of the labour process under capital examined so far^[230] — which is the subsumption under capital of a mode of labour already developed before the emergence of the capital-relation — the formal subsumption of labour under capital. The capital-relation is a relation of compulsion, the aim of which is to extract surplus labour by prolonging labour time — it is a relation of compulsion which does not rest on any personal relations of domination and dependence, but simply arises out of the difference in economic functions. This capital-relation as a relation of compulsion is common to both modes of production, but the specifically capitalist mode of production also possesses other ways of extracting surplus value. If, in contrast to this, the basis is an existing mode of labour, hence a given level of development of the productive power of labour and a mode of labour which corresponds to this productive power, surplus value can only be created by prolonging labour time, hence in the manner of absolute surplus value. Therefore, where this is the sole form of production of surplus value, we have the formal subsumption of labour under capital.

5) Despite that, there are reasons to believe that even if real subsumption occurs, as Antonio Negri emphasizes, one should hold out the possibility that it is incomplete, that formal subsumption and precapitalist production ("survivals" as anthropologists term it) survive. Here I think it is important to reference the only section that really discusses formal and real subsumption in the actual text of Volume I. The Chapter is number sixteen, entitled "Absolute and Relative Surplus-Value." In it, Marx describes the distinction then goes on to say that hybrid forms persist:

The prolongation of the working-day beyond the point at which the labourer would have produced just an equivalent for the value of his labour-power, and the appropriation of that surplus-labour by capital, this is production of absolute surplus-value. It forms the general groundwork of the capitalist system, and the starting-point for the production of relative surplus-value. The latter pre-supposes that the working-day is already divided into two parts, necessary labour, and surplus-labour. In order to prolong the surplus-labour, the necessary labour is shortened by methods whereby the equivalent for the wages is produced in less time. The production of absolute surplus-value turns exclusively upon the length of the working-day; the production of relative surplus-value, revolutionises out and out the technical processes of labour, and the composition of society. It therefore pre-supposes a specific mode, the capitalist mode of production, a mode which, along with its methods, means, and conditions, arises and develops itself spontaneously on the foundation afforded by the formal subjection of labour to capital. In the course of this development, the formal subjection [subsumption] is replaced by the real subjection [subsumption] of labour to capital.

It will suffice merely to refer to certain intermediate [hybrid] forms, in which surplus-labour is not extorted by direct compulsion from the producer, nor the producer himself yet formally subjected to capital. In such forms capital has not yet acquired the direct control of the labour-process. By the side of independent producers who carry on their handicrafts and agriculture in the traditional old-fashioned way, there stands the usurer or the merchant, with his usurer’s capital or merchant’s capital, feeding on them like a parasite. The predominance, in a society, of this form of exploitation excludes the capitalist mode of production; to which mode, however, this form may serve as a transition, as it did towards the close of the Middle Ages. Finally, as is shown by modern “domestic industry,” some intermediate forms are here and there reproduced in the background of Modern Industry, though their physiognomy is totally changed.

6) Finally, as noted elsewhere by Daniel Buck, the discussion of formal and real subsumption earlier appears under the heading of original accumulation in the Grundrisse, written before Marx had coined these new phrases. In that sense formal/real subsumption together with original accumulation occupy the heart of the problem of history and capital, pre-capital and transition. Here is where one should start in order to think through the problem of the gap between capital's history and capital's logic:

Marx apparently understood primitive accumulation and subsumption to be intimately related: he discusses the incorporation of weaver labor into the circuits of capital in the context of primitive accumulation in the Grundrisse (1973:510), but in the context of formal and real subsumption in Volume I of Capital (1976: see “Results of the immediate process of production”, especially pp 1019–1038).

Mr. Capitalist

Marx begins the final chapter of Volume II with two assumptions:

It is assumed in this case: 1) that this amount is sufficient under the given technical conditions either to expand the functioning constant capital or to establish a new industrial business. But it may also happen that surplus-value must be converted into money and this money hoarded for a much longer time before this process, i.e., before real accumulation, expansion of production, can take place; 2) that production on an extended scale has actually been in process previously.

Thus, we again see the problem of hoards, except this time they are definitely voluntary interruptions to circulation: money is withdrawn so that eventually it can be spent on more means of production, more means of labor. We also see a reference to the logic of expanded reproduction itself. Specifically, each act of reproduction presupposes previous acts of reproduction and hence also subsequent acts. Expanded reproduction cannot occur ex nihilo, nor should it be seen as a one-shot deal.

Marx discusses the hoard as a precondition for expanded reproduction but also notes that in itself, withdrawn money is neither productive nor circulating capital. It is idle, only potential capital (566). The same problem with simple reproduction and fixed capital arises once more: if money is withdrawn, then the perfect equilibrium is disrupted, and eventually you wind up with capitalists who have too many unsold commodities existing alongside capitalists with money that is not being used. This will be resolved below.

In the meantime, we should note that Marx conceives of hoards as an immanent moment to capital (569). These are unavoidable problems which must be overcome through more advanced forms of capital. Part of the problem it seems, is that the abstract models Marx has been working with have oversimplified the actuality of production and circulation's totality. On 570 and 571, Marx describes the total social capital not as a well-oiled, smoothly-functioning metabolizing machine with inputs and outputs more or less running automatically. Instead, total social capital is described as a series of "one-sided purchases" by departments I and II, purchases that may, the capitalist hopes, in the end return capital to its pockets but is by no means guaranteed.

Throughout the process of value traveling from the constant capital of department I through to the realization of commodities produced by department II, a one-sided purchase is always needed before the next step can be taken: "But inasmuch as only one-sided exchanges are made, a number of mere purchases on the one hand, a number of mere sales on the other — and we have seen that the normal exchange of the annual product on the basis of capitalism necessitates such one-sided metamorphoses — the balance can be maintained only on the assumption that in amount the value of the one-sided purchases and that of the one-sided sales tally."

Here perhaps we can think about the significance of the section on bookkeeping earlier: to the individual capitalist and producer, the entire process is invisible. Its trading partners, far away in time and space, are indifferent to the actual exchange at hand. There is no mental conception, except in the form of bookkeeping, that can account for all of this. Which is to say, there is no guiding agency or subject who oversees the encounter between commodity, money and productive capital:

The constant supply of labour-power on the part of working-class I, the reconversion of a portion of commodity-capital I into the money-form of variable capital, the replacement of a portion of commodity-capital II by natural elements of constant capital II c — all these necessary premises demand one another, but they are brought about by a very complicated process, including three processes of circulation which occur independently of one another but intermingle. This process is so complicated that it offers ever so many occasions for running abnormally.

And hence Marx's famous line

The fact that the production of commodities is the general form of capitalist production implies the role which money is playing in it not only as a medium of circulation, but also as money-capital, and en-genders certain conditions of normal exchange peculiar to this mode of production and therefore of the normal course of reproduction, whether it be on a simple or on an extended scale — conditions which change into so many conditions of abnormal movement, into so many possibilities of crises, since a balance is itself an accident owing to the spontaneous nature of this production.

In my mind, this is the argument about political economy Marx wants to make. Sure, there are tendencies and laws and determinate relationships, but those change and are mutable over time with changes in the development of capitalist production. What remains stubborn, however, is the randomness of it all. The fact that, rather than asking why there are imbalances of production and circulation, we should be asking why aren't there more? At this point one can introduce correctives. The state immediately comes to mind. But Marx has something else in mind: credit.

Just as the circulation process entails a series of segmented, one-sided purchases that somehow add up to a complicated totality, it can be supplemented by credit, which will make withdrawn money productive, which will give loans to capitalists who have too many commodities and not enough money capital, in short, will facilitate an easier and smoother flow of goods. And this is done not by compiling the capital of many different capitalists and re-segmenting it into smaller amounts:

The successive transformation of this virtually additional productive capital into virtual money-capital (hoard) .... is accomplished by a repeated withdrawal of money from circulation and a corresponding formation of a hoard.

The surplus-product converted into virtual money-capital will grow so much more in volume, the greater was the total amount of already functioning capital whose functioning brought it into being. With the absolute increase of the volume of the annually reproduced virtual money-capital its segmentation also becomes easier, so that it is more rapidly invested in any particular business, either in the hands of the same capitalist or in those of others (for instance members of the family, in the case of a partition of inherited property, etc.). By segmentation of money-capital is meant here that it is wholly detached from the parent stock in order to be invested as a new money-capital in a new and independent business.

Finally, I'll end the analytical part of this post by drawing attention to pages 577 to 579 and then on 584. Here Marx confronts the problem that the capitalists of department II face: because less money is being circulated, withdrawn from circulation by department I, department II now faces hoards of unsold commodities. How does it get rid of them? Marx's suggestion is that it is sold to its own workers, who pay for their products with their wages. But he then goes on to show why, mathematically, that is not the case. I draw attention to this section because, I believe, Marx never actually answers his own question in the course of the chapter. It is as good an indicator as any that the status of these reproduction schemes are interesting experiments but ultimately unfinished. I wish I had the mathematical credentials to play around with them more, but for now I'm putting this book down.

Other thoughts

• (572-573): Marx shows tat the process of expansion, at its initial stages, requires nothing more than the parts of simple reproduction. The only difference is that the money capital that would usually be circulated is instead withdrawn into hoards. Those hoards will be put to use when invested in expanded means of production and labor. In the meantime, those hoards must be overcome, possibly through credit.

• (581): Marx argues that the problem of stocks and hoards and maintaining a smooth flow of commodities and money is unique to reproduction schemas that account for both department I and II. But without department I, expanded reproduction could not occur. So really, they are immanent problems in the actual functioning of individual capitals which thus far have been described only in isolation.

• (592): Mention of companies that provide boarding to their own workers. Interesting, relevant for studies of plantations and the textile mills of early capital.

• (596): Marx reiterates that simple reproduction is "incompatible with capitalist production" from the start. He also argues that because of the rate of population, simple reproduction is impossible to maintain, since more and more unemployed workers will put pressure on capitalists to expand.

Anybody's guess

This chapter is huge and difficult to summarize and organize coherently.

One must first recognize the relationship between this chapter and the next. As Marx notes early, simple reproduction is a mental exercise alone, more fiction than any capitalist economy in historical reality. So why study simple reproduction? As a building block of analysis for understanding the real object of analysis: expanded reproduction.

Simple reproduction, reproduction on the same scale, appears as an abstraction, inasmuch as on the one hand the absence of all accumulation or reproduction on an extended scale is a strange assumption in capitalist conditions, and on the other hand conditions of production do not remain exactly the same in different years (and this is assumed). The assumption is that a social capital of a given magnitude produces the same quantity of commodity-value this year as last, and supplies the same quantum of wants, although the forms of the commodities may change in the process of reproduction. However, as far as accumulation does take place, simple reproduction is always a part of it, and can therefore be studied by itself, and is an actual factor of accumulation (470).

So what is Marx's approach to simple reproduction?

He writes: "But this purely formal manner of presentation is no longer sufficient once we consider the total social capital and the value of its product." What changes when one shifts from abstract individual capital to the actual circulation of all capitals? "[T] movement is not only a replacement of values, but a replacement of materials, and is therefore conditioned not just by the mutual relations of the value componenets of the social product but equally bu their use-values, their material shape" (470).

With this line, Marx forces us to think hard about why individual capital + individual capital is not enough to represent the complexity of total social capital. In other words, why is the sum more than just the sum?

The most obvious answer is that individual capitals play specific roles in relation to each other, as elements in the total social circulation. Given this, we have to subdivide into department I and department II. It should be a given that these divisions are arbitrary and could further be divided into numberless smaller divisions. The point has been made, though: a break with individual capitals towards a consideration of social capital. However, one thing I'm a little uneasy with in this analysis is the fact that Marx wants us to think about use-value, that is, the difference between a business making machines for other businesses versus machines that make Christmas toys. This is all well and good. But all sorts of other specificities are arbitrarily elided by Marx when he makes statements indicating that all Department Is can be combined together in analysis, that the parts being made by one company can be grouped together with those of another. Other considerations of the historical record of capital are also suspended: revolutions in prices, technological changes that require abandoning old machines for new ones, the price differences between parts, spatial differences in supplies and populations, etc. (469-483).

It seems to me that this exercise indicates that for all sorts of reasons (all sorts of use-value-related reasons), the total equilibrium of simple (and expanded) reproduction is impossible to achieve. It is "an accident," as he indicates in the next chapter. But the point of Marx's analysis at this point is, rather than indicating why the regular imbalances occur is to understand under what perfect conditions an irregular equilibrium could be achieved. Or can it even be achieved at all?

What analytical value is there in allowing in one element of use-value while suspending all others? I believe the point is that it can help us parse out all the chaotic elements that can go wrong, to show that, even under near-perfect conditions, the very facticity of an element like the distinction in departments is enough to throw a wrench into the gears.

As far as I understand it, the heart of the matter is that the division of production into two departments, along with the attendant assumptions of wear and tear, replacement of parts creates uneven timing of investment and production which inevitably leads to hoards (see the voluntary and involuntary stock formation section in chapter six) and contradictions that must be displaced somehow through the expansion of the market.

Below I will include the more interesting quotes from the rest of the chapter. But for now, let's examine the temporal irregularity of normal production to examine how crises are immanent to it.

First, Marx points out that while the total quantity one must spend on replacing the wear and tear of machines or dealing with the comings and goings of a seasonal labor force remain mathematically the same, the periodicity of these factors means that at certain moments, surplus-value is building and accumulating with nowhere to go, and sometimes a lot of surplus-value is needed at hand in order to be converted into constant and variable capital (526).

Second, Marx states almost as an ontological condition that the whole collection of machines and means of production are all "of different ages, and just as each year people functioning in these branches of production die, so each year do quantities of fixed capital reach the end of their life" (528).

Third, unless the cycle of means of production can be completed in a year, which is highly unlikely, then the year to year expenditures of an individual capitalist will look different.

Finally, we have the hypothesis that if Deparment II needs to save up money for a new machine in the future, and if it therefore withholds a certain amount each year, spending less on constant capital (since it can keep using the machines from the last time), then Department I would have 200 extra value that it could not sell. Further, if Department II produces as many commodities as it needs to stay in business but Department I has 200 less to spend than before, then Department II has 200 worth of commodities left unsold. Hence, a simultaneous problem of overproduction on both sides(!).

How can this be resolved? Marx spend the rest of this section trying to work it out. You can read all the prosaic math formulas on pages 530 onward, but the conclusion is basically that this scenario is impossible to resolve within the limits of simple reproduction:

The law that when reproduction proceeds normally (whether it be on a simple or on an extended scale) the money advanced by the capitalist producer to the circulation must return to its point of departure (whether the money is his own or borrowed) excludes once and for all the hypothesis that 200 II_c(d) is converted into money by means of money advanced by I (533).

Finally, we have the goods on page 542, where Marx indicates that the lack of inputs for the commodity and monetary surplus requires a foreign market to provide things commodities and customers. Such a solution is, of course, still imperfect and only defers an internal contradiction. From here, Luxemburg and Lenin . . . :

If II_c (1) is greater than II_c (2), foreign commodities must be imported to realise the money-surplus in I_s. If, conversely, II_c (1) is smaller than II_c (2), commodities II (articles of consumption) will have to be exported to realise the depreciation part of II_c in means of production. Consequently in either case foreign trade is necessary.

Foreign trade could help out in either case: in the first case in order to convert commodities I held in the form of money into articles of consumption, and in the second case to dispose of the commodity surplus. But since foreign trade does not merely replace certain elements (also with regard to value), it only transfers the contradictions to a wider sphere and gives them greater latitude (544).

The summary of Marx's conclusions are on pages 542 to 545. They are the highlight of the chapter. He describes how hoards in precapitalist times are necessary to ensure the welfare of a population, but "in capitalist production however, they are an evil." This reminds us again of Marx's discussion about involuntary and voluntary stock earlier. Simple reproduction, mathematically, must become expanded reproduction. There is no other. Simple reproduction is like a square triangle.

Okay, other thoughts . . .

• (487): Marx argues against the thesis of underconsumption, showing that it is a logical tautology (since the function of consumers is to spend money, then the problem must be that the consumers do not have money, but that money must come from the capitalist class, which in no way helps them exit the crisis) and that historically, all crises are precipitated by higher wages and attempts to increase consumption. Take that, Keynes.

• (488): In the midst of his long section working out the contours of money capital, Marx makes his point very clear: money may change hands between capitalists and workers, but in each exchange, the worker will always have to give the money back as part of their consumption fund. So ultimately, money is just bait that reels in the value (labour-power) of the workers, who must use their wages to exchange for the commodities that they themselves made: The "general law that money advanced to the circulation by producers of commodities returns to them in the normal course of commodity circulation. From this it incidentally follows that if any money-capitalist at all stands behind the producer of commodities and advances to the industrial capitalist money-capital (in the strictest meaning of the word, i.e., capital-value in the form of money), the real point of reflux for this money is the pocket of this money-capitalist."

• (490): Marx introduces the concept of the worker who lives hand-to-mouth and hence must be paid in advances and wages frequently but in small amounts. Here, the analytical significance is that the workers' necessity for small and frequent distribution of money places a strain on the limited money supply. The amount of money in circulation, remember, is in no way determined by the total amount of value in circulation but rather by factors such as how much is paid each time and how frequently. Therefore, one can find phrases like "£1,500 are needed to circulate the equivalent value of £5,000."

• (497): Finally, Marx ends the money section by spelling out the role of merchant capital. That is, the capitalist must spend money in order to make back surplus-value. Merchant capitalists are seen as parasites because they seem totally unproductive, but all capitalists are parasites insofar as the expenditure of money in business is ultimately the same princpiple of casting out money in order to receive it back, with surplus-value added.

• (498): With the advent of Department I, Marx indicates that one can no longer assume that constant capital is converted into money, which is spent on the next cycle's means of production. Instead it must be understood as the machines themselves remain, and they can be used again as new means of production. Hence, we must understand the role of Department I in total social capital as distinct from an individual capital in isolation, who draws its means of production out of thin air.

• (502): Marx shows that Adam Smith's reified brain was only able to see commodities as revenue split into v + s (wages and profit) because he did not see department one.

And it is this circumstance which induced Adam Smith to maintain that the value of the annual product resolves itself into v + s. This is true 1) only for that part of the annual product which consists of articles of consumption; and 2) it is not true in the sense that this total value is produced in II and that the value of its product is equal to the value of the variable capital advanced in II plus the surplus-value produced in II. It is true only in the sense that II_{(c + v + s)} is equal to II_{(v + s)} + I_{(v + s)}, or because II is equal to I_{(v + s)}.

Regarding point 2) above, Marx shows that the value of labour-power and constant capital in Department I is carried over to the means of production (dead labour as constant capital) in Department II. So it appears as though all value is produced in Department II when in actuality Department II is only the last step in a longer process.

• (508): Marx poses the difference between Volume I and Volume II nicely as the difference between individual and total social capital: the product of an individual capital can take any form and it could go anywhere. Volume I was entirely indifferent to what commodities were used for after the point of sale. With total social capital, all elements of reproduction must balance out such that the products eventually replace the original constant capital. Hence, Volume II tracks the path of consumed constant capital from Department I to II and back again to Department I.

• (516-519): A very interesting explanation that examines the same exchange from the standpoint of capitalist and standpoint of worker. For a capitalist selling his product, it is realizing the surplus-value of a commodity. For the worker, it is merely exchanging money for equivalent capital. In each exchange, the positioning of each subject as either commodity-owner and money-owner resolves in such a way that the capitalist ultimately possesses all of the capital and the worker can only exchange at fixed rates. This leads Marx to next discuss (520) the social reproduction of classes. Not in terms of anything like ideology or politics; merely in terms of why the working class continually makes so little money compared to the capitalist. An antagonistic relationship is thus preserved.

• (545-556): The section on the reproduction of Money Capital demonstrates the problems of hoards and the necessity for money to circulate as productive capital. Several problems are raised from 549 onwards. All this concludes on page 556 when Marx writes that the irregularity of the money supply explain the rise of the merchant capital class:

all these different aspects of spontaneous movement had only to be noted, and made conspicuous, through experience, in order to give rise to a methodical use of the mechanical appliances of the credit system and to a real fishing out of available loanable capitals.

(556-564): Marx refutes Destutt de Tracy's theories of accruing profit by selling dear to demonstrate that it is logically impossible. Ultimately, the point is that in a logical system built to explain simple reproduction, one cannot simply account for profits and gains without explaining how to resolve deficits and hoards. Only expanded reproduction can do so. Onto the next chapter . . .

The base of a triangle or the axis of an ellipse

From reading secondary literature on this last section, I learned that Marx wrote the following chapter on "former presentations of the subject" long before he wrote his specific criticisms of Smith and Ricardo in Part II. In fact, at this point in the text, one begins to receive the clear impression that this is an unfinished, unedited manuscript. This becomes more evident in the next two chapters. At any rate, Marx's writing here is clear and can be followed, but the specific importance of each line is uneven and sometimes barely there at all. At the risk of doing violence to the text, let me try to speculate on the actual theoretical significance at stake here.

He begins with Quesnay, who is chronologically situated before Smith but is really Marx's foil for Smith. Quesnay was wrong about agriculture as the source of value, but he was correct in his interpretation of production as the heart of the system and the way in which constant capital reappears in a renewed form in the commodity. Smith correctly expands value from agriculture to all realms of production, but he errs by not understanding the distinction between the pairs A) fixed and circulating capital versus B) constant and variable capital.

Rather than going into the details of the distinction (and I missed a large part of it since I did not read part II) let me give you a table from Harvey's Limits to Capital.



As far as I understand it, the misunderstanding is no more complex than: 1) the two binaries are overlapping and hence are confusing (perhaps due to the way Smith focuses upon the immediate physical properties of capitals in motion, unable to distinguish abstractions like constant and variable capital), and 2) by not seeing constant capital, Smith misses key analytical points.

Those key analytical points are: 1) by not seeing constant, Smith cannot see variable capital, by not seeing variable capital, Smith does not understand how exploitation occurs in the movement of:

M - C (CC + VC) - C' (CC + VC + SV) - M'

2) By not understanding constant capital, Smith cannot explain where the means of production come from, which means he does not understand the division of production into two departments (in the next chapter) and he does not understand that some departments of production will require more or less turnover time than others. In other words, Smith sees every individual capitalist as an isolated cycle of fixed and circulating capital generating revenue, which is then split three ways as wages, profits and rent (439).
However, Smith is aware of the failures of his equations; that is, he is aware that his equations cannot explain how capital (constant capital, investments) occurs. That is why "he has to smuggle in a fourth element by an indirect route, namely the element of capital." Marx then demonstrates that if Smith is going to insist that part of the "revenue" can be accounted for as capital, then Smith begs the question of where the value of that capital came from. For Marx, it is value that has been transferred from constant capital to the commodity.

On 444, Marx argues that Smith's fixed and circulating capital, described in terms of im/mobility, really just points to the two departments of production. Those that produce means of production (machines, gadgets, etc.) and those that produce commodities for immediate consumption (food, clothing). Because the latter circulate among consumers, Smith sees them as circulating capital. What he really should have been analyzing was the process in which value is transferred from department I to department II, that is, from Smith's fixed to Smith's circulating capital.

On 449, Marx points out a particularly vulgar part of Smith's calculus, when he argues that a commodity's original source of value is its division into revenues. I'm not sure exactly what Smith was arguing, but Marx's point is clear: Smith has inverted the historical process of production such that he first sees the finished product, the commodity, and retroactively constructs exchange-value from there. It is the ultimate economics of appearances.

On 451, Marx points out that even within Smith's own theories, the lacuna left by surplus-value emerging from variable capital is clearly detectable.

On 456, Marx shows another grave consequence of Smith's theory: by arguing that the workers' wages are paid out as revenue resulting from the sale of the commodity, he has collapsed the whole process of exploitation and rendered it invisible. Remember, the crux of Volume I is that a mystification occurs at the time of the sale of labour-power. That is, the commodity labour-power is sold at its exchange-value (the wage) in exchange for the use-value of labour-power (the ability to add surplus-value to the means of production). This site of mystification is where the worker gets paid and not at the time of sale of the commodity made by the worker. If Smith were correct, a jump in prices for a product would imply a jump in wages for the worker. But that is of course never the case.

Another conclusion Marx continually makes is that, according to Smith's formula, simple reproduction is the only possibility. If the output is equal to the inputs -- if revenue is only equal to the money paid by the capitalist -- then expanded reproduction is ruled out (457).

On 462, a crazy paragraph that argues that within a regime of value premised upon expended labour-power, a serf in feudal times produces value much in the same way as the wage worker. Wow, this is interesting. I'll have to think about this for my own research..."The substance of value is and remains nothing but expended labour-power — labour independent of the specific, useful character of this expenditure. A serf for instance expends his labour-power for six days, labours for six days, and the fact of this expenditure as such is not altered by the circumstance that he may be working three days for himself, on his own field, and three days for his lord, on the field of the latter."

"In this a commodity produced by a capitalist does not differ in any way from that produced by an independent labourer or by communities of working-people or by slaves."

Finally, on 464, Marx concludes that by not describing the commodity's components as different sections of capital, Smith has tried to create a transhistorical theory of value and production. In this way, Smith's serious error is that for him "the various factors of the labour process .... appear from the start in the character masks of the era of capitalist production." In other words, a bourgeoisie economist unable to think beyond the forms of appearance of capital.

Object of the inquiry

Chapter eighteen can easily be summarized as a perspective on where Marx has gone thus far in terms of looking at production capital from the standpoint of individual capital. A simultaneous movement is made in this last section: one from production towards accounting for circulation; and hence one from individual to total social capital.

He begins by stating that the "determining motive" of the production process is the production and valorization of surplus-value. "On top" of production, one must add circulation, and their combination forms the "overall circuit" that is "constantly repeated afresh at definite intervals" (427).

Circulation for Marx can be broken down into "1) The circuit of capital proper and 2) the circuit of the commodities which enter into individual consumption, consequently of the commodities for which the labourer expends his wages and the capitalist his surplus-value (or a part of it)." However, "the expenditure of this surplus-value and wages for commodities does not form a link in the circulation of capital, although at least the expenditure of wages is essential for this circulation" (428).

This is a tricky quote to unravel. My understanding is that Marx wants to ensure we understand that spending wages is a movement of M - C, not C - M, and so no value can be realized. Circulation can only entail the movement of C - M or C - P. That is, it includes the process of turning constant capital into a commodity and selling it, and it includes tracking the value attached to capital such as labor-power and its subsequent valorization. That is, circulation only counts for the things that remain in the capitalists hands. Once in the hands of the workers, capital becomes money, that is, nothing that can be self-valorized in the exchange for commodities.

Marx then summarizes the prior work up until now:

"In Book I the process of capitalist production was analysed as an individual act as well as a process of reproduction: the production of surplus-value and the production of capital itself...

"In the first part of this Book II, the various forms were considered which capital assumes its circular movement, and the various forms of this movement itself. The circulation time must now be added to the working times discussed in Book I....

"But in both the first and the second Parts it was always only a question of some individual capital, of the movement of some individualised part of social capital. However the circuits of the individual capitals intertwine, presuppose and necessitate one another, and form, precisely in this interlacing, the movement of the total social capital.

"We have now to study the process of circulation (which in its entirety is a form of the process of reproduction) of the individual capitals as components of the aggregate social capital, that is to say, the process of circulation of this aggregate social capital."

All the components must now be synthesized.

For the sake of their blue eyes

With these final two chapters in part one, I felt like Marx was really setting down the distinctions between the concerns of Volumes II and III, distinct from Volume I. By introducing circulation, Marx introduces two elements that, for simplicity's sake, were left suspended in his consideration of production in the first volume: time and the negotiation/struggle of selling goods. At the risk of getting ahead of myself, it seems to me that in the first volume, Marx's main goal is to enact a critique of the production sphere itself. You could call this a critique of exploitation, an explanation of his theory of value, an emphasis on production at the heart of capital economies. Whatever it is, however, it falls short of demonstrating how multiple individual capitals interact. When expanded to the level of total social capital, however, Marx's critique centers around the crisis-ridden character of capital. It seems to me that these chapters on circulation time and circulation costs are the return of the real, the concrete, in short, use-value. Because production and circulation do not, historically, run smoothly like in the models of individual capital sketched out in Volume I, all sorts of irregular interruptions can always occur, cascade and snowball into larger cyclical crises. For the reader unfamiliar with this larger theoretical trajectory, these two chapters must seem pretty boring. But from the standpoint of figuring out the categories of how to maximize valorization and then how individual capitalists are prone to errors, these chapters are important contributions to the overall flow of the argument.

Chapter Five in a few bullet points:

• (200): Production time includes both "the period of the labour process" as well as "periodic interruptions." Thus it can be broken down into: "1) the time during which they function as means of production, hence serve in the productive process; 2) the stops during which the process of production, and thus the functioning of the means of production embodied in it, are interrupted; 3) the time during which they are held in readiness as prerequisites of that process, hence already represent productive capital but have not yet entered into the process of production."

• (201): The latent state of production time is often due to the natural, material properties of the product: "corn that is sown, wine that ferments in the cellar." In other words, use-value.

• Interruptions are counted as a loss: "normal interruptions of the overall production process ... produce neither value nor surplus-value. Hence the drive towards night work."

• (202): A distinction between regular pauses (night time, weekends) and irregular interruptions (crises, embargoes). The former can still be counted towards a commodity's value. The latter adds no surplus-value.

• (203): The need for individual capitalists to employ merchants and stocks to minimize time spent on sales and circulation: "The more the metamorphoses of circulation of a certain capital are only ideal, i.e., the more the time of circulation is equal to zero, or approaches zero, the more does capital function, the more does its productivity and the self-expansion of its value increase. For instance, if a capitalist executes an order by the terms of which he receives payment on delivery of the product, and if this payment is made in his own means of production, the time of circulation approaches zero."

• (205): Interesting line that makes my head hurt: "There is a difference between C — M and M — C which has nothing to do with the difference in forms of commodities and money but arises from the capitalist character of production. Intrinsically both C — M and M — C are mere conversions of given values from one form into another. But C' — M' is at the same time a realisation of the surplus-value contained in C'. M — C however is not. Hence selling is more important than buying. Under normal conditions M — C is an act necessary for the self-expansion of the value expressed in M, but it is not a realisation of surplus-value; it is the introduction to its production, not an afterword."

• (206): Spoiling is the absolute limit of a commodity's value (the revenge of use-value).

• The need for markets and urban centers: to reduce selling time.

Chapter Six

• (208): An interesting analogy of labor to latent heat in chemistry. Labor produces potential value, which must still be realized in the sale. Doesn't this type of argumentation veer towards a "circulation is more important" than production type of thinking? But Marx has told us in the last chapter that in fact both are key. Nonetheless, a shift away from Volume I, where Marx wouldn't be caught dead talking about circulation on the same level of production.

• (209): The merchant enters as perhaps the first, delineated "nonproductive" worker in Marx's universe: "a man who sells his labour. He expends his labour-power and labour-time in the operations C — M and M — C. And he makes his living that way, just as another does by spinning or making pills. He performs a necessary function, because the process of reproduction itself include unproductive functions. He works as well as the next man, but intrinsically his labour creates neither value nor product." Later, Marx will refer to lawyers and doctors, too, in this category of nonproductive workers.

• (211): Great line comparing the function of the merchant to a machine: "It is as though one part of the product were transformed into a machine which buys and sells the rest of the product. This machine brings about a reduction of the product. It does not participate in the productive process, although it can diminish the labour-power, etc., spent on circulation. It constitutes merely a part of the costs of circulation."

• Next, Marx discusses bookkeeping as a necessary mental reflection of the entire circulation process. I'm not sure what Marx is suggesting here. It is an interesting excursion into the mind of his capitalists, as Marx otherwise seems loathe to speculate about what the inside of his characters' head looks like. Unlike a merchant, which has only a one-dimensional role in the economy, bookkeeping is necessary and social, underpining the function of total social capital (212). But hasn't Marx already made the case for why merchants are also necessary in large, sprawling economies? I just don't understand the distinction he wants to make between necessary and unnecessary unproductive labor.

Stock Formation

Have to admit, I loved this section. Not sure why.

• (214): In this key, beginning introduction, Marx has complicated things greatly. He tells us that while stock costs do not add use-value, they add value added to costs. Further, while keeping stocks does nothing from the social standpoint, it still adds value to the commodities of individual capitals. So here we have suggestions that commodities may be sold at values detached from their actual use-value. That is: a hammer may cost $2 because of how useful it is, but if you add the value of keeping it in stock, it could sell for $3.50. This also asserts the primacy of labor-time as the measure of value, as opposed to use-value.

• Marx seems to suggest a key difference between individual capital and total social capital. Where "from the social point of view" stock is just an "unproductive expenditure of labor," individual capitalists can still profit by charging more money for the hammer. Marx is suggesting there isn't more material wealth - more things - produced by stock, so there is less collective total social capital. Is he? That interpretation would see TSC as composed of material wealth, not value; of use-value, not exchange-value. That would deviate from previous understandings of TSC as nothing but the sums of value of individual capital. Hmm, maybe there is a tendency to see TSC as a drive towards producing material wealth and to see individual capitals as one of value alone.

• (215): The key concept and the contradiction of stock formation: because irregular supplies would hurt the ability of capitalists to realize value, keeping a smooth flow is paramount. For this reason, an unproductive activity is key to the realization of productive labor: "The quicker the sale is effected the more smoothly runs the process of reproduction. Delay in the form of conversion of C' — M' impedes the real exchange of matter which must take place in the circuit of capital, as well as its further functioning as productive capital. On the other hand, so far as M — C is concerned, the constant presence of commodities in the market, commodity-supply, appears as a condition of the flow of the process of reproduction and of the investment of new or additional capital."

• (218): A key footnote about cash crop economies suffering crises in the nineteenth century (hmm...).

• (217-221): Marx refutes Lalor's argument that with the development of capitalism, stocks declined. Over four pages, Marx elucidates how this is just an optical illusion that doesn't see how the quantity of stocks sitting in any one place has been reduced, while the speed, intensity and geographic scope of commodity circulation has skyrocketed such that the overall amounts of commodities in circulation have increased. They simply are no longer kept in the same simple commodity stock form (they are instead more likely to be in forms of productive capital or the individual consumption fund).

• A great many historical changes are implicated and quickly reviewed by Marx here, especially on pages 219 to 220: increased intensity of production (machinery); speed and cheapness of transfer (transportation and communication); regular flow of money in the face of irregular conversion of capital (the credit system); and the diversification of raw material production (cash crop economies in agrarian societies).

• (221): Marx suggests there is a shift from producing for consumption (supply and demand) towards one of simply "produce, dammit!" "With the development of capitalist production, the scale of production is determined less and less by the direct demand for the product and more and more by the amount of capital available in the hands of the individual capitalist, by the urge of self-expansion inherent in his capital and by the need of continuity and expansion of the process of production."

• With this shift, an inversion of priorities has taken place. With the emphasis on smooth flow of operations, merchants and capitalists' number one enemy was scarcity, so hoarding stocks was imperative for profit. With scarcity less of a threat, capitalists now focus upon newness, both in the sense of perishable commodities and new technology. Hoarding stock thus loses its appeal.

• (223): Signs of crisis begin to emerge again. One sign emerges in Marx's constant invocation of continual supplies as the imperative facing all capitalists. I kept thinking, why exactly is a constant supply so important? Is there something else besides the danger of selling out one's own product? I suppose that today, selling out one's product is not such a big danger. It happens all the time at the bakeries and stores here (in Tokyo) that replenish stocks from scratch daily. In an earlier time, I'm sure that the atmosphere of unregulated competition made such moments much more dire: "Constancy and continuity of the process of circulation, and therefore of the process of reproduction, which includes the process of circulation, are safeguarded only by the formation of such supplies." Anyway, the point is that there is an unpredictable encounter between what the capitalist has and what the consumer wants to buy. The model of equilibrium is already put into question.

• (224): The second dimension of crisis is, of course, overproduction. This arises in Marx's distinction between voluntary and involuntary stock. Involuntary indicates a capitalist has too many commodities because it just cannot find the consumers to take them off its hands. Uh-oh. And with the mystification of the credit system ("give me a loan on this car even though I don't have a job") and the general ambiguity in appearance between an intentional and unintentional stock ("no, see, these toys are going to sell any day now, just you wait"), overproduction crises can compound and multiply pretty quickly.

• (225): the three costs of stock formation are: "The costs of supply formation consist: 1) of a quantitative diminution of the mass of the products (for instance in the case of a flour supply; 2) of a deterioration of quality; 3) of the materialised and living labour required for the preservation of the supply."

The Transport Industry

• Here Marx concludes that transportation, like merchants, are a necessary loss to surplus-value that in the end helps capitalists realize more value out of their commodities. Interestingly, Marx delineates two dimensions of the transportation sector. On the one hand, it is part of production (construction of railroads, boats, etc.) and is also a wing of circulation (229). Obviously, this is a key section for future reference in thinking about the geographical implications of capital accumulation.

• To end this post, I thought I'd include this great line: "A house that is sold by A to B circulates as a commodity, but it does not get up and walk" (226).

Towards Accumulation: Chapters 18 and 19.

Chapter 18: Introduction to Part III

I want to move through these preliminary chapters of Part III in order to get to Marx’s discussion of Simple Reproduction and Accumulation (Ch. 20 and 21). Chapter 18 begins with a great summation of the various components of Marx’s study thus far – showing how the forms in Part One and the processes (turnovers) of Part Two point to a much larger social process – approached here via the concepts of social capital. Following Marx’s mode of analysis in Volume I, wherein the commodity opened into a much larger social process of capitalist production, here Marx writes that:

“Just as the metamorphosis of the individual commodity is but one term in the series of metamorphoses of the commodity world as a whole, of commodity circulation, so the metamorphosis of the individual capital, its turnover, is a single term in the circuit of the social capital. (427-428)”

The problem then becomes how to think this general social process of commodity production and circulation in a general social form. In this regard, Marx writes:

“the circuits of individual capitals are interlinked, they presuppose one another and condition one another, and it is precisely by being interlinked in this way that they constitute the movement of the total social capital. (429)”

Here, it almost seems as if Marx is saying the total social capital IS the sum of its individual parts, but as was noted multiple times before, the determinative factors are at the level of the social (socially necessary labour time, surplus-value being transcendent of an individual capital, etc.). This problem leads to a discussion of two points of the role of money in this interlinking of individual capitals: (1) provides the means in which each individual capital begins the process [appearing as a ‘prime mover’] and; (2) that this advanced money stands “in a different ratio to the productive capital that it sets in motion” (430) Regarding the first point, Marx makes an interesting point, one that brings us back to the question of logical explication and actually economic-description:

“Commodity production presupposes commodity circulation, and commodity circulation presupposes the representation of commodity in money, monetary circulation; the duplication of commodities into commodities and money is a law of the emergence of the product as a commodity. Capitalist commodity production, for its part, whether we consider it socially or individually, similarly presupposes capital in the money form, or money capital, both as the prime mover for each business when it first begins, and as a permanent driving force. Circulating capital, especially, presupposes the constantly repeated appearance, at short intervals, of the motor of money capital. (431)”

Now this obviously is a discussion of the internal logic of capital – thus not one of origins per se – though I think it can possibly be tied to our discussion of the problem of primitive accumulation at the end of Vol I. More importantly however, is that this accounts for the fetishization of money capital in political economy, wherein the effect of the process (augmented value) at the level of appearance (money), is taken as the prime mover. It is both the necessary means (capital advanced) and objective goal (profit) of the entire process.

Regarding the second point, that the advanced capital stands in a different ratio from the productive capital it set in motion, Marx time and time again reminds us that this process in no way is affected by the amount of money in circulation – in other words, money does not provide an ultimate limit (economically nor logically) to this process. The limit at the level of the individual capital is overcome, as we saw in Part II, by credit and joint-stock companies – which again open into a discussion of social capital determining the functioning of its constitutive individual processes. On this second point, see pp. 443-443.

Chapter 19: Former Presentations
Engels assembles here sections wherein Marx reviews how political economy has attempted to understand the general social process of capitalist accumulation. Once again, Marx begins by showing how Quesnay had correctly found the ‘source’ of accumulation within labour – albeit limited to agriculture, and how his terms (avances primitives and avances annuelles) being “fixed” and “circulating” capital in Smith. On a side note, Marx goes back and forth on Smith; both showing how he inadvertently pointed to essential processes of capitalist accumulation, but also reducing his work to simplistic – at one point exclaiming that the only advance effected by Smith’s translation of Quesnay’s terms was bringing in ‘capital.’

Rather than working through the extensive analysis of Smith’s understanding of accumulation, Marx’s critique seems to be that the three forms of ‘revenue’ in Smith: wages, profit and rent do not open into how accumulation can occur, and in this regard, Smith has to sneak in a fourth element – that of capital (see 439). To take one short example, Marx critiques Smith for overlooking that “if capital is to come in as revenue, then capital must previously have been spent. (440)” In his summary beginning on page 461 (concerning revenue and commodities), Marx shifts the discussion to his own analysis – arguing that the “substance of value is and remains nothing more than expended labour-power – labour independent of its particular useful character – and value production is nothing but the process of this expenditure. (462)”

Marx finishes by noting that Ricardo, Ramsay, Say, Proudhon, Storch, Sismondi, Mill and others were unable – for various reasons - to move beyond Smith’s conceptual system, and thus “Smith’s confusion” remains as “an article of orthodox belief in political economy. (467)” Now onto the Simple Reproduction and Accumulation…..

Combined and uneven development and Total Social Capital

I read Max's post on part one several months ago and remembered that he argued "all three circuits come together in the fourth chapter." And while that is true on some level -- analytically, at least -- I feel like the short chapter three on commodity capital is really the key to understanding the three circuits.

I want to do some theoretical speculation in this post. I want to avoid redundant summarization but I feel like chapter three is too important not to summarize at least a bit. If you're uninterested in summarization, skip to the next part.

1. Why is third figure, the circulation of commodity capital, distinct from figures I and II (money and productive capital)?

Marx is constantly differentiating figure III from I and II, and I started numbering all the different ways he does so. Ultimately, they are related but heuristically we can see perhaps four:

a) "First, in this case the total circulation with its two antithetical phases opens the circuit, while in the Form I the circulation is interrupted by the process of production and in Form II the total circulation with its two complementary phases appears merely as a means of effecting the process of reproduction and therefore constitutes the movement mediating between P ... P."

I take this to mean that C' is caught between P and M where P and M, in theory, could end at P and M without further reproduction.

b) "Secondly, when circuits I and II are repeated, even if the final points M' and P' form the starting-points of the renewed circuit, the form in which M' and P' were produced disappears."

This is pretty self-explanatory. But it requires a bit more of an understanding of why P and M are inward-looking circuits, which I'll try to explain a bit more below.

c) "As commodity-capital it is always two-fold. From the point of view of use-value it is the product, in the present case yarn, of the functioning of P whose elements L and MP, coming as commodities from the sphere of circulation, have functioned only as factors in the creation of this product. "

This is not a big one, but I guess you could think "M = x-value" and "P=u-value" and C combines both x and u-values.

d) "C is presupposed twice outside the circuit. The first time in the circuit C' — M' — C { L+MP . This C, so far as it consists of MP, is commodity in the hands of the seller; it is itself commodity-capital, so far as it is the product of a capitalist process of production; and even if it is not, it appears as commodity-capital in the hands of the merchant. The second time, in the second c of c — m — c, which must likewise be at hand as a commodity so that it can be bought."

This is not so much a logical distinction as it is a deeper theoretical implication emanating from the first two. So let's talk about that a bit.

2. Why is the circulation of commodity capital critical, and what is total social capital?

In theory, the circuits M and P could die with the second M or second P. That actually is too psychologizing; rather, one must emphasize that with M and P, the circulations are isolated from one another. As Marx says, P-P' implies that production is the "purpose of the process." M-M' is at least more honest in implying that valorization is the purpose, but it fails to take into account the whole circuit of P.

Think of it this way. If you only dealt with money, as most of us do, we could presume that zero production occurs, but logically we know it happens somewhere. But we just can't see it. If we only dealt in production, say as workers who never have a chance to personally spend the money we earn, we would know that commodity transactions occur, but we would have no idea how it happens.

In other words, M and P circuits represent standpoints in the total circuit that need to be connected, and C is the best way to connect them.

One really easy way to think about this is to look closely at the total process:

Figure I: M - C' - P - C'' - M'
Figure II: P - C' - M - C'' - P
Figure III: C' - M - C - P - C''

For every M or P, C appears three times! C is always in transition between M or P, always in anticipation to be valorized, always the mediator between two isolated standpoints. C does all the traveling.

I think we can argue that unlike M or P, C is outward looking beyond individual capital circuits in two ways.

A) Temporally. Every C is always in anticipation of future realization in money, and it always contains valorization from the past. It implies a history that is non-existent in P and M circuits.

B) Spatially. The quote I use to demonstrate point d) above speaks to this. From the standpoint of individual commodity capital, other commodity capitals must exist in order to enter as a capital to be bought (labor-power and means of production, where do these workers come from? who made these machines for them to use? These questions must be answered); and they must come in the form of commodities to be bought by the individual capitalist for its individual consumption. Who feeds workers, what keeps them reproducing?

This movement outwards thus implies a key concept which, I believe, symbolically moves Volume II beyond the abstract, individual focus of production: total social capital. What is total social capital?

But just because the circuit C' ... C' presupposes within its sphere the existence of other industrial capital in the form of C (equal to L + MP) — and MP comprises diverse other capitals, in our case for instance machinery, coal, oil, etc. — it clamours to be considered not only as the general form of the circuit, i.e., not only as a social form in which every single industrial capital (except when first invested) can be studied, hence not merely as a form of movement common to all individual industrial capitals, but simultaneously also as a form of movement of the sum of the individual capitals, consequently of the aggregate capital [translated also as "total social capital"] of the capitalist class, a movement in which that of each individual industrial capital appears as only a partial movement which intermingles with the other movements and is necessitated by them.

TSC is thus contrasted to particular, individual capitals. It is the regulatory framework within which the accumulation of capital occurs. What is the significance of this?

3. Combined and Uneven Development

To return to my previous post about Geoff Eley, and to which Max responded, I think the question about how slavery and non-wage labor fits into the histories of capitalism is best answered by distinguishing between individual and total social capital. Consider the Jairus Banaji article which argues that unfree labor has been, contra most Eurocentric and developmentalist accounts, part of the history of capital accumulation. The reason people say "capitalism as a system can't perform underneath a regime of slavery" stems from a conceptual conflation of individual with TSC:

Regarding the related issue of whether capital can exploit workers who are truly unfree (who represent bondage in Kant’s sense), the major problem with Brass’s way of handling this thesis, apart from his definition of unfree labour, is that the needs of individual and social capital are conflated throughout his argument. Brass conceives capitalism entirely from the standpoint of individual capital, ignoring the fact that the logic that regulates capitalist economy is, necessarily, that of the total social capital. Thus, the real issue of theory here is whether we can sensibly visualise the accumulation of capital being founded on unfree labour (in the strict sense just noted) at the level of the expansion of the total social capital. And the obvious res pons e is , no, since the mobility of labour is essential to the mechanism of capital at this level. (80)

Banaji could have written this paragraph more easily, so allow me to try to translate: Yes, of course slavery cannot function as the underlying framework for total social capital. Total social capital is still premised upon free (as in, free to move; not free to decide) labor. But given that total social capital, there is always the possibility of the entrance from the outside of commodities produced in non-free labor situations. Hence, slave-produced cotton on the world market in competition with cotton produced under superficially free conditions. Banaji says as much on the next page:

Thus the overworking of slaves in the Southern states of the American Union was, [Marx] tells us in Volume I, a question of the ‘production of surplus-value itself ’.58 In the Grundrisse, he refers to ‘[t]he fact that we now not only call the plantation owners in America capitalists, but that they are capitalists’ 59 and implies that these ‘anomalous’ forms of capitalist enterprise could exist because capitalism as a whole was based on free labour. (My interpretation of this is: the American slave owners are capitalists because they are part of the total social capital.) In Theories of Surplus Value, he writes that the ‘business in which slaves are used in conducted by capitalists’, though this is qualified by saying that here the capitalist mode of production ‘exists only in a formal sense’.60 Finally, in Volume III of Capital, he writes, ‘Where the capitalist conception prevails, as on the American plantations, this entire surplus-value is conceived as profit’,61 and, in Volume II, slaves are described as ‘fixed capital’. (81)

Now, this raises the conceptual question of how one defines what is TSC and what is merely one particular individual capital within the TSC. Doesn't this give rise to homogenization, precisely when the concept of TSC vs. individual capital seems to explain how a diversity of production regimes can co-exist? This is an important question.

One way I've resolved this in my head is to rely upon a statement from one of the champions of the concept of uneven and combined development, Ernest Mandel:

There is only one basic driving force which compels capital in general to step up capital accumulation, extraction of surplus value and exploitation of labour, and feverishly to look for profits, over and above average profit: this is competition.

What unites slave and free cotton is nothing but the competition between the two on the world market. To the extent that the average profit against which an individual capital must exceed is determined by the most advanced techniques, say industrial production, then all other modes of production are thus placed into the framework of industrial production as the regulator of total social capital. Once an industry becomes totally uncompetitive, then it withdraws or goes bankrupt, in either case it no longer interacts with the other individual capitals in the circulation of the commodity circuit.

Hints at the existence of uneven and combined development, i.e. the competition between commodities produced under radically different conditions, can be found in chapter four:

Within its process of circulation, in which industrial capital functions either as money or as commodities, the circuit of industrial capital, whether as money-capital or as commodity-capital, crosses the commodity circulation of the most diverse modes of social production, so far as they produce commodities. No matter whether commodities are the output of production based on slavery, of peasants (Chinese, Indian ryots). of communes (Dutch East Indies), of state enterprise (such as existed in former epochs of Russian history on the basis of serfdom) or of half-savage hunting tribes, etc. — as commodities and money they come face to face with the money and commodities in which the industrial capital presents itself and enter as much into its circuit as into that of the surplus-value borne in the commodity-capital, provided the surplus-value is spent as revenue; hence they enter in both branches of circulation of commodity-capital. The character of the process of production from which they originate is immaterial. They function as commodities in the market, and as commodities they enter into the circuit of industrial capital as well as into the circulation of the surplus-value incorporated in it. It is therefore the universal character of the origin of the commodities [also translated as: "characterized by the many-sided character of its origins], the existence of the market as world-market, which distinguishes the process of circulation of industrial capital.

Marx's point is here is not that they follow the same conditions of production but rather that they compete. They compete as commodity capital; hence, the unity of total social capital must be thought at the level of the commodity.

4. Other thoughts on Chapter Four.

Sorry this post is huge. There is not a lot to add from this chapter since I think the main points are covered in Chapter Three.

It is noteworthy that Marx is constantly talking about how the circulation and production processes are interrupted and not internally connected. At one point, Marx writes that the continuity of individual capitals is interrupted on three levels: their quantities, division of portions (I assume how they are invested, consumed and utilized differently) and temporal variations (seasonal work, etc.). Thus Marx is setting the stage for crisis theory, although he will not go into the details yet. He simply points out there is no reason for the market to work. Disequilibrium, not equilibrium, should be the presumed state of affairs.

Near the end, Marx also begs the question of where laborers come from, how the world market has actually worked outside of abstract models (the question of histories).

To cap off this post, I thought I would highlight this line:

As a matter of fact capitalist production is commodity production as the general form of production. But it is so and becomes so more and more in the course of its development only because labour itself appears here as a commodity, because the labourer sells his labour, that is, the function of his labour-power, and our assumption is that he sells it at its value, determined by its cost of reproduction. To the extent that labour becomes wage-labour, the producer becomes an industrial capitalist. For this reason capitalist production (and hence also commodity production) does not reach its full scope until the direct agricultural producer becomes a wage-labourer.

One could interpret this to say "capitalism is ONLY when wage-labor appears and the divorce between labor and the means of production are complete." But could one interpret the line "full scope" to suggest that there is such a thing as capitalist production as a less than full scope? The semiproletarianization of some in a system (a total social capital) determined by the real subsumption and proletarianization of others?