Studying Marx's Grundrisse

The theory of exploitation

2007-07-17T21:49:00.000+10:00

Where do profits come from? How can wage-labour reasonably be described as wage-slavery? If a worker makes a free contract, as an individual equal before the law, with an employer, isn't that a fair day's wage for a fair day's work?
Shouldn't the word "exploitation" be reserved for exceptional cases where workers are exceptionally at a disadvantage in the wage-bargain, rather being used (as Marxists use it) for all wage-labour?
The Grundrisse offers a faster-burning and more vivide first draft of the answers to these questions which Marx develops in Capital.
In Capital, Marx is laconic and deliberately "flat" about why it is labour that sustains capital.
"In order to be able to extract value from the consumption of a commodity, our friend, Moneybags, must be so lucky as to find, within the sphere of circulation, in the market, a commodity, whose use-value possesses the peculiar property of being a source of value, whose actual consumption, therefore, is itself an embodiment of labour, and, consequently, a creation of value. The possessor of money does find on the market such a special commodity in capacity for labour or labour-power". [Chapter 6].
It just so happens that way, and that's that.
In Capital, when Marx introduces the concept of surplus value (the common underpinning, in his theory, of capitalist revenue of all sorts), he starts by imagining that wages are equal to the amount of value added by a worker in a day. Impossible: there would be nothing for capital to feed on! A seemingly pedantic distinction resolves the conundrum. The value of labour-power (which underpins wages) is determined by the labour-time embodied in working-class subsistence, not by the labour done by the worker after the capitalist has bought the labour-power.
"The owner of the money has paid the value of a day’s labour-power; his, therefore, is the use of it for a day; a day’s labour belongs to him. The circumstance, that on the one hand the daily sustenance of labour-power costs only half a day’s labour, while on the other hand the very same labour-power can work during a whole day, that consequently the value which its use during one day creates, is double what he pays for that use, this circumstance is, without doubt, a piece of good luck for the buyer, but by no means an injury to the seller". [Chapter 7]
"By no means an injury to the seller!" Only over hundreds of pages, in Capital, does Marx build up the picture which shows that the market criterion, "by no means an injury to the seller", is only a half, or quarter, or one-tenth truth. In Capital, Marx does not use the words "exploit" or "exploitation" until chapter 11. Even there, those words are mostly used in a fairly neutral way.
In Capital Marx chose a deliberately toned-down, give-your-opponents-their-strongest-argument approach. Compare the Grundrisse.
"The exchange between capital and labour... splits into two processes which are not only formally but also qualitatively different, and even contradictory:
(1) The worker sells his commodity... for a specific sum of money... (2) The capitalist obtains labour itself.. the productive force... which thereby becomes... a force belonging to capital itself..."
"Instead of aiming their amazement in this direction - and considering the worker to owe a debt to capital for the fact that he is alive at all, and can repeat certain life processes every day as soon as he has eaten and slept enough - these whitewashing sycophants of bourgeois economics should rather have fixed their attention on the fact that, after constantly repeated labour, he always has only his living, direct labour itself to exchange..."
"The worker cannot become rich in this exchange, since, in exchange for his labour capacity as a fixed, available magnitude, he surrenders its creative power, like Esau his birthright for a mess of pottage. Rather, he necessarily impoverishes himself... because the creative power of his labour establishes itself as the power of capital, as an alien power confronting him. He divests himself of labour as the force productive of wealth; capital appropriates it, as such...
"The productivity of his labour, his labour in general, in so far as it is not a capacity but a motion, real labour, comes to confront the worker as an alien power; capital, inversely, realizes itself through the appropriation of alien labour".
"The worker emerges not only not richer, but emerges rather poorer from the process than he entered. For not only has he produced the conditions of necessary labour as conditions belonging to capital; but also the value-creating possibility, the realisation which lies as a possibility within him, now likewise exists as surplus value, surplus product, in a word as capital, as master over living labour capacity, as value endowed with its own might and will, confronting him in his abstract, objectless, purely subjective poverty. He has produced not only the alien wealth and his own poverty, but also the relation of this wealth as independent, self-sufficient wealth, relative to himself as the poverty which this wealth consumes, and from which wealth thereby draws new vital spirits into itself, and realizes itself anew".
"After production, [labour capacity] has become poorer by the life forces expended, but otherwise begins the drudgery anew..."
In the earlier parts of the Grundrisse, Marx follows other economists in calling what the capitalists buy from the workers "labour". In the very course of writing the Grundrisse, he realised that was wrong. The worker sells not labour but labour-power, or the capacity to labour.
The best-known explanation of this distinction between labour and labour-power is Engels' introduction to a later edition of Wage Labour and Capital. Engels' introduction is deliberately "flat", in the same way that Marx's exposition in the early chapter of Capital is. In the Grundrisse, we see the distinction dawning on Marx; and it is not merely a distinction, it is a conflict.
"Living labour itself appears as alien vis-a-vis living labour capacity, whose labour it is, whose own life's expression it is, for it has been surrendered to capital... Labour capacity relates to its labour as an alien... Just as the worker relates to the product of his labour as an alien thing, so does he relate to... his own labour as an expression of his life, which, although it belongs to him, is alien to him and coerced from him... Capital is the existence of social labour".
The distinction between labour-power and labour is not just a logical distinction, but a social process of separation, a question of social power. Marx was to explain further in Theories Of Surplus Value:
"Instead of labour, Ricardo should have discussed labour-power. But had he done so, capital would also have been revealed as the material conditions of labour, confronting the labourer as power that had acquired an independent existence and capital would at once have been revealed as a definite social relationship".
The explanations in the Grundrisse are all the more powerful because here - in contrast to some of his earlier writings, and more sharply than in any other of his later writings - Marx stresses that "the workers themselves... will not permit [wages] to be reduced to the absolute minimum; on the contrary, they achieve a certain quantitative participation in the general growth of wealth".
That they do so is politically important: it is what makes wage-workers within capitalism able to get "a share of civilization which distinguishes [them] from the slave" - such as "participation in the higher, even cultural satisfactions, the agitation for his own interests, newspaper subscriptions, attending lectures, educating his children, developing his taste etc".
The formal equality which the wage-worker achieves in capitalist society is important, too: it "essentially modifies his relation by comparison to that of workers in other social modes of production".
The evil is one not to be remedied by higher wages, or more complete formal equality.
Thus Marx's comment, some years later, on a clause in the German socialists' Gotha Programme which said that the problem with wage-labour was an "iron law" keeping wages too low:
"It is as if, among slaves who have at last got behind the secret of slavery and broken out in rebellion, a slave still in thrall to obsolete notions were to inscribe on the program of the rebellion: Slavery must be abolished because the feeding of slaves in the system of slavery cannot exceed a certain low maximum!"
Of course slaves generally did not get enough food. Of course slave revolts were good even if limited to demanding bigger food rations. Of course it is inherent in the system of capitalist wage-labour that wages are squeezed down. Of course it is important that workers struggle to get even a little bit more. But Marx developed his theory so as to encourage workers to rebel against wage-labour as a whole, not just against low wages, just as, in their time, slaves had eventually rebelled against slavery as such, and not just against small food rations.
The same thought is expressed in the Grundrisse:
"The recognition of the products as [labour-power's] own, and the judgement that its separation from the conditions of its realisation is improper - forcibly imposed - is an enormous advance in awareness, itself the product of the mode of production resting on capital, as much the knell to its doom as, with the slave's awareness that he cannot be the property of another, with his consciousness of himself as a person... slavery... ceases to be able to prevail as the basis of production".

Martin Thomas

Marx's telescope

2007-06-24T20:49:00.000+10:00

Marx's Grundrisse, and the long-term perspective on how capital prepares the working class to develop itself as a revolutionary class
By Martin Thomas

Download pdf of this contribution here

PowerPoint presentation on the Grundrisse

2007-06-24T08:29:00.000+10:00

Click here for a short PowerPoint presentation on the Grundrisse.

Workshop discussions on the Grundrisse

2007-06-23T20:29:00.000+10:00

Handouts with discussion points, for workshop session on the Grundrisse at Workers' Liberty summer school, London, 30 June/ 1 July 2007. Download as pdf.

Study schedule

2007-02-18T01:00:00.000+10:00

The page references to the McLellan book of excerpts are to the Paladin edition, 1973.

Section 1: pp.83-111.
McLellan excerpt 1, p.26ff.
Key passages.
Notes from our discussion
The method of inquiry and the method of presentation. What do historical materialism, the primacy of the mode of production as a determinant, and dialectics mean? The arts and material development (pp.109-11). (In this connection it may be useful also to look at Marx's short 1873 Afterword to Capital volume 1, and his even shorter Preface to "A Contribution to a Critique of Political Economy", the other texts where Marx said he was discussing methodology).

Section 2: pp.883-893.
McLellan excerpt 2, p.58ff.
Key passages
Notes from our discussion
Free-trading and protectionism. Bastiat and Carey.

Section 3: pp.115-134 (also 161-2 and 248-9).
No excerpts included in McLellan.
Key passages
Notes from our discussion
Critique of Proudhonist socialism as represented by Darimon. "The foolishness of those socialists (namely the French, who want to depict socialism as the realisation of the ideals of bourgeois society articulated by the French revolution) who demonstrate that exchange and exchange value etc. are originally (in time) or essentially (in their adequate form) a system of universal freedom and equality, but that they have been perverted by money, capital, etc..."

Section 4: pp.135-172.
McLellan excerpt 3, p.70ff; 4, p.76ff; 5, p.81ff; 6, p.86ff.
Key passages
Notes from our discussion
Critique of those socialists who advocated that workers should be guaranteed the full fruits of their labour by being paid in "labour-money" (money representing so many hours of labour rather than so many dollars), and then being able to buy goods and services representing exactly as many hours. "This demand can be satisfied only under circumstances where it can no longer be raised".

Section 5: pp.172-250.
No excerpts in McLellan.
Key passages
Notes from our discussion
Money as the "god among commodities" and the "real community" of capitalist society. "Wage labour on one side, capital on the other, are therefore only other forms of developed exchange value and of money". Accounting money and hard cash. Circulation and the other functions of money. Crises.

Section 6: pp.250-266.
McLellan excerpt 7, p.89ff.
Key passages.
Notes from our discussion
What is capital? The difference between a trading economy and capitalist production.

Section 7-10: pp.266-458 (also pp.487-8 and 514-5).
McLellan:
Excerpt 8, p.89ff (=pp.278-9)
Excerpt 9, p.93ff (=pp.304-310)
Excerpt 10, p.100ff (=pp.325-326)
Excerpt 11, p.102ff (=pp.331-2)
Excerpt 12, p.104ff (=pp.359-364)
Excerpt 13, p.111ff (=pp.409-410)
Excerpt 14, p.113ff (=pp.415-6)
Excerpt 15, p.115ff (=pp.450-6)
Excerpt 16, p.122ff (=pp.456-8)
Excerpt 18, p.139ff (=pp.487-8)
Key passages.
Notes for our discussion
How capital becomes productive. How the exchange-relation between the capitalist and the worker, formally free and equal, is in fact a relation of exploitation. "Labour is absolute poverty as object, on one side, and is, on the other side, the general possibility of wealth as subject and as activity... Instead of... considering the worker to owe a debt to capital for the fact that he is alive at all, and can repeat certain life processes every day... these whitewashing sycophants of bourgeois economics should rather have fixed their attention on the fact that, after constant repeated labour, [the worker] always has only his living, direct labour itself to exchange..."
"Capital is productive, i.e. an essential relation for the development of the social productive forces... Those who demonstrate that the productive force ascribed to capital is a displacement, a transposition of the productive force of labour, forget precisely that capital itself is essentially this displacement, this transposition, and that wage labour as such presupposes capital... The demand that wage labour be continued but capital suspended is self-contradictory".
The difference, however, between capitalist and pre-capitalist exploitation: "The sphere of [the worker's] consumption is not qualitatively restricted, only quantitatively. This distinguishes him from the slave, serf, etc.... [The] essential civilising moment... on which the historic justification, but also the contemporary power of capital rests..."
The "great civilising influence of capital; its production of a stage of society in comparison to which all earlier ones appear as mere local developments of humanity and as nature-idolatry"; and simultaneously its limitedness, its propensity to crises.
"Capital in general, as distinct from the particular real capitals, is itself a real existence".

Section 11-12: pp.458-533 (and pp.769-70, and pp.881-2).
McLellan excerpt 17, p.125ff (=pp.459-471)
Key passages
Notes for our discussion
Extra note: The "civilising influence of capital"
Extra note: productive and unproductive labour
Extra note: more on "why the working class"
Extra note: Geography and historical materialism
The historical emergence of wage-labour from pre-capitalist trading economies. The distinction between capitalist wage-labour and e.g. medieval day-labourer relations.
Capital, circulation, public works, and privatisation. "The separation of public works from the state, and their migration into the domain of the works undertaken by capital itself, indicates the degree to which the real community has constituted itself in the form of capital".

Section 13: pp.534-690.
Key passages
Notes for our discussion
McLellan excerpt 19, p.141ff (=pp.539-542)
Excerpt 20, p.145ff (=pp.610-4)
Excerpt 21, p.150ff (=pp.649-652)

Section 14: pp.690-743 (especially 701-712)
McLellan:
Excerpt 22, p.154ff (=pp.692-704)
Excerpt 23, p.164ff (=pp.704-6)
Excerpt 24, p.167ff (=pp.708-711)
Excerpt 25, p.171ff (=pp.711-2)
Key passages
Extra note: crises
Three questions arising from pages 690-743
Extra note: revolutionising education

Section 15: pp.745-882.
McLellan:
Excerpt 27, p.176ff (=pp.748-750)
Excerpt 26, p.173ff (=pp.831-833)
Notes for our discussion
"Capital as fructiferous". Tendency of rate of profit to fall. Interest and profit. Money and precious metals. Alienation.

Extra note by Roger on "the impossibility of state capitalism"

2007-02-17T22:20:00.000+10:00

I agree with Martin that attempts to prove state capitalism to be logically impossible have little value. Nevertheless, attempts have been made and in some cases appear to have some backing from Marx.

For example, in a debate with Harman, Mandel brandished a quotation from the Grundrisse, to the effect that capital can only exist as many capitals. The logical point is that a hypothetical single capital would have no other capital to be compared with, and so couldn’t have exchange value. (In the same way there could not be only one commodity in the whole world). Mandel implied that this purely logical point made state capitalism an impossibility.

Yet state capitalism, in the mundane sense of the state acting as a capitalist, is a commonplace in capitalist societies. For example, in Australia, until recently, the Commonwealth Bank was a state bank, operating in much the same way as the other banks, similarly Qantas was a state owned airline, run along commercial lines. We can imagine a society where production is dominated by state capital and so call that society “state capitalist”, without in any way endorsing the idea of a single capital.

Even in the limit of a whole country being a “single trust” there is no logical impossibility. The trust buys means of production and labour power on the world market and sells its products on the world market and makes a profit. Trotsky thought such a single trust could not exist in practice (because it would be overthrown by the workers), but that is a different issue from logical impossibility.

Kautsky (and others) have argued that a “single master” is necessarily extremely onerous for the workers. But a “single master” only arises if the workers are forcibly denied access to the world labour market. In a hypothetical state capitalist East Germany, the workers could freely move to and work in West Germany. Unfortunately in the real East Germany, attempts to move to West Germany could easily be fatal – casting much doubt on the notion that East Germany actually was an example of state capitalism.

Bukharin considered a single trust covering the entire globe. There would now really be a single master and commodity production would not exist. Bukharin concluded: “This would be capitalism no more, for the production of commodities would have disappeared; still less would it be socialism, for the power of one class over the other would have remained (an even grown stronger). Such an economic structure would, most of all, resemble a slaveowning economy where the slave market is absent”.

This is the only case where state capitalism is logically impossible, but the circumstances are so extremely hypothetical, that this one case has no relevance to the issue of whether some countries were or are state capitalist..

Extra note: debate on the Stalinist USSR

2007-02-10T10:57:00.000+10:00

What light does Marx's discussion of the defining characteristics of capital shed on the debates about the nature of the Stalinist USSR?

Comments on this site:

From notes on pages 743-882

Martin Thomas: "Exploitation by capital without the mode of production of capital"

As regards "backward branches of industry" on the margins of modern bourgeois economy, Marx writes:
The most odious exploitation of labour still takes place in them, without the relation of capital and labour here carrying within itself any basis whatever for the development of new forces of production, and the germ of newer historic forms... What takes place is exploitation by capital without the mode of production of capital. [p.853].
And earlier, he writes that in the development of English capitalism, wage-labour only became fully "free" at the end of the 18th century.
Absolute surplus value... appears determined by the absolute lengthening of the working day above and beyond necessary labour time. Necessary labour time works for mere use value, for subsistence. Surplus labour time is work for exchange value, for wealth...
At this stage the difference between the production of capital and earlier stages of production is still merely formal. With kidnapping, slavery, the slave trade and forced labour, the increase of these labouring machines, machines producing surplus product, is posited directly by force; with capital, it is mediated through exchange...
This form of surplus labour appears in the slave and serf modes of production etc., where use value is the chief and predominant concern, as well as in the mode of production of capital, which is oriented directly towards exchange value...
In... relative surplus value, which appears as the development of the workers' productive power, as the reduction of necessary labour time relative to the working day, and as the reduction of the necessary labouring population relative to the population (this is the antithetical form), in this form there directly appears the industrial and the distinguishing historic character of the mode of production founded on capital.
The forcible transformation of the greater part of the population into wage labourers, and the discipline which transforms their existence into that of mere labourers, correspond to the first form.... coercive measures employed to transform the mass of the population, after they had become propertyless and free, into free wage labourers... This is repeated in a similar fashion with the introduction of large industry, of factories operating with machines...
Only at a certain stage of the development of capital does the exchange of capital and labour become in fact formally free. One can say that wage labour is completely realized in form in England only at the end of the eighteenth century, with the repeal of the law of apprenticeship. [p.769-770].
In my view, these passages shed some light on Stalinist state capitalism as a system heavily oriented to "absolute surplus value".

Roger Clarke: "Exploitation by capital without the mode of production of capital"

This section heading heading shows the problem with describing the Stalinist USSR as "Stalinist state capitalism". Surely this description, even with the qualification "state", implies that the capitalist mode of production not only existed, but was dominant, in the USSR.
Marx makes a distinction between "free labour", i.e. propertyless non-bonded labour, and "wage labour", which is also "formally free" in its exchange with capital. Of course wage labour is ultimately compulsory labour, but the compulsion is not direct, as it was in earlier modes of production.
"Only at a certain stage of the development of capital does the exchange of capital and labour become in fact formally free. One can say that Wage labour is completely realized in form in England only at the end of The eighteenth century, with the repeal of the law of apprenticeship. [p.769-770]."
Thus Tudor England was "a stage in the development of capital", but was not yet capitalism. Nor does it make much sense to describe Tudor England as "still feudal", when the defining relationships of feudalism were already in an advanced state of dissolution. Yet I do not know of any serious attempt to define a "Tudor" mode of production. There are periods in history, which may last for centuries, where the concept of a definite mode of production is not useful. More light is cast on the Tudor period by looking back at the feudal system in dissolution and forward to the capitalist system yet to be developed than by attributing the events of this period to the dynamics of the "Tudor" mode.
I think something like this is the rational core of Ticktin's "no mode of production" view of the USSR. Unfortunately he spiced it up with cute "paradoxical" formulations - "the mode of no mode" etc. My friend in NZ propose instead to explore the idea that, although the Stalinist system was relatively short-lived, there was a distinct "Stalinist" mode that was constructed in the 1929-34 period. Of course the world capitalist system exerted a profound influence on the USSR, but it does not follow that the USSR was just a cork bobbing on the capitalist sea. Did the USSR also have its own inner spring and does it make sense to describe this inner spring as "capitalist"? Despite the use of railways, factory production and other "capitalist" technology, there were huge differences between the relations of production in the USSR in 1934, and anything that Marx would have described as capitalism.

From notes on pages 458-533

Martin Thomas: Capital without wage-workers? Wage-payment without capitalist wage-labour?

It is possible for capitalists to emerge without any large number of wage-workers. For example, merchant capitalists. Another example: "slavery is possible at individual points within the bourgeois system of production" [p.464]; "the plantation owners in America... are capitalists... based on their existence as anomalies within a world market based on free labour" [p.513].
Generalised wage-labour - wage-labour as the main form of deployment of labour - is impossible without capital; and generalised capital is impossible without wage-labour.
But sometimes large numbers of workers can be paid in the wage-form without being capitalist wage-workers. Workers living from a wage, salary, stipend, or fees are not necessarily wage-workers working for capital. For centuries there are many such workers, paid from revenue rather than capital.
"The entire class of so-called services from the bootblack up to the king falls into this category. Likewise the free day-labourer... In Asiatic societies... whole cities arise... from the exchange of [the monarch's] revenue with the 'free hands'... The pay of the common soldier is also reduced to a minimum... but he exchanges the performance of his services not for capital, but for the revenue of the state..." [p.467].
"In bourgeois society itself, all exchange of personal services for revenue - ... cooking, sewing etc., garden work etc., up to and including... civil servants, physicians, lawyers, scholars, etc. - belongs under this rubric, within this category..." [p.468]...

Relevance to debates about Stalinism

What light does this discussion shed on the debates about Stalinism? Your conclusion as to whether the workers in the Stalinist states were wage-workers or not depends, up to a point, on how much you reckon Marx's third condition, "a free exchange-relation - money-circulation - between both sides", must be understood as requiring a fully, or nearly fully, free market, or only as requiring that the relationship be mediated through money, perhaps on a very imperfect market.
In fact labour markets are extremely "imperfect" in almost all capitalist states - for varying reasons, sometimes to do with trade unions - and the basic development of the concept of wage-labour presupposes only the money-relationship, not any particular level of freely-competitive price-setting, nor any particular level of individual legal freedom going with the money-relationship beyond the requirement that the worker not be a slave or a serf legally annexed to another individual.
That the worker is a "slave" to "capital in general" does not contradict wage-labour. "The free worker... sells the particular expenditure of force to a particular capitalist, whom he confronts as an independent individual. It is clear that this is not his relation to the existence of capital as capital, i.e. to the capitalist class". [p.464].
Logically, you could build on Marx and argue that in the USSR the bureaucrats formed a state-capitalist class while exploiting by methods other than wage-labour, because of their "existence as anomalies within a world market based on free labour". (That was approximately Tony Cliff's idea, though his summary was that the whole economy was capitalist despite no wage-labour). The more common view (e.g. of some Regulation School writers) that the Stalinist USSR was a wage-labour society, but not a capitalist one, seems harder to mesh with Marx's argument.

Roger Clarke: Capitalist free labour

“A presupposition of wage labour, and one of the historic preconditions for capital, is free labour and the exchange of this free labour for money, in order to realize money, to consume the use value of labour not for individual consumption, but as use value for money.”
Grundrisse p.471
“When e.g. the great English landowners dismissed their retainers, who had, together with them, consumed the surplus product of the land; when further their tenants chased off the smaller cottagers etc., then, firstly, a mass of living labour powers was thereby thrown onto the labour market, a mass which was free in a double sense, free from the old relations of clientship, bondage and servitude, and secondly free of all belongings and possessions, and of every objective, material form of being, free of all property; dependent on the sale of its labour capacity or on begging, vagabondage and robbery as its only source of income.”
Grundrisse p.507
Here the “freedom” of the labourer appears merely as two negatives – absence of the old relationships and absence of labourers’ property.
Yet in Capital these same ideas are expressed more “positively”
“It [capital] can spring into life, only when the owner of the means of production and subsistence meets in the market with the free labourer selling his labour power. And this one historical condition comprises a world’s history. Capital, therefore, announces from its first appearance a new epoch in the process of social production.
Capital p.170
“The capitalist epoch is therefore characterized by this, that labour-power takes in the eyes of the labourer himself the form of a commodity which is his property; his labour consequently becomes wage-labour. On the other hand, it is only from this moment that the produce of labour universally becomes a commodity.”
Capital p.170 footnote
While “free” labour does not imply political rights such as the right to vote or the right to join a trade union, it does, in Marx’s finished exposition in Capital, mean something more than the mere absence of slavery or serfdom. That something is the effective ownership by the worker of his own labour power.
Thus the existence of a genuine (not necessarily “perfect”) labour market is a defining characteristic of a capitalist system. The “imperfection” introduced by trade unions shows that “perfection” can be a disadvantage to workers. However trade unionism is based on the existence of a genuine labour market and simply tries to obtain a better price for the sellers of labour power.
Direct compulsion can still occur under established capitalism, but only as an anomaly – eg the cotton plantation owners in the US were capitalists who exploited slaves, but they could only be capitalists because production by wage labour was the general rule in the US, i.e. the dominant mode of production in the US at the time was capitalism.
Cliff’s “state-capitalist” theory of full-blown Stalinism (the USSR from 1929-1956) is nonsense. Direct state compulsion in USSR was an anomaly in the world economy, but was the general rule in the USSR in this period. Therefore the dominant mode of production in the world was capitalist, but the dominant mode of production in the USSR was not.

From notes on pages 250-266

Martin Thomas: Marx identifies capitalism indiscriminately with a society where exchange-value dominates, and a society where wage-labour dominates. He bridges the gap by arguing that the domination of one must mean the domination of the other. For example, if exchange-value dominates, then the mass of the population have no direct access to the means of subsistence, but have to buy them for money. Since they do not own the means of subsistence, they can get that money only by selling what they do still own - their own labour-power.
On the very broadest scale this equation may work. But in actual history there is a lot of slippage.
Some societies may be more or less dominated by exchange-value while wage-labour is still secondary. In the countryside, the working population has some access to the land, but uses that more to grow cash-crops than to supply itself directly, and moreover every household depends on bits and pieces of paid labour for others as well as its own work on its own land. Paid labour takes place under a variety of relations, but rarely in straightforward capitalist forms. Some of it is tied into quasi-feudal relations of dependence, for example by "debt servitude". Some of it has more the character of an exchange of services between neighbours on not-very-different economic levels than of capitalist employment.
Conversely, take the Stalinist states. Some Marxists deny that wage-labour existed there at all. Leave that debate aside for a moment, and consider the debate among the large and diverse number who agree that wage-labour (in impure, distorted forms) did exist there. Many of them would still say that, because exchange-value did not dominate sufficiently there, the Stalinist states were not (state-)capitalist.
True, the workers were paid wages and had to buy their means of subsistence in the market, or rather in a variety of markets (official publicly-run markets; officially-licensed free markets; grey and black markets). Even if those markets were very far from a neo-classical economist's ideal, they were still markets. But for producer goods the role of the market was much smaller. There were grey markets operating between different enterprises, but to a large degree the enterprise's acquisition of consumer goods depended on government allocation rather than on straightforward purchasing-power. Therefore (they say) not capitalist. Some even argue that state capitalism, in contradistinction to competitive capitalism, is a contradiction in terms, because if the state dominates capital then exchange-value cannot dominate the distribution of producer goods.

From notes on pages 135-172

Martin Thomas: To work, a time-chit system presupposes a bank which would in fact be a general ruler of production. In which case, if that bank planned everything, what would be the purpose of the chits? The bank would have to be either "a despotic ruler of production and trustee of distribution" or "a board which keeps the books and accounts for a society producing in common" (notice, having in mind debates about the nature of Stalinism, that Marx assumes that these two possibilities are radically different from each other). (p.115-6).

From notes on the Introduction

Martin Thomas: In my view, also, the Introduction has had some bad effects on later "Marxism".
You can read it as saying that production is dominant a priori - that there is a structure called the relations of production which shapes society a priori without any intermediary of human action. You can see the harmful effects of that in the idea that the Stalinist USSR was a workers' state because of the supposed relations of production. (One of the problems with the approach is - actually in line with Marx's argument in the Introduction - it is tricky, or even impossible, to define "relations of production" in abstraction from everything else in society).

Furthe reading: link to past debates

Notes for our discussion on pages 743-882

2007-01-31T20:01:00.001+10:00

In these pages, Marx's notes become much scrappier, and sometimes for many pages on end are little more than strings of copied-out excerpts from previous economists. I saw five main themes worth discussion, some of them returns to ideas previously sketched in earlier pages of the Grundrisse; and a few other interesting remarks.
First, the more bitty interesting remarks, and then the more solid (but also "heavier") themes.

*1. Dr Price and Jesus's shilling

The notion of capital as a self-reproducing being - as a value perenniating and increasing by virtue of an innate quality - has led to the marvellous inventions of Dr Price, which leaves the fantasies of the alchemists far behind, and which Pitt earnestly believed and made into the pillars of his financial sagacity in his sinking fund laws... The following, a few striking excerpts from the man:
'Money bearing compound interest increases at first slowly. But, the rate of increase being continually accelerated, it becomes in some time so rapid, as to mock all the powers of the imagination. One penny, put out at our Saviour's birth to 5% compound interest, would, before this time, have increased to a greater sum than would be obtained in a 150 millions of Earths, all solid gold...
'A state need never, therefore, be under any difficulties; for, with the smallest savings, it may, in as little time as its interest can require, pay off the largest debts.'
His secret: the government should borrow at simple interest, and lend out the borrowed money at compound interest. [p.842].
No less a figure than John Maynard Keynes offered a similar scenario - based on the idea that capital's appropriation of new wealth is based only on the arithmetic of compound interest, not on the exploitation of labour - with tongue only partly in cheek:
I trace the beginnings of British foreign investment to the treasure which Drake stole from Spain in 1580. In that year he returned to England bringing with him the prodigious spoils of the Golden Hind. Queen Elizabeth was a considerable shareholder in the syndicate which had financed the expedition.
Out of her share she paid off the whole of England’s foreign debt, balanced her Budget, and found herself with about £40,000 in hand. This she invested in the Levant Company --which prospered. Out of the profits of the Levant Company, the East India Company was founded; and the profits of this great enterprise were the foundation of England’s subsequent foreign investment. Now it happens that £40,000 accumulating at 3.5 per cent compound interest approximately corresponds to the actual volume of England’s foreign investments at various dates, and would actually amount to-day to the total of £4,000,000,000 which I have already quoted as being what our foreign investments now are. Thus, every £1 which Drake brought home in 1580 has now become £100,000. Such is the power of compound interest! [Economic Possibilities for our Grandchildren, 1930].

*2. Alienation and its overthrow

Social wealth confronts labour in more powerful portions as an alien and dominant power. The emphasis comes to be placed not on the state of being objectified, but on the state of being alienated, dispossessed, sold; on the condition that the monstrous objective power which social labour itself erected opposite itself as one of its moments belongs not to the worker, but to the personified conditions of production, i.e. to capital...
But obviously this process of inversion is a merely historical necessity, a necessity 832 for the development of the forces of production solely from a specific historic point of departure, or basis, but in no way an absolute necessity of production...
With the suspension of the immediate character of living labour, as merely individual, or as general merely internally or merely externally, with the positing of the activity of individuals as immediately general or social activity, the objective moments of production are stripped of this form of alienation...
The worker's propertylessness, and the ownership of living labour by objectified labour, or the appropriation of alien labour by capital - both merely expressions of the same relation from opposite poles - are fundamental conditions of the bourgeois mode of production, in no way accidents irrelevant to it...
Where... wage labour... is the point of departure, there machines can only arise in antithesis to living labour, as property alien to it, and as power hostile to it; i.e. that they must confront it as capital. But it is just as easy to perceive that machines will not cease to be agencies of social production when they become e.g. property of the associated workers.
In the first case, however, their distribution, i.e. that they do not belong to the worker, is... a condition of the mode of production founded on wage labour. In the second case the changed distribution would start from a changed foundation of production, a new foundation first created by the process of history. [p.831-3].

*3. Training for labour in general

We discussed before the idea that capitalist development simultaneously drives to "de-skill" every particular job and to require a higher level of general education and training of the whole working class. Marx seems, rather cryptically, to point to this idea in one passage.
Capitalist growth, he writes, requires growth of the population and [its] training for labour (including thereby also a certain amount of free time for non-labouring, not directly labouring population, hence development of mental capacities etc... [p.774].

*4. "Exploitation by capital without the mode of production of capital"

As regards "backward branches of industry" on the margins of modern bourgeois economy, Marx writes:
The most odious exploitation of labour still takes place in them, without the relation of capital and labour here carrying within itself any basis whatever for the development of new forces of production, and the germ of newer historic forms... What takes place is exploitation by capital without the mode of production of capital. [p.853].
And earlier, he writes that in the development of English capitalism, wage-labour only became fully "free" at the end of the 18th century.
Absolute surplus value... appears determined by the absolute lengthening of the working day above and beyond necessary labour time. Necessary labour time works for mere use value, for subsistence. Surplus labour time is work for exchange value, for wealth...
At this stage the difference between the production of capital and earlier stages of production is still merely formal. With kidnapping, slavery, the slave trade and forced labour, the increase of these labouring machines, machines producing surplus product, is posited directly by force; with capital, it is mediated through exchange...
This form of surplus labour appears in the slave and serf modes of production etc., where use value is the chief and predominant concern, as well as in the mode of production of capital, which is oriented directly towards exchange value...
In... relative surplus value, which appears as the development of the workers' productive power, as the reduction of necessary labour time relative to the working day, and as the reduction of the necessary labouring population relative to the population (this is the antithetical form), in this form there directly appears the industrial and the distinguishing historic character of the mode of production founded on capital.
The forcible transformation of the greater part of the population into wage labourers, and the discipline which transforms their existence into that of mere labourers, correspond to the first form.... coercive measures employed to transform the mass of the population, after they had become propertyless and free, into free wage labourers... This is repeated in a similar fashion with the introduction of large industry, of factories operating with machines...
Only at a certain stage of the development of capital does the exchange of capital and labour become in fact formally free. One can say that wage labour is completely realized in form in England only at the end of the eighteenth century, with the repeal of the law of apprenticeship. [p.769-770].
In my view, these passages shed some light on Stalinist state capitalism as a system heavily oriented to "absolute surplus value".

1. "Capital as fructiferous"

Commodities are products of labour. But they are sold as products of capital. They are sold under conditions governed by the competition of capitals. The active agents of the process, i.e. the capitalists, measure that price in relation to their costs (all their costs), and their gain (excess of sale prices over costs) in relation to the capital employed, i.e. as profit, gain divided by stock of capital, not as surplus value divided by wages.
Capital relates to itself as self-increasing value; i.e. it relates to surplus value as something posited and founded by it; it relates as well-spring of production, to itself as product; it relates as producing value to itself as produced value. It therefore no longer measures the newly produced value by its real measure, the relation of surplus labour to necessary labour, but rather by itself as its presupposition... Surplus value thus measured by the value of the presupposed capital, capital thus posited as self-realizing value—is profit... The product of capital is profit. [p.746].
From this follows (but Marx expands on this nowhere in the Grundrisse) that prices diverge systematically from value (the so-called "transformation problem").

2. The tendency of the rate of profit to fall

This famous "law" was first expounded (first at any length, anyway) in the Grundrisse. It is in the Grundrisse, too, that we find Marx's most extravagant claim for this "law".
This is in every respect the most important law of modern political economy, and the most essential for understanding the most difficult relations. It is the most important law from the historical standpoint. [p.748].
Here, I think, we have to take the term "political economy" in the sense in which Marx subtitled Capital "a critique of political economy". Remember that both Adam Smith and David Ricardo believed (for different reasons) that there was a "law" inexorably pushing down profit rates. Almost a century later, John Maynard Keynes believed the same thing. Marx, rather understandably, seizes on this conclusion of the bourgeois economists as showing, out of the mouths of its own advocates, that capitalist economy was bound to undermine itself. And he thinks he has found a different (sounder) explanation for it.
When Marx came to expound the "law" with a bit more care, in Capital volume 3, he put quite a lot of emphasis on the countervailing factors, and presented it as much more a general tendency, and less an iron law, than Smith or Ricardo did. It remains a fact, I think, that Marx's reasoning on this question was fundamentally wrong.
The main value of the exposition in the Grundrisse is that Marx presents the argument in fresh, straightforward form, without the complications and qualifications which he would add in Capital volume 3, and thus shows the fallacy more clearly.
Marx argues that increasing labour productivity must mean that workers work with a greater mass of machines and raw materials, and therefore the ratio of capital advanced to living labour must rise. Since the surplus value derives from living labour, and the proportion of living labour which can produce surplus value rather than covering wages can only rise in a limited way, the ratio of surplus value to capital advanced, i.e. the gross profit rate, must fall.
The growth of the productive power of labour is identical in meaning with (a) the growth of relative surplus value or of the relative surplus labour time which the worker gives to capital; (b) the decline of the labour time necessary for the reproduction of labour capacity; (c) the decline of the part of capital which exchanges at all for living labour relative to the parts of it which participate in the production process as objectified labour and as presupposed value. The profit rate is therefore inversely related to the growth of relative surplus value or of relative surplus labour, to the development of the powers of production, and to the magnitude of the capital employed as [constant] capital within production. In other words, the... law is the tendency of the profit rate to decline with the development of capital... [p.763].
The fact that in the development of the productive powers of labour the objective conditions of labour, objectified labour, must grow relative to living labour -- this is actually a tautological statement, for what else does growing productive power of labour mean than that less immediate labour is required to create a greater product, and that therefore social wealth expresses itself more and more in the conditions of labour created by labour itself? [p.831].
The capital can grow and the rate of profit can grow in the same relation if the relation of the part of capital presupposed as value and existing in the form of raw materials and fixed capital rises at an equal rate relative to the part of the capital exchanged for living labour. But this equality of rates presupposes growth of the capital without growth and development of the productive power of labour. One presupposition suspends the other. This contradicts the law of the development of capital, and especially of the development of fixed capital. [p.747].
The fallacy: the growth of the mass, or the complexity, of the machinery and the raw materials, does not necessarily mean a growth in their value. If the productive power of labour increases, so also does the productive power of the labour which extracts raw materials or builds machinery.
Marx himself notes that fixed capital is employed only to the extent that its value is smaller than the value it posits [p.766].
Think that through. A capitalist introduces a technical innovation. He will do that only if it raises his profit. If he is the first to introduce that technical innovation, he gets a windfall profit, because he can sell at a price set by his competitors, who produce with higher costs.
Eventually the innovation diffuses. The pioneer capitalist has to cut his selling price. That means that the costs for other capitalists will fall (exception: if the pioneer capitalist produces only luxuries, bought neither as inputs for production nor as wage-goods. In that case, the costs for other capitalists stay the same).
As adjustment proceeds, the pioneer capitalist's profit rate falls from his initial windfall rate - but other capitalists' rate rises. When adjustment is complete, the new general rate is still higher than (or in the exceptional case, no lower than) the old one.
In real life, of course, any number of disturbances could have reduced the profit rate in the meantime. But the profit rate can fall as a pure result of technical innovation only if (somehow) the innovation increases not only real but also money wages.
Or think through the relation between fixed capital and surplus value from another angle. The fixed capital at any point in time is an "objectified" form of the proportion of the surplus value accumulated over a number of previous years, that number being set by the lifespan of fixed capital.
Fixed capital simply cannot spiral into hugeness while surplus value remains limited, for otherwise there would not be sufficient surplus value to supply the required annual increments in fixed capital. There can be a long-term, general tendency for the ratio of fixed capital to surplus value to rise only if there are long-term tendency either for the proportion of surplus-value accumulated (rather than consumed) to rise (there is no such tendency), or for the lifespan of fixed capital to increase (the general trend is rather the opposite).

2.1. Rate and mass of profit

In Capital volume 3 Marx argues that the long-term tendency is for the rate of profit to fall but the mass of profit to rise.
That could be so, of course, without necessarily posing any big problem for capital. There is nothing "natural" about a 15%, or 10%, or 5% rate of profit. Why shouldn't capital gradually, as the decades pass, become accustomed to an always-slightly-decreasing "normal" rate of profit, given that the actual mass of loot increases (and, even more so, the use-values in which that loot is embodied)?
Even if the tendency of the rate of profit to fall were a fact, it does not, contrary to Marx, follow that it would mean that the development of the productive forces brought about by the historical development of capital itself, when it reaches a certain point, suspends the self-realisation of capital.." [p.749].
Bastiat seems to have argued that point. If so, I can't see but that Bastiat was right, on that particular point. Marx denounces Bastiat with great sarcasm, drawing on Ricardo [p.755-6]; but all Ricardo seems to have done is pointed out, arithmetically, that a certain level of decline in the percentage profit rate could produce a reduced mass of profit even if the stock of capital rose (six per cent of 1.1. million is less than seven per cent of one million).
The arithmetic proves nothing at all about real economic trends; if the fall in the rate of profit is supposed to be due to the increase in the stock of capital relative to living labour (as it is in Marx's argument), then an increase from one million to 1.1 million in that stock cannot produce a fall in the rate of profit from 7% to 6%.

2.2. Comment on Ricardo

In passing, however, on these pages, Marx makes two comments on Ricardo which have critical edge against many over-hasty generalisations in the social sciences, including some propounded by Marxists.
Ricardo, so Marx argues, elevates a historical relation holding for a period of 50 years and reversed in the following 50 years to the level of a general law; and constructed general and eternal laws about physiological chemistry at a time where the latter hardly existed... flees from economics to seek refuge in organic chemistry [p.752, 754].
(Ricardo's version of the tendency of the rate of profit to fall was based on a supposed law of increasing costs in agriculture as population increased and agriculture had to spread out to worse and worse land; those increasing costs would drive up wages, because it would cost the workers more to eat, and thus cut into profits. The gainers would be the landlords, drawing increased rents on the better land).

2.3. The growth of the unproductive "middle class"

Marx is commonly held to have predicted the extinction of all middle layers of the population in capitalist society, and a stark polarisation between working class and capitalists. In the Communist Manifesto there is indeed a prediction of that sort.
Marx's settled view was different. In the notebooks published as Theories of Surplus Value he wrote:
What [Ricardo] forgets to emphasise is the constantly growing numbers of the middle classes, those who stand between the workman on the one hand and the capitalist and landlord on the other. The middle classes maintain themselves to an ever increasing extent directly out of revenue, they are a burden weighing heavily on the working base and increase the social security and power of the upper ten thousand. [TSV 2, p573].
Here in the Grundrisse he writes:
A mass of parasitic bodies come to cluster around capital, and, under one or another title, they lay hands on so much of the total production as to leave little danger of the workers being overwhelmed by abundance. [p.757].

3. Interest

In Capital volume 3 Marx argues that interest arises from the phenomenon of "capital as fructiferous": because an industrial capitalist can expect to make x% per year profit from an advance of capital, he can and will borrow the money from a money-capitalist, giving the money-capitalist y% per year interest and keeping (x-y)% as what bourgeois economists call "profit of enterprise". The relative value of x and y is an empirical question determined by the balance of forces between the two groups of capitalists, active industrial capitalists and money-capitalists.
The beginnings of this theory are explained here.
The form of interest is older than that of profit. The level of interest in India for communal agriculturists... indicates.... that profit as well as part of wages itself is appropriated in the form of interest by the usurer... Historically, the form of industrial profit arises only after capital no longer appears alongside the independent worker. Profit thus appears originally determined by interest. But in the bourgeois economy, interest determined by profit, and only one of the latter's parts. Hence profit must be large enough to allow of a part of it branching off as interest. Historically, the inverse. Interest must have become so depressed that a part of the surplus gain could achieve independence as profit. [p.851-2].

4. Money

Marx devotes many pages to excerpts from other economists on money, collecting facts about money systems at various times and commenting critically on bourgeois theories.
Unfortunately the two main propositions of Marx's comments do not hold up today.
First: that money must be based on gold, or some similar actual money-commodity, actual embodiment of actual labour. For some purposes money can be replaced by tokens, but never for all.
Commodities, as values, are objectified labour; the adequate value must therefore itself appear in the form of a specific thing, as a specific form of objectified labour. [p.795].
As mere numerical magnitudes, as amounts of any unit of the same name, [commodities] only become comparable to one another, and only express proportions towards one another, when each individual commodity is measured with the one which serves as unit, as measure. But I can only measure them against one another, only make them commensurable, if they have a unit - the latter is the labour time contained in both. The measuring unit must therefore [be] a certain quantity of a commodity in which a quantity of labour is objectified. [p.793].
In these pages, Marx refers to the "assignats" currency of revolutionary France, not even professing to represent any specified thing [p.807]. But only in passing: he makes no comment on whether this exception demolishes his rule that only precious-metal-based money is possible.
There is room for argument about when that rule became untrue, but it is certainly untrue now. No central bank holds any quantity of gold remotely adequate to support its currency, or guarantees any gold-equivalent for its currency. For some time now, central banks have been systematically selling gold (slowly, so as not to collapse the market); instead, they hold dollars, yen, or euros as their reserves.
The dollar is not a title to a given quantity of gold. It is a title to a quantum of average US labour. The exact size of that quantum varies somewhat, and is even difficult to determine; but then, it was always difficult to determine the exact amount of labour-time embodied in a quantum of gold.
The new things are evidently, on one side, the growth of the world market beyond the scale that the quantities of gold existing in nature could possibly serve as adequate reserves; and, on the other, the greater strength of the capitalist state, and the greater confidence of the capitalists that the state will, within limits, preserve the ratio of the dollar to US labour-time.
This is, of course, unstable. A collapse of the dollar would wreck world trade without even the option of returning to "specie payments" (settling outstanding bills in gold) except on a small scale. But it is how the world is now.
The best explanation of this that I know comes from the French Regulation School economist (and now Green politician) Alain Lipietz, in The Enchanted World and Mirages and miracles.
Marx's second proposition is a radical inversion of the "quantity theory" of money and prices.
Prices regulate the quantity of currency and not the quantity of currency prices, or in other words... trade regulates currency (the quantity of the medium of circulation), and currency does not regulate trade.... [p.814].
This is true only if the money is based on gold or another precious metal. It is not true for pure paper money. (The inverse, the "quantity theory", is not true either, but that is another matter).
Marx does add, rather cryptically, that this law is not equally applicable to the fluctuations of prices in all epochs. His example of it not applying is e.g. in antiquity, e.g. in Rome, where the circulating medium does not itself arise from circulation, from exchange, but from pillage, plunder etc.

5. Value and capital

Right at the end of this section of the Grundrisse, on pages 881-2, is a fragment which is plainly a first draft of the opening pages of Capital volume 1.
The interesting thing here is the final sentences, which present the whole of economic history as a process, first of the break-up of diverse pre-historic communal systems by exchange, then of the apotheosis of exchange (in capitalism), then of the replacement of capitalism by a new communism.
The system of modern private exchange not the spontaneous economy of societies. Exchange begins not between the individuals within a community, but rather at the point where the communities end -- at their boundary, at the point of contact between different communities... India offers us a sample chart of the most diverse forms of such economic communities, more or less dissolved, but still completely recognizable; and a more thorough research into history uncovers it as the point of departure of all cultured peoples.
The system of production founded on private exchange is, to begin with, the historic dissolution of this naturally arisen communism... A whole series of economic systems lies in turn between the modern world, where exchange value dominates production to its whole depth and extent, and the social formations whose foundation is already formed by the dissolution of communal property....
Earlier, Marx once again makes it very plain that when he starts Capital volume 1 by analysing value, he considers value as formed and shaped by fully capitalist society.
Value, which appeared as an abstraction, is possible only as such an abstraction, as soon as money is posited; this circulation of money in turn leads to capital, hence can be fully developed only on the foundation of capital, just as, generally, only on this foundation can circulation seize hold of all moments of production... Categories such as value, which appear as purely abstract, show the historic foundation from which they are abstracted, and on whose basis alone they can appear, therefore, in this abstraction... The concept of value is entirely peculiar to the most modern economy, since it is the most abstract expression of capital itself and of the production resting on it. In the concept of value, its secret betrayed. [p.776].
Marx cannot quite have meant the last-but-one sentence literally, that value is entirely peculiar to modern capitalism (and does not exist at all in any of the various previous societies with extensive exchange?) More in line with the argument, and more plausible, is the proposition that the full development of value occurs only in modern capitalism.
These pages also include a succinct restatement of why price not only is, but has to be, different from value.
Why is labour time, the substance and measure of value, not at the same time the measure of prices, or, in other words, why are price and value different at all? Proudhon's school believe it a great deed to demand that this identity be posited and that the price of commodities be expressed in labour time. The coincidence of price and value presupposes the equality of demand and supply, exchange solely of equivalents (hence not of capital for labour) etc.; in short, formulated economically, it reveals at once that this demand is the negation of the entire foundation of the relations of production based on exchange value. But if we suppose this basis suspended [i.e. capitalism abolished], then on the other side the problem disappears again... [p.794-5].

Extra note: revolutionising education

2007-01-31T19:55:00.000+10:00

In a broad historical overview, capitalism has greatly increased the general level of education. In closer focus, however, today's capitalist societies appear as doing this very patchily and inefficiently.
Why? It is of concern to us. In this field as in others, socialism will have to build on what has been developed by capitalism.
Some common explanations are only partial.
1. Capitalism demoralises, brutalises, and exhausts a large part of the working class, so that successive generations have no confidence in their ability to acquire wide learning, and do not even try. Yes: but a large pool of working-class people with very limited literacy and numeracy is a drag on capital. A moderate increase in the literacy, numeracy, and self-confidence of these workers would be of advantage to capital. Governments plainly strive to achieve that moderate increase - only, with very limited results.
2. Capitalist governments fail to do many things which would be in the long-term interests of capital, because those things cost money, they lack a powerful particular capitalist lobby to promote them, and so they fall victim every time budgets are tight.
3. Capital fears too wide a diffusion of critical thinking. Yes, but it also fears too narrow a diffusion. By the very nature of capital - fluid, dynamic, ever-changing - capitalist thinking is not monolithic. In almost every sphere of thought other than those immediately touching on capitalist privileges, capital positively welcomes critical, imaginative, outside-the-box thinking.
4. Capital cuts down on general education, such as philosophy, in favour of promoting narrower vocationally-oriented education. I'm not sure that this is even true. Even if philosophy courses are cut back, media studies courses proliferate, and most of the media-studies knowledge is as useless to the bourgeoisie as it is to the working class. Universities build up media studies and cut back philosophy not because of some grand capitalist plot, but because media studies is more popular and brings in more "customers".

There are plenty of immediate issues to be campaigned in relation to the above points, particularly the first and second. But there is more to it.

The Bolsheviks, in their educational experiments (which largely failed, because of poverty, in the short time they had before the counter-revolution), based themselves not only on Dewey's learning-by-doing, but on the ideas which Marx develops in Capital (attributing them to Robert Owen) on the integration of education with productive labour. They called it "the unified labour school".
In all human history until relatively recent times (the point is made by Bruno Bettelheim), children acquired their education, their work discipline, and their concept of what work was and education was for, by first observing and then, gradually, more and more, working with their parents and other nearby adults.
This pattern had many oppressive features. It tended to socialise the children of the great majority into thinking that life could have no possibilities other than a narrow circle of endless, back-breaking toil in the fields (plus, if they were female, further back-breaking housework).
Yet the sudden disappearance of the pattern has strange results. Most children, today, never see their parents or adult neighbours working (except in housework). If they visit a parent's workplace to have a look, very often what they see will be incomprehensible: the parent just sits at a computer. If the child asks a parent what he or she does at work, the parent may be hard put to give a comprehensible answer. (In my impressionistic experience, it is quite common to find that children, even teenagers, do not understand at all what their parents do at work).
Education is thus separated off from work, or even from any well-understood image of work. Hence the constant talk about making schooling "relevant", and the ineptness and often destructiveness of the attempts to make it "relevant". (Mathematics in schools, for example, has been reduced to a collection of "problem-solving techniques". The core of the subject, the idea of mathematical proof, has been scrapped. Yet the problems which are used to practise these "techniques" are almost always, and more or less perforce, highly artificial: "Jessica's daughter is one-third Jessica's age. In 11 years' time Jessica will be twice as old as her daughter. How old is Jessica now?")

Children, from the age of 14, still are inducted into work: but in a very special way. Overwhelmingly, as teenagers, they work in a very narrow range of workplaces - fast-food places, car washes, supermarkets, video shops - with very few other workers much older than themselves.
There is almost none of the fruitful-on-both-sides interaction which could happen when teenagers move to and fro between "real" adult workplaces and the classroom.
Increasingly, mainstream workplaces are set up so that even when a teenager comes in on "work experience", there is nothing for the teenager to do except marginal, menial tasks (photocopying, making coffee, etc.)
Where direct manual labour plays an important part, especially if the manual labour has become light and delicate because of mechanisation, child workers are readily valuable to capital. That is how it was in the 19th century textile mills.
In many modern capitalist workplaces, especially in the richer countries, it would require considerable, and expensive, redesign of the work process to make it possible for teenagers to do work, alongside the adults, from which they would learn.
No capitalist wants to bear that expense. No capitalist government wants to try to impose that expense on recalcitrant capitalists. They confine themselves instead to ineffectual "work experience" courses.
Socialism can and should transform the relationship between work and education.

Three questions arising from pages 690-743

2007-01-27T00:15:00.000+10:00

1. Whose is "the general intellect"?
2. Increasing alienation as a revolutionary force?
3. Who or what "breaks down" capitalism?
Three questions arising from pages 690-743

1. Whose is "the general intellect"? Emancipation through education, or universal bludging?

In these pages Marx refers repeatedly to the immense productive power of "the general intellect". What he seems to mean is the general pool of scientific knowledge, more or less readily available to any interested and educated person, in contrast to particular patent processes.
"The general intellect" appears as the property of the capitalist class, not because the capitalists are clever, but because they alone have the accumulated wealth necessary to put the productive power of "the general intellect" to work, hiring scientists along the way if necessary.
Capitalism today has added a twist to this. The number of patents has expanded enormously. Of the seven million patents issued in the USA since the first one in 1836, half have been granted since about 1970 [New Scientist, 6 January 2007]. Since the 1990s, patents are granted to "intellectual property" which would previously have been classified as unpatentable mathematical algorithms. The term "intellectual property" is now everywhere, but dates only from the 1980s. More and more scientific research is done within capitalist corporations, or, if by scientists in universities, under capitalist sponsorship; its results are more and more treated by the capitalist sponsors as their "property".
Under socialism (so I take Marx to think), "the general intellect" will become social property, scientific knowledge being used under social control to shorten the necessary drudgery of economic production and to enrich people's increased free time.
This perspective does not depend on every member of society developing an encyclopedic knowledge of science, any more than the capitalist control of the powers of science today depends on capitalists being scientific experts. I think Marx's perception is coloured by the assumption, still more or less plausible in his day, that an energetic, intelligent, and leisured individual could become basically educated in every field of systematic human knowledge (as Engels pretty much was). That assumption makes no sense today. Anyone today, however energetic, intelligent, and leisured, will be vastly ignorant in many fields of knowledge. That is a manageable problem - but a fairly wide spread of basic scientific education is still, as far as I can see, essential for Marx's perspective to make sure.
Otherwise, how avoid the scientifically-knowledgeable becoming a ruling clerisy? Or, conversely, society being repeatedly disrupted by decisions about the deployment of science being taken democratically with an "electorate" which knows little about the issues at stake and thus is prey to demagogy? These dangers may be a lesser evil than the horrors of capitalism, but they're not good.
Education thus appears as a core issue for socialists.
Marx's prediction in the Grundrisse is that the expansion of free time will lead to a huge expansion of people's self-education and self-development. There is evidence from present-day society that this is not entirely utopian: among the layers of the population whose jobs allow them more free time and energy after work, the take-up of serious popularised-science books and TV programme is higher than ever.
It can hardly be considered automatic, though. Could it be argued that Marx is too optimistically "high-minded" about how people will use more free time? He does write that "free time... is both idle time and time for higher activity", but seems to assume that most people will do a lot of the "higher activity".
Do we need to look at a new objection to socialism, in addition to the old "universal greed" one, and the "universal laziness" one (without the whip of capitalist wage-labour, no-one will work, so society will collapse)? A "universal bludging" one? A scenario that in a socialist society, people will do their short quota of necessary labour, but mostly then spend the rest of their time bludging - as captives of the same sort of dumbing-down entertainment which already seizes more people in today's society than those so exhausted by their wage-labour that (unless very exceptionally strong-willed) they just don't have energy for more? So that the bludging majority will either be the captives of the educated minority, or disrupt society by making social decisions a matter of who can best make a demagogic appeal to an ill-informed public?
Two connected questions are: what should socialists be saying about education now, within capitalist society; and why is capitalism so unable to increase "productivity" in education?
In general, after all, we do not propose to build socialism by executing some blueprint from nowhere and assuming that we have a completely new population with a completely new mentality. We propose to develop socialism by building on bases provided by capitalism, and to do it with people more or less as they are now.
Marx and Engels did write: Both for the production on a mass scale of this communist consciousness, and for the success of the cause itself, the alteration of men on a mass scale is, necessary, an alteration which can only take place in a practical movement, a revolution; this revolution is necessary, therefore, not only because the ruling class cannot be overthrown in any other way, but also because the class overthrowing it can only in a revolution succeed in ridding itself of all the muck of ages and become fitted to found society anew [The German Ideology]. But they did not believe that a revolution could transform human nature completely and suddenly; it could only bring to the fore some aspects already there, but currently pushed down, and push down some traits currently boosted.
The methods of education have changed startlingly little over centuries. New ideas - those of active education, learning-by-doing - did come forward in the early 20th century (from John Dewey in the USA, for example). The Bolsheviks drew on those ideas while trying to design a new education system in Russia after the revolution: the poverty of the country, and the civil war, meant that they made little progress before the Stalinist counter-revolution struck down all such efforts.
Deweyan ideas did become more widespread in the advanced capitalist countries after World War 2. But what's "new" bourgeois educational thinking today? The advocacy of a return to the old pre-1900 norm of education by lecture plus rote learning!
In the 1960s there was a smaller flurry of suggestions for new methods of education. Some people suggested that computer systems could take over from teachers. That hasn't happened and doesn't look like ever happening.
On education, the left tends to confine itself to opposing the retrogressionists and demanding better wages for teachers, more teachers, better school buildings, no fees for uni students, and so on. All these things are important, but they do not add up to a revolutionary vision.

2. Increasing alienation as a revolutionary force?

Passages in the Grundrisse can be read as suggesting that, while Marx did not predict a constant fall in absolute working-class living standards, he did predict a trend for capitalism to increase the alienation of labour in all its forms.
That raises two questions. One, was Marx right about that? Two, should we expect increased alienation to produce increased radicalism in the working class?
I think Marx was partly right about the trend, and partly wrong. The wealth of capitalist societies has become more and more "alienated from" the majority - more and more concentrated in the hands of the bosses of a relatively few giant corporations, or even, above them, in the hands of an esoteric layer of financial wheeler-dealers.
Also, capital works constantly to make each job more "alienated". But there, there are counter-tendencies. Many of the most "alienated" jobs - precisely because they reduce the worker more and more to a mere cog in the machinery - end up being abolished through automation. Simultaneously, the number grows of maintenance, repair, and design jobs "alongside" the machinery (a number which Marx, in his time, considered insignificant).
Those jobs, however hard capital tries, tend to be more resistant to "alienation".
Further, the inability of capital to "automate" activities like education and health care leads to a relative growth in the numbers of such workers as teachers and nurses, whose work is, once again, more resistant to "alienation".
Should we expect increased alienation-on-the-job to produce increased radicalism in the working class? No, not necessarily, any more than we expect increased exploitation necessarily to produce increased radicalism. Increased alienation and increased exploitation, in and of themselves, only brutalise. They radicalise only in combination with other things. I see no basis either in Marx or in reality for the idea that the worse things are for workers, the more revolutionary they will be.
What I think Marx does argue, and is arguable, is that capital has an inbuilt drive to make alienation, at the overall class level, at the level of the overall relations between working class and capital, more socially visible.
The semblance of exchange [between workers and capital] vanishes in the course [Prozess] of the mode of production founded on capital. This course itself and its repetition posit what is the case in itself, namely that the worker receives as wages from the capitalist what is only a part of his own labour. This then also enters into the consciousness of the workers as well as of the capitalists. [Grundrisse p.597].
Engels developed the idea further in Anti-Duhring: The crises demonstrate the incapacity of the bourgeoisie for managing any longer modern productive forces... the transformation of the great establishments for production and distribution into joint-stock companies and state property shows how unnecessary the bourgeoisie are for that purpose. All the social functions of the capitalist are now performed by salaried employees. The capitalist has no further social function than that of pocketing dividends, tearing off coupons, and gambling on the Stock Exchange, where the different capitalists despoil one another of their capital...
But the transformation, either into joint-stock companies, or into state ownership, does not do away with the capitalistic nature of the productive forces... The modern state, no matter what its form, is essentially a capitalist machine, the state of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of productive forces, the more does it actually become the national capitalist, the more citizens does it exploit.

3. Who or what "breaks down" capitalism?

3.1. In these pages of the Grundrisse Marx sometimes writes as if there are more or less automatic mechanisms within capitalism which will lead to its breakdown regardless of what anyone consciously decides to do.
Capitalism thus works towards its own dissolution as a form dominating production... Production based on exchange value breaks down. And so on.
There is similar wording elsewhere in Marx's writings. Capital volume 1: The knell of capitalist private property sounds. The expropriators are expropriated. In sentences about the downfall of capitalism, the verb is in the passive voice ("are expropriated"), with silence on the active subject, or the subject of the verb is an abstraction or even a metaphor ("the knell").

3.2. There is, however, absolutely no room for supposing that Marx was, in his own mind, vague about the active agency of the downfall of capitalism. Just three pages after the thought that "production based on exchange value breaks down", Marx states flatly: The mass of workers must themselves appropriate their own surplus labour. Once they have done so... [p.708].
In the very first line of the Rules of the First International, Marx wrote: The emancipation of the working classes must be conquered by the working classes themselves.
Back in 1845, Marx and Engels had scornfully insisted: History does nothing, it “possesses no immense wealth”, it “wages no battles”. It is man, real, living man who does all that, who possesses and fights; “history” is not, as it were, a person apart, using man as a means to achieve its own aims; history is nothing but the activity of man pursuing his aims. [The Holy Family].

3.3. The suggestion that capitalism will break down of its own accord has, however, recurred destructively in later Marxist and allegedly-Marxist thought.
3.3.1. At the end of the 19th century, Eduard Bernstein based his "revisionist" drive to swing German Social Democracy towards policies of bit-by-bit reform on the idea that history had refuted a prediction of "breakdown of capitalism" made by Marx and Engels.
Karl Kautsky, as summarised by Lenin, replied: Marx and Engels never propounded a special breakdown theory... they did not connect a breakdown necessarily with an economic crisis. This is a distortion chargeable to their opponents who expound Marx’s theory one-sidedly, tearing out of context odd passages from different writings in order thus triumphantly to refute the “one-sidedness” and “crudeness” of the theory. Actually Marx and Engels considered the transformation of West-European economic relations to be dependent on the maturity and strength of the classes brought to the fore by modern European history.
3.3.2. Yet by about 1909 the same Kautsky, become middle-aged and less revolutionary, was basing his own perspectives on a sort of "breakdown theory". Capitalism, he came to argue, was fast approaching an economic and social crisis so huge that the capitalist ruling class would be thrown into hopeless disarray. So long as the labour movement was well organised and prepared, power would pretty much fall into its hands. Hence Kautsky could combine advocating very cautious tactics for the present - all bold tactics best reserved for the period of catastrophe sure to come soon - with glowing promises of revolutionary victory just round the corner.
3.3.3. The Communist International and the Communist Parties were formed in a period, after the end of World War 1, of actual huge social and economic crisis. A large section of the Communist Parties became devoted to the idea that this capitalist crisis was the once-promised once-and-for-all "breakdown", drawing the conclusion that none but directly revolutionary tactics should now be considered (this was called the "theory of the offensive"). It took a big battle led by Lenin and Trotsky to quash this idea.
Lenin famously remarked (though I can't trace the source of this dictum) that there is no a crisis without a way out for the bourgeoisie. Trotsky spelled it out:
If we grant - and let us grant it for the moment - that the working class fails to rise in revolutionary struggle, but allows the bourgeoisie the opportunity to rule the world’s destiny for a long number of years, say two or three decades, then assuredly some sort of new equilibrium will be established... After a new world division of labor is thus established in agony for 15 or 20 or 25 years, a new epoch of capitalist upswing might perhaps ensue. [Report on the World Economic Crisis and The New Tasks of The Communist International, June 1921].
Trotsky also explained that economic crisis did not necessarily at all produce working-class radicalisation. What was radicalising about the capitalist cycle of boom and slump was the alternation, the change, not necessarily the slump phase.
After a period of big battles and defeats, a crisis has the effect of depressing rather than arousing the working class. It undermines the workers' confidence in their powers and demoralises them politically. Under such conditions, only an industrial revival can close the ranks of the proletariat, pour fresh blood into its veins, restore its confidence in itself and make it capable of further struggle. [My Life].
3.3.4. After the triumph of Stalinism in the Communist Parties, their ideologues placed particular stress on the capitalist-collapse theme. The "tendency of the rate of profit to fall", given little weight by any of the great pre-1914 Marxists, was now touted as "the Marxist theory", supposedly mathematical proof of capitalism's fall into the abyss. See, for example, Emile Burns' much-used 1000-page Stalinist primer of 1935, A Handbook of Marxism.
After World War Two, the Communist Parties insisted right up to the late 1950s that Marx had (correctly) predicted "absolute immiseration", and the working class in Europe was being pushed closer and closer to starvation.
To people hostile to capitalism but uneasy about the USSR, the Stalinists would reply: well, capitalism is collapsing anyway, and the USSR is the only alternative. I can still remember a student meeting as late as 1969 when some of us criticised the East European states, and a CPer replied threateningly that Eastern Europe was going great guns economically, capitalism was doomed, and we'd better start thinking about what side we wanted to be on when "socialism" (Stalinism) took over.
3.3.5. In his very last years Trotsky himself lost his grip on the question of crisis. He came to assume that capitalism had no way out. This assumed condition of permanent and total crisis meant, of course, that: Under conditions of decaying capitalism the proletariat grows neither numerically nor culturally. There are no grounds, therefore, for expecting that it will sometime rise to the level of the revolutionary tasks - other than a new capitalist convulsion pushing the existing working class (with its existing numbers and culture) to rally to the revolutionaries. The harsh and tragic dialectic of our epoch is working in our favour. Brought to the extreme pitch of exasperation and indignation, the masses will find no other leadership than that offered to them by the Fourth International.
This vision, abstracted, crudified and dogmatised, would contribute to much sectarian posturing by would-be Trotskyists after Trotsky's death in 1940.
3.3.6. In any period when capitalism is in extreme difficulties, obviously unlikely to be surmounted soon, there's an understandable tendency among revolutionary socialists to jump to the conclusion that "this is the one", guaranteed by economic reasoning to be the final crisis. In the 1930s, not only Stalinists but also independent Marxists started talking about "late capitalism". In the 1970s, the same again.

3.4. The truth on this, I suggest, is:
a) Revolutionary socialist perspectives depend entirely on the growth and increased awareness and abilities of the working class.
b) They also depend on capitalism being ineradicably subject to crises. If capitalism always kept on an even keel, then there would be none of the tremendous internal conflicts and disarray within the capitalist class necessary to spark and create space for revolutionary mobilisations from below, and it would be impossibly difficult for more than a minority of the working class not to be lulled into an assumption of the eternal durability of capitalism.
c) They do not depend on proving that some "final crisis" or "breakdown" will come, or even that the periodic crises necessarily become sharper. Neither of those things can in fact be proved.

3.5. I think Kautsky was right about the main drift of Marx's thinking. Marx and Engels did not connect a breakdown necessarily with an economic crisis. Actually Marx and Engels considered the transformation of [capitalist] relations to be dependent on the maturity and strength of the [working class].
The curious counterpoint of crisis-enthusiasm in Marx's writings comes, I think, from three things:
a) In earlier writings, the "natural" enthusiasm of the new convert, who can't believe that the refusal of others to accept the revolutionary socialist truths which now seem so clear to him or her can survive the shake-up sure to be provided by the next crisis.
b) A desire to emphasise "materialism" in contrast to the idealism of earlier socialists, for whom socialism was, in one way or another, just the triumph of abstract, ahistorical Reason. Thus in his Afterword to the Second German Edition of Capital (1873), Marx approvingly quotes a reviewer who had written that Marx proves, at the same time, both the necessity of the present order of things, and the necessity of another order into which the first must inevitably pass over; and this all the same, whether men believe or do not believe it, whether they are conscious or unconscious of it. Marx treats the social movement as a process of natural history, governed by laws not only independent of human will, consciousness and intelligence, but rather, on the contrary, determining that will, consciousness and intelligence...
Actually, of course, Marx did not believe the absurd idea that the replacement of capitalism could happen "all the same" whether or not people "are conscious or unconscious of it". But he did believe that processes internal to capitalist development, not some arbitrary will inserted from outside, led to socialist revolution (including by creating the necessary consciousness). He wanted to emphasise that side of it, and was willing to exaggerate a bit, or condone exaggerations by others, in doing so.
Engels would later write: Marx and I are ourselves partly to blame for the fact that the younger people sometimes lay more stress on the economic side than is due to it. We had to emphasise the main principle vis-a-vis our adversaries, who denied it, and we had not always the time, the place or the opportunity to give their due to the other elements involved in the interaction. [Letter to Bloch, 22 September 1890].
c) I do not believe that Marx ever got clearly into focus the radical difference between a working-class socialist revolution, overthrowing capitalism, and a bourgeois revolution, overthrowing feudalism. With the bourgeois revolution, it can indeed happen with people having very little conscious idea of aims; and much of the work of the bourgeois revolution can arrive as an impersonal economic resultant of the disparate activities of many people, none of whom consciously desired the outcome. Not so with the socialist revolution.
Marx gave many pointers to the difference - in The Eighteenth Brumaire, for example - but it was Trotsky who first formulated it clearly (in Lessons of October, 1924).

Key passages from pp.690-743

2007-01-12T16:48:00.000+10:00

The accumulation of knowledge and of skill, of the general productive forces of the social brain, is thus absorbed into capital, as opposed to labour, and hence appears as an attribute of capital, and more specifically of fixed capital, in so far as it enters into the production process as a means of production proper. Machinery appears, then, as the most adequate form of fixed capital, and fixed capital, in so far as capital's relations with itself are concerned, appears as the most adequate form of capital as such...
The quantitative extent and the effectiveness (intensity) to which capital is developed as fixed capital indicate the general degree to which capital is developed as capital, as power over living labour, and to which it has conquered the production process as such. Also, in the sense that it expresses the accumulation of objectified productive forces, and likewise of objectified labour. However, while capital gives itself its adequate form as use value within the production process only in the form of machinery and other material manifestations of fixed capital, such as railways etc. (to which we shall return later), this in no way means that this use value -- machinery as such -- is capital, or that its existence as machinery is identical with its existence as capital; any more than gold would cease to have use value as gold if it were no longer money. Machinery does not lose its use value as soon as it ceases to be capital. While machinery is the most appropriate form of the use value of fixed capital, it does not at all follow that therefore subsumption under the social relation of capital is the most appropriate and ultimate social relation of production for the application of machinery.
To the degree that labour time -- the mere quantity of labour -- is posited by capital as the sole determinant element, to that degree does direct labour and its quantity disappear as the determinant principle of production -- of the creation of use values -- and is reduced both quantitatively, to a smaller proportion, and qualitatively, as an, of course, indispensable but subordinate moment, compared to general scientific labour, technological application of natural sciences, on one side, and to the general productive force arising from social combination [Gliederung] in total production on the other side -- a combination which appears as a natural fruit of social labour (although it is a historic product). Capital thus works towards its own dissolution as the form dominating production.
While, then, in one respect the transformation of the production process from the simple labour process into a scientific process, which subjugates the forces of nature and compels them to work in the service of human needs, appears as a quality of fixed capital in contrast to living labour; while individual labour as such has ceased altogether to appear as productive, is productive, rather, only in these common labours which subordinate the forces of nature to themselves, and while this elevation of direct labour into social labour appears as a reduction of individual labour to the level of helplessness in face of the communality [Gemeinsamkeit] represented by and concentrated in capital; so does it now appear, in another respect, as a quality of circulating capital, to maintain labour in one branch of production by means of coexisting labour in another. In small-scale circulation, capital advances the worker the wages which the latter exchanges for products necessary for his consumption. The money he obtains has this power only because others are working alongside him at the same time; and capital can give him claims on alien labour, in the form of money, only because it has appropriated his own labour. This exchange of one's own labour with alien labour appears here not as mediated and determined by the simultaneous existence of the labour of others, but rather by the advance which capital makes. The worker's ability to engage in the exchange of substances necessary for his consumption during production appears as due to an attribute of the part of circulating capital which is paid to the worker, and of circulating capital generally. It appears not as an exchange of substances between the simultaneous labour powers, but as the metabolism [Stoffwechsel] of capital; as the existence of circulating capital. Thus all powers of labour are transposed into powers of capital; the productive power of labour into fixed capital (posited as external to labour and as existing independently of it (as object [sachlich]); and, in circulating capital, the fact that the worker himself has created the conditions for the repetition of his labour, and that the exchange of this, his labour, is mediated by the co-existing labour of others, appears in such a way that capital gives him an advance and posits the simultaneity of the branches of labour. (These last two aspects actually belong to accumulation.) Capital in the form of circulating capital posits itself as mediator between the different workers.
Fixed capital, in its character as means of production, whose most adequate form [is] machinery, produces value, i.e. increases the value of the product, in only two respects: (1) in so far as it has value; i.e. is itself the product of labour, a certain quantity of labour in objectified form; (2) in so far as it increases the relation of surplus labour to necessary labour, by enabling labour, through an increase of its productive power, to create a greater mass of the products required for the maintenance of living labour capacity in a shorter time. It is therefore a highly absurd bourgeois assertion that the worker shares with the capitalist, because the latter, with fixed capital (which is, as far as that goes, itself a product of labour, and of alien labour merely appropriated by capital) makes labour easier for him (rather, he robs it of all independence and attractive character, by means of the machine), or makes his labour shorter. Capital employs machinery, rather, only to the extent that it enables the worker to work a larger part of his time for capital, to relate to a larger part of his time as time which does not belong to him, to work longer for another. Through this process, the amount of labour necessary for the production of a given object is indeed reduced to a minimum, but only in order to realize a maximum of labour in the maximum number of such objects. The first aspect is important, because capital here -- quite unintentionally -- reduces human labour, expenditure of energy, to a minimum. This will redound to the benefit of emancipated labour, and is the condition of its emancipation...
To the degree that large industry develops, the creation of real wealth comes to depend less on labour time and on the amount of labour employed than on the power of the agencies set in motion during labour time, whose ‘powerful effectiveness’ is itself in turn out of all proportion to the direct labour time spent on their production, but depends rather on the general state of science and on the progress of technology, or the application of this science to production. (The development of this science, especially natural science, and all others with the latter, is itself in turn related to the development of material production.) Agriculture, e.g., becomes merely the application of the science of material metabolism, its regulation for the greatest advantage of the entire body of society. Real wealth manifests itself, rather – and large industry reveals this – in the monstrous disproportion between the labour time applied, and its product, as well as in the qualitative imbalance between labour, reduced to a pure abstraction, and the power of the production process it superintends. Labour no longer appears so much to be included within the production process; rather, the human being comes to relate more as watchman and regulator to the production process itself. (What holds for machinery holds likewise for the combination of human activities and the development of human intercourse.) No longer does the worker insert a modified natural thing [Naturgegenstand] as middle link between the object [Objekt] and himself; rather, he inserts the process of nature, transformed into an industrial process, as a means between himself and inorganic nature, mastering it. He steps to the side of the production process instead of being its chief actor. In this transformation, it is neither the direct human labour he himself performs, nor the time during which he works, but rather the appropriation of his own general productive power, his understanding of nature and his mastery over it by virtue of his presence as a social body – it is, in a word, the development of the social individual which appears as the great foundation-stone of production and of wealth. The theft of alien labour time, on which the present wealth is based, appears a miserable foundation in face of this new one, created by large-scale industry itself.
As soon as labour in the direct form has ceased to be the great well-spring of wealth, labour time ceases and must cease to be its measure, and hence exchange value [must cease to be the measure] of use value. The surplus labour of the mass has ceased to be the condition for the development of general wealth, just as the non-labour of the few, for the development of the general powers of the human head. With that, production based on exchange value breaks down, and the direct, material production process is stripped of the form of penury and antithesis. The free development of individualities, and hence not the reduction of necessary labour time so as to posit surplus labour, but rather the general reduction of the necessary labour of society to a minimum, which then corresponds to the artistic, scientific etc. development of the individuals in the time set free, and with the means created, for all of them.
Capital itself is the moving contradiction, [in] that it presses to reduce labour time to a minimum, while it posits labour time, on the other side, as sole measure and source of wealth. Hence it diminishes labour time in the necessary form so as to increase it in the superfluous form; hence posits the superfluous in growing measure as a condition – question of life or death – for the necessary.
On the one side, then, it calls to life all the powers of science and of nature, as of social combination and of social intercourse, in order to make the creation of wealth independent (relatively) of the labour time employed on it. On the other side, it wants to use labour time as the measuring rod for the giant social forces thereby created, and to confine them within the limits required to maintain the already created value as value. Forces of production and social relations – two different sides of the development of the social individual – appear to capital as mere means, and are merely means for it to produce on its limited foundation. In fact, however, they are the material conditions to blow this foundation sky-high.
‘Truly wealthy a nation, when the working day is 6 rather than 12 hours. Wealth is not command over surplus labour time’ (real wealth), ‘but rather, disposable time outside that needed in direct production, for every individual and the whole society.’ (The Source and Remedy etc. 1821, p. 6.)
Nature builds no machines, no locomotives, railways, electric telegraphs, self-acting mules etc. These are products of human industry; natural material transformed into organs of the human will over nature, or of human participation in nature. They are organs of the human brain, created by the human hand; the power of knowledge, objectified. The development of fixed capital indicates to what degree general social knowledge has become a direct force of production, and to what degree, hence, the conditions of the process of social life itself have come under the control of the general intellect and been transformed in accordance with it. To what degree the powers of social production have been produced, not only in the form of knowledge, but also as immediate organs of social practice, of the real life process...
The development of fixed capital indicates in still another respect the degree of development of wealth generally, or of capital...
The creation of a large quantity of disposable time apart from necessary labour time for society generally and each of its members (i.e. room for the development of the individuals’ full productive forces, hence those of society also), this creation of not-labour time appears in the stage of capital, as of all earlier ones, as not-labour time, free time, for a few. What capital adds is that it increases the surplus labour time of the mass by all the means of art and science, because its wealth consists directly in the appropriation of surplus labour time; since value directly its purpose, not use value. It is thus, despite itself, instrumental in creating the means of social disposable time, in order to reduce labour time for the whole society to a diminishing minimum, and thus to free everyone’s time for their own development. But its tendency always, on the one side, to create disposable time, on the other, to convert it into surplus labour...
The mass of workers must themselves appropriate their own surplus labour. Once they have done so – and disposable time thereby ceases to have an antithetical existence – then, on one side, necessary labour time will be measured by the needs of the social individual, and, on the other, the development of the power of social production will grow so rapidly that, even though production is now calculated for the wealth of all, disposable time will grow for all. For real wealth is the developed productive power of all individuals. The measure of wealth is then not any longer, in any way, labour time, but rather disposable time. Labour time as the measure of value posits wealth itself as founded on poverty, and disposable time as existing in and because of the antithesis to surplus labour time; or, the positing of an individual’s entire time as labour time, and his degradation therefore to mere worker, subsumption under labour. The most developed machinery thus forces the worker to work longer than the savage does, or than he himself did with the simplest, crudest tools...
As the basis on which large industry rests, the appropriation of alien labour time, ceases, with its development, to make up or to create wealth, so does direct labour as such cease to be the basis of production, since, in one respect, it is transformed more into a supervisory and regulatory activity; but then also because the product ceases to be the product of isolated direct labour, and the combination of social activity appears, rather, as the producer... In the production process of large-scale industry... just as the conquest of the forces of nature by the social intellect is the precondition of the productive power of the means of labour as developed into the automatic process, on one side, so, on the other, is the labour of the individual in its direct presence posited as suspended individual, i.e. as social, labour. Thus the other basis of this mode of production falls away...
The dimension already possessed by fixed capital, which its production occupies within total production, is the measuring rod of the development of wealth founded on the mode of production of capital...
Real economy – saving – consists of the saving of labour time (minimum (and minimization) of production costs); but this saving identical with development of the productive force. Hence in no way abstinence from consumption, but rather the development of power, of capabilities of production, and hence both of the capabilities as well as the means of consumption. The capability to consume is a condition of consumption, hence its primary means, and this capability is the development of an individual potential, a force of production. The saving of labour time [is] equal to an increase of free time, i.e. time for the full development of the individual, which in turn reacts back upon the productive power of labour as itself the greatest productive power. From the standpoint of the direct production process it can be regarded as the production of fixed capital, this fixed capital being man himself. It goes without saying, by the way, that direct labour time itself cannot remain in the abstract antithesis to free time in which it appears from the perspective of bourgeois economy.
Labour cannot become play, as Fourier would like, although it remains his great contribution to have expressed the suspension not of distribution, but of the mode of production itself, in a higher form, as the ultimate object. Free time – which is both idle time and time for higher activity – has naturally transformed its possessor into a different subject, and he then enters into the direct production process as this different subject. This process is then both discipline, as regards the human being in the process of becoming; and, at the same time, practice [Ausübung], experimental science, materially creative and objectifying science, as regards the human being who has become, in whose head exists the accumulated knowledge of society... [pp.694-712]

Extra note: crises

2007-01-12T16:41:00.001+10:00

As Roger pointed out in our discussion on pages 533-690, Marx makes several different attempts at different points in his writings to sketch something like a theory of capitalist breakdown.
1. The famous theory of the tendency of the rate of profit to fall (volume 3 of Capital; also mentioned in the Grundrisse, though never in anything Marx finalised for publication).
2. The tendency of capital to reduce necessary labour-time to a minimum.
Why this tendency should push capital into crises is not clear to me, but there are passages in the Grundrisse (nowhere else, as far as I know) where Marx suggests that this tendency should indeed push capital to breakdown.
3. The concentration and centralisation of capital, and, in counterpoint to it, the massification and concentration of the working class (in Capital volume 1).

To put my own cards on the table, I think that all breakdown theories are follies, even if tentatively suggested by Marx himself. No.3, above, the only published version, is not really a breakdown theory in the way the others are.
The issue was dealt with best by Kautsky in his unjustly neglected and excellent critique of Bernstein, written while Kautsky was still a revolutionary. Lenin summarised this point in an approving review.

Passing from the method to the results of its application, Kautsky deals with the so-called Zusammenbruchstheorie, the theory of collapse, of the sudden crash of West-European capitalism, a crash that Marx allegedly believed to be inevitable and connected with a gigantic economic crisis.
Kautsky says and proves that Marx and Engels never propounded a special Zusammenbruchstheorie, that they did not connect a Zusammenbruch necessarily with an economic crisis. This is a distortion chargeable to their opponents who expound Marx’s theory one-sidedly, tearing out of context odd passages from different writings in order thus triumphantly to refute the “one-sidedness” and “crudeness” of the theory. Actually Marx and Engels considered the transformation of West-European economic relations to be dependent on the maturity and strength of the classes brought to the fore by modern European history. Bernstein tries to assert that this is not the theory of Marx, but Kautsky’s interpretation and extension of it. Kautsky, however, with precise quotations from Marx’s writings of the forties and sixties, as well as by means of an analysis of the basic ideas of Marxism, has completely refuted this truly pettifogging trickery of the Bernstein...
Simon Clarke's book "Marx's theory of crisis" is also useful here, showing (conclusively, I think) that Marx moved away from his flirting with economic-breakdown theories as his thought developed.
In the discussion I also mentioned a study group we held on Marx's writings on the theory of crises a few years back. There are (incomplete) notes from that study group.

Notes for our discussion on pp.533-690

2007-01-02T23:42:00.000+10:00

"The annihilation of space by time"

Capital, argues Marx, drives to create an ever-wider-ranging world market - to extend and to speed up economic exchanges.
While capital must on one side strive to tear down every spatial barrier to intercourse, i.e. to exchange, and conquer the whole earth for its market, it strives on the other side to annihilate this space with time, i.e. to reduce to a minimum the time spent in motion from one place to another. The more developed the capital, therefore, the more extensive the market over which it circulates, which forms the spatial orbit of its circulation, the more does it strive simultaneously for an even greater extension of the market and for greater annihilation of space by time... [p.539].
This idea of "the annihilation of space by time" has been taken as a cardinal theme, almost as a motto, by the Marxist geographer David Harvey in the books where he examines globalisation and post-modern conditions, such as The Condition of Postmodernity and Spaces of Capital.

Capital laying the basis for "the universal development of the individual"

This "universalising" tendency of capital, argues Marx, both makes it immensely productive and creates the basis for a new society.
The universalizing tendency of capital... distinguishes it from all previous stages of production. Although limited by its very nature, it strives towards the universal development of the forces of production, and thus becomes the presupposition of a new mode of production...
The result is: the tendentially and potentially general development of the forces of production -- of wealth as such -- as a basis; likewise, the universality of intercourse, hence the world market as a basis. The basis as the possibility of the universal development of the individual... [p.540-1].

Overview of these pages

Previous sections of the Grundrisse corresponded, more or less, with sections in Capital, or were more or less self-contained "essays", like the Introduction, the review of Bastiat and Carey, and the polemic against "labour-money".
From about this point onwards, the notes in the Grundrisse become more diffuse and disjointed. A large part is taken up by surveys of what previous economists have written on various questions, but these surveys are much more bitty than those published in Theories Of Surplus-Value.
Pp.549-602 are indeed about previous economists' theories of surplus value (i.e. of profit). Then, going back to the problem of circulation or "realisation" - how capital sells its products and gets the revenue promptly - Marx spends over 100 pages on notes on or around the questions of credit, competition, the speed of turnover of capital, and fixed and circulating capital. In view, he gets nowhere near crisp conclusions on those questions, and a lot of Marx's discussion of turnover is spoiled by mistakes.
Nevertheless, always striving to relate his discussion of even detailed technical questions back to basic concepts, Marx studs these pages with vivid remarks on basic issues.
There are important comments in these pages on:
(1) The distinction between labour and labour-power (or labour-capacity), which, as we've seen, Marx failed to make in the earlier sections of the Grundrisse;
(2) Why labour is the substance of value, and labour-time the measure of value - an idea pretty much taken for granted in the earlier sections of the Grundrisse;
(3) Capital's drive to develop human potentialities beyond any pre-set limit; how it does that in a way which cramps and the subjugates the majority, and also brings great crises; but also, how in doing that it lays the basis for exploding itself and allowing the creation of a new society.

The economic effects of competition

Competition may well even out, equalize the level of profit, but in no way creates the measure of this level. Likewise, competition among the workers could press down a higher wages level etc., but the general standard of wages... could not be explained by the competition between worker and worker, but only by the original relation between capital and labour.
Competition generally, this essential locomotive force of the bourgeois economy, does not establish its laws, but is rather their executor. Unlimited competition is therefore not the presupposition for the truth of the economic laws, but rather the consequence -- the form of appearance in which their necessity realizes itself. For the economists to presuppose, as does Ricardo, that unlimited competition exists is to presuppose the full reality and realization of the bourgeois relations of production in their specific and distinct character. Competition therefore does not explain these laws; rather, it lets them be seen, but does not produce them. [p.552].
Here Marx is dealing with the sort of argument that says that profits are set by competition between capitalists, or by competition between workers which reduces wages to a level suitable for a particular rate of profit. Later, he comments on Ricardo's statement that he, Ricardo, takes unrestricted competition as a theoretical assumption.
The laws of capital are completely realized only within unlimited competition and industrial production. Capital develops adequately on the latter productive basis and in the former relation of production; i.e. its immanent laws enter completely into reality. Since this is so, it would have to be shown how this unlimited competition and industrial production are conditions of the realization of capital, conditions which it must itself little by little produce... [p.559-60].
Production founded on capital for the first time posits itself in the forms adequate to it only in so far as and to the extent that free competition develops, for it is the free development of the mode of production founded on capital; the free development of its conditions and of itself as the process which constantly reproduces these conditions...
But free competition is the adequate form of the productive process of capital. The further it is developed, the purer the forms in which its motion appear...
Competition merely expresses as real, posits as an external necessity, that which lies within the nature of capital; competition is nothing more than the way in which the many capitals force the inherent determinants of capital upon one another and upon themselves... [p.649-51].

Questions raised by Marx's comments on the economic effects of competition

(1) These passages, and others similar, are given a rather inflated and mystical interpretation by some Marxist writers. They claim that all the laws of motion of capitalism are set by "capital in general" at some very abstract and abstruse level, and even to refer to what competition does is to sink into empiricist shame: see for example many of the reviews of and polemics against Robert Brenner's Global Turbulence.
But if "unlimited competition" is the "executor" of the laws of capitalism, then it follows that the actual forms and limits, the sharpening and slackening and shifts, of capitalist competition must modify how capitalism develops.
(2) Starting soon after Marx's death, and for a century afterwards, the usual argument by Marxists (starting with Engels) was that the rise of free competition characterised the youth of capitalism; that free competition was being squeezed out (or even: had been squeezed out) by the rise of monopolies and state intervention; and that this development signified capitalism moving into old age.
Marx has a passage in the Grundrisse that fits well into that interpretation.
As long as capital is weak, it still itself relies on the crutches of past modes of production, or of those which will pass with its rise. As soon as it feels strong, it throws away the crutches, and moves in accordance with its own laws. As soon as it begins to sense itself and become conscious of itself as a barrier to development, it seeks refuge in forms which, by restricting free competition, seem to make the rule of capital more perfect, but are at the same time the heralds of its dissolution and of the dissolution of the mode of production resting on it. [p.651].
Today it is plain that capitalist competition is once again increasing, and has been doing so for some time. Brenner makes sharpened competition the foundation of his theories, and not even his most critical reviewers have denied the fact. Semmler has shown that the rise of "monopolies" in the traditional Marxist sense (i.e. the domination of an industry a small group of big capitalist corporations) does not necessarily reduce competition, and may even sharpen it. (Semmler, W. 1982. Theories of competition and monopoly, Capital and Class, vol. 12, Winter, 91–116).
It is certainly true that "advanced" capitalism needs more and more state regulation. Even the most extravagant bouts of neo-liberalism have modified that state regulation rather than removing it. But that state regulation can quite well coexist with sharp, and sharpening, capitalist competition.
It seems that the rise of cartels in the early 20th century was mostly to do with difficulties and setbacks in the development of the world market, forcing capital back into greater concern with the creation of protected national arenas. It seems further that those, like Kautsky and Rosa Luxemburg, who argued (at first anyway) that these cartels were necessarily fragile and unstable, were closer to the truth than those, like Hilferding, who argued, very influentially, that they had permanently created a new "organised capitalism".
In short, the weight of evidence is that the drive to increase and expand competition is inherent to capitalism at all stages of its development, not only its youth; any "organised capitalism" will in due course face capitalist impulses to transform it once again into a "disorganised capitalism".

Competition and freedom

By some bourgeois economists, so Marx comments, free economic competition is seen:
... as the absolute mode of existence of free individuality in the sphere of consumption and of exchange. Nothing can be more mistaken...
It is not individuals who are set free by free competition; it is, rather, capital which is set free... Free competition is the real development of capital...
Free competition... is nothing more than free development on a limited basis — the basis of the rule of capital. This kind of individual freedom is therefore at the same time the most complete suspension of all individual freedom, and the most complete subjugation of individuality under social conditions which assume the form of objective powers, even of overpowering objects — of things independent of the relations among individuals themselves.
The analysis of what free competition really is, is the only rational reply to the middle-class prophets who laud it to the skies or to the socialists who damn it to hell... The assertion that free competition = the ultimate form of the development of the forces of production and hence of human freedom means nothing other than that middle-class rule is the culmination of world history - certainly an agreeable thought for the parvenus of the day before yesterday. [p.649-52].
Even while flaying the bourgeois ideologues of free competition, Marx also separates himself from the sentimental socialists who say that socialism is a question of emphasising the cooperative as against the competitive, or the collective as against the individual, in human activity. In fact Marx will also show that capital creates cooperation on a huge scale.

Labour and labour-power

On p.462, Marx concludes from a discussion of the way that the wage-worker is subordinated to the machine:
Living labour itself appears as alien vis-à-vis living labour capacity, whose labour it is, whose own life's expression it is, for it has been surrendered to capital in exchange for objectified labour, for the product of labour itself. Labour capacity relates to its labour as to an alien... Labour capacity's own labour is as alien to it -- and it really is, as regards its direction etc. -- as are material and instrument. Which is why the product then appears to it as a combination of alien material, alien instrument and alien labour - as alien property, and why, after production, it has become poorer by the life forces expended, but otherwise begins the drudgery anew...
Not in the way it is usually explained (by trying to explain how the "value of labour" can be two different things, the worker's product and their wage, and concluding that the wage is not the value of labour but of labour-power), Marx has concluded that labour is not only different from labour-power but alien to it.
Marx uses "labour-capacity" and "labour-power" interchangeably, without any nuance of difference. In Capital chapter 6 he writes:
By labour-power or capacity for labour is to be understood the aggregate of those mental and physical capabilities existing in a human being, which he exercises whenever he produces a use-value of any description.
Unter Arbeitskraft oder Arbeitsvermögen verstehen wir den Inbegriff der physischen und geistigen Fähigkeiten, die in der Leiblichkeit, der lebendigen Persönlichkeit eines Menschen existieren und die er in Bewegung setzt, sooft er Gebrauchswerte irgendeiner Art produziert.
In these pages, Marx returns again and again to the difference between labour-power and labour.
What the capitalist acquires through exchange is labour capacity: this is the exchange value which he pays for. Living labour is the use value which this exchange value has for him, and out of this use value springs the surplus value and the suspension of exchange as such. Because Ricardo allows exchange with living labour -- and thus falls straight into the production process -- it remains an insoluble antinomy in his system that a certain quantity of living labour does not = the commodity which it creates, in which it objectifies itself, although the value of the commodity = to the amount of labour contained in it... [p.561-2].
Wages, however, express the value of living labour capacity, but in no way the value of living labour, which is expressed, rather, in wages + profit... The amount of labour which the worker works is very different from the amount of labour that is worked up into his labour capacity... He does not sell as commodity the use made of him, he sells himself not as cause but as effect. [p.571].
Labour capacity is not = to the living labour which it can do, = to the quantity of labour which it can get done -- this is its use value. It is equal to the quantity of labour by means of which it must itself be produced and can be reproduced. The product is thus in fact exchanged not for living labour, but for objectified labour, labour objectified in labour capacity. [p.576].
What is exchanged for wages is labour capacity, and this does not figure in production at all, but only in the use made of it -- labour. Labour appears as the instrument of the production of value because it is not paid for, hence not represented by wages. As the activity which creates use values, it likewise has nothing to do with itself as paid labour. In the hand of the worker, the wage is no longer a wage, but a consumption fund. It is wages only in the hand of the capitalist, i.e. the part of capital destined to be exchanged for labour capacity. It has reproduced a saleable labour capacity for the capitalist, so that in this regard even the worker's consumption takes place in the service of the capitalist. He does not pay for labour itself at all, only for labour capacity. [p.593-4].
The capitalist does not exchange capital directly for labour or labour time; but rather time contained, worked up in commodities, for time contained, worked up in living labour capacity. The living labour time he gets in exchange is not the exchange value, but the use value of labour capacity...
The exchange which proceeds between capitalist and worker thus corresponds completely to the laws of exchange; it not only corresponds to them, but also is their highest development. For, as long as labour capacity does not itself exchange itself, the foundation of production does not yet rest on exchange, but exchange is rather merely a narrow circle resting on a foundation of non-exchange, as in all stages preceding bourgeois production.
But the use value of the value the capitalist has acquired through exchange is... more labour time than is objectified in labour capacity, i.e. more labour time than the reproduction of the living worker costs. Hence, by virtue of having acquired labour capacity in exchange as an equivalent, capital has acquired labour time -- to the extent that it exceeds the labour time contained in labour capacity -- in exchange without equivalent; it has appropriated alien labour time without exchange by means of the form of exchange... and, as we saw, in the further development of capital even the semblance is suspended that capital exchanges for labour capacity anything other than the latter's own objectified labour; i.e. that it exchanges anything at all for it...
Thus the exchange turns into its opposite, and the laws of private property -- liberty, equality, property -- property in one's own labour, and free disposition over it -- turn into the worker's propertylessness, and the dispossession of his labour, [i.e.] the fact that he relates to it as alien property... [p.673-4].

Profit "misrepresents" surplus value

On pp.565ff Marx examines actual factory accounts. The discussion is confused - the profit rate in the example is 3.8%, not 4.2% as in Marx's text or 4.7% as in the editor's footnote - but the important conclusion is that this percentage "misrepresents" the rate of surplus value, which is 63.5% (1650 divided by 2600, not 1650 divided by 2000, as in text).

The workers' combination as the capitalists' property

The collective power of labour, its character as social labour, is... the collective power of capital. Likewise science. Likewise the division of labour... All social powers of production are productive powers of capital, and it appears as itself their subject. The association of the workers, as it appears in the factory, is therefore not posited by them but by capital. Their combination is not their being, but the being of capital. Vis-à-vis the individual worker, the combination appears accidental. He relates to his own combination and cooperation with other workers as alien, as modes of capital's effectiveness. [p.585].
Same idea as p.470-1: The combination of this labour appears... subservient to and led by an alien will and an alien intelligence - having its animating unity elsewhere... Just as the worker relates to the product of his labour as an alien thing, so does he relate to the combination of labour as an alien combination, as well as to his own labour as an expression of his life, which, although it belongs to him, is alien to him and coerced from him... Communal or combined labour... is... posited as an other towards the really existing individual labour - as an alien objectivity (alien property) as well as an alien subjectivity (of capital)... Capital... is the existence of social labour [p.470-1].
And as Capital chapter 13: The productive power developed by the labourer when working in cooperation, is the productive power of capital... it appears as a power with which capital is endowed by Nature - a productive power that is immanent in capital".
It is the central idea in Michael Lebowitz's book Beyond Capital: Marx’s Political Economy of the Working Class.
On pp.586-7 Marx discusses how this capitalist appropriation of worker cooperation develops.
[In some industries, like mining, there is worker cooperation even before they are taken over by capital. There] capital does not create but rather takes over the accumulation and concentration of workers... [Or sometimes in its early stages] capital employs different hand weavers, spinners etc. who live independently and are dispersed over the land... Their unification by capital is thus merely formal, and concerns only the product of labour, not labour itself...
[Later capital] gathers them [the workers] in one spot under its command, into one manufactory, and no longer leaves them in the mode of production found already in existence, establishing its power on that basis, but rather creates a mode of production corresponding to itself, as its basis. It posits the concentration of the workers in production, a unification which will occur initially only in a common location, under overseers, regimentation, greater discipline, regularity... Now capital appears as the collective force of the workers, their social force, as well as that which ties them together, and hence as the unity which creates this force. [p.586-7]
This idea of first the formal, and then the real, subjection of the workers to capital is further developed in Capital:
... 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 is replaced by the real subjection of labour to capital. [Capital chapter 16].
And in Results of the Immediate Production Process, a text written as a chapter of Capital volume 1 but omitted by Marx in the final editing.
'This continual progression of knowledge and of experience,' says Babbage, 'is our great power.' This progression, this social progress belongs [to] and is exploited by capital. All earlier forms of property condemn the greater part of humanity, the slaves, to be pure instruments of labour. Historical development, political development, art, science etc. take place in higher circles over their heads. But only capital has subjugated historical progress to the service of wealth. [p.589-90].

Population

Around p.352 Marx follows an argument fairly commonplace in his day - that accumulation of capital will lead to to increased wages, but that this tendency will eventually be counterbalanced by the increased wages encouraging workers to have more children, and allowing more of those children to survive, thus creating a surplus population.
On p.604 Marx corrects this simplistic and wrong theory of population, developing the basis of the ideas he will later expound in Capital.
It is already contained in the concept of the free labourer, that he is a pauper: virtual pauper. According to his economic conditions he is merely a living labour capacity, hence equipped with the necessaries of life... [But] he can live as a worker only in so far as he exchanges his labour capacity for that part of capital which forms the labour fund. This exchange is tied to conditions which are accidental for him, and indifferent to his organic presence. He is thus a virtual pauper.
Since it is further the condition of production based on capital that he produces ever more surplus labour, it follows that ever more necessary labour is set free. Thus the chances of his pauperism increase. To the development of surplus labour corresponds that of the surplus population.
In different modes of social production there are different laws of the increase of population and of overpopulation... Only in the mode of production based on capital does pauperism appear as the result of labour itself, of the development of the productive force of labour. [p.604].

Labour under capital and in the future; labour as the substance of value

Adam Smith argued that labour-time was the measure of value because it was the measure of the sacrifice necessary to produce a commodity.
Marx's argument against Smith is very relevant to modern bourgeois economics, because there wages appear as determined by the "marginal cost" of giving up leisure, and profits (or interest, at any rate) by the "marginal cost" of waiting, i.e. setting money aside for production rather than spending it on immediate consumption.
This is labour for Smith, a curse. 'Tranquillity' appears as the adequate state, as identical with 'freedom' and 'happiness'. It seems quite far from Smith's mind that the individual, 'in his normal state of health, strength, activity, skill, facility', also needs a normal portion of work, and of the suspension of tranquillity...
The overcoming of obstacles is in itself a liberating activity - and that, further, the external aims [of labour] become stripped of the semblance of merely external natural urgencies, and become posited as aims which the individual himself posits - hence as self-realization, objectification of the subject, hence real freedom, whose action is, precisely, labour.
He [Adam Smith] is right, of course, that, in its historic forms as slave-labour, serf-labour, and wage-labour, labour always appears as repulsive, always as external forced labour; and not-labour, by contrast, as 'freedom, and happiness'... [p.611].
But For example, even the semi-artistic worker of the Middle Ages does not fit into his definition. [p.612].
Marx emphatically does not see the communist future as a reign of universal idling and "fun" in which there is no tension of exertion.
[When] labour becomes attractive work, the individual's self-realization, [that] in no way means that it becomes mere fun, mere amusement, as Fourier... conceives it. Really free working, e.g. composing, is at the same time precisely the most damned seriousness, the most intense exertion.
The work of material production can achieve this character only (1) when its social character is posited, (2) when it is of a scientific and at the same time general character, not merely human exertion as a specifically harnessed natural force, but exertion as subject, which appears in the production process not in a merely natural, spontaneous form, but as an activity regulating all the forces of nature...
Labour regarded merely as a sacrifice... is a purely negative characterization. This is why Mr Senior, for example, was able to make capital into a source of production in the same sense as labour, a source sui generis of the production of value, because the capitalist too brings a sacrifice, the sacrifice of abstinence, in that he grows wealthy instead of eating up his product directly. Something that is merely negative creates nothing. If the worker should, e.g. enjoy his work - as the miser certainly enjoys Senior's abstinence - then the product does not lose any of its value... [p.612].
Responding to Smith, Marx gives probably the longest exposition in all his writings of exactly why he considers labour to be the substance of value.
Two things are only commensurable if they are of the same nature. Products can be measured with the measure of labour — labour time — only because they are, by their nature, labour. They are objectified labour.
As objects they assume forms in which their being as labour... has, apart from itself, no other features in common. They exist as equals as long as they exist as activity. The latter is measured by time, which therefore also becomes the measure of objectified labour...
In so far as the product has a measure for itself, it is its natural measure as natural object, mass, weight, length, volume etc. Measure of utility etc. But as effect, or as static presence of the force which created it, it is measured only by the measure of this force itself. The measure of labour is time.
Only because products are labour can they be measured by the measure of labour, by labour time, the amount of labour consumed in them.
The negation of tranquillity, as mere negation, ascetic sacrifice, creates nothing. Someone may castigate and flagellate himself all day long like the monks etc., and this quantity of sacrifice he contributes will remain totally worthless. The natural price of things is not the sacrifice made for them. This recalls, rather, the pre-industrial view which wants to achieve wealth by sacrificing to the gods. There has to be something besides sacrifice... [p.613].

The arithmetic of turnover

Marx's discussions of turnover, such as on p.652-7, are vitiated by the confusions which we already saw on pp.518ff, and by another. In some passages Marx does note that differences in the length of the production process of different items are a completely different matter from differences in the quantities of labour-time embodied in them [p.602], and that each round of production does not wait for the sale of the products of the previous round [p.660], but in other passages he ignores these points: remember, these are rough, first-draft notes.
The governing assumption of the calculations on p.652-7 is that each next "production phase" must wait for the sale of the products of the previous one. As if capitalist production were like a craft shoemaker, waiting for the sale of each pair of shoes so that he can buy leather to make the next one.
Capitalist production is not like that. A capitalist in a line of business with a longer production and circulation process (within the normal range, i.e. excluding things like large construction projects, the cultivation of forests, etc.) will have revenue coming back to him just as continuously as one in a line with a shorter production and circulation process, only it will be revenue from the products of somewhat longer ago.
In that sense his capital will "turn over" just as fast. The main difference is that the longer-process capitalist will need a larger amount of "working capital" to finance his larger stock of "work in progress".

Key passages from pp.533-690

2007-01-02T23:40:00.000+10:00

The universalising tendency of capital

While capital must on one side strive to tear down every spatial barrier to intercourse, i.e. to exchange, and conquer the whole earth for its market, it strives on the other side to annihilate this space with time, i.e. to reduce to a minimum the time spent in motion from one place to another. The more developed the capital, therefore, the more extensive the market over which it circulates, which forms the spatial orbit of its circulation, the more does it strive simultaneously for an even greater extension of the market and for greater annihilation of space by time...
There appears here the universalizing tendency of capital, which distinguishes it from all previous stages of production. Although limited by its very nature, it strives towards the universal development of the forces of production, and thus becomes the presupposition of a new mode of production, which is founded not on the development of the forces of production for the purpose of reproducing or at most expanding a given condition, but where the free, unobstructed, progressive and universal development of the forces of production is itself the presupposition of society and hence of its reproduction; where advance beyond the point of departure is the only presupposition.
This tendency -- which capital possesses, but which at the same time, since capital is a limited form of production, contradicts it and hence drives it towards dissolution -- distinguishes capital from all earlier modes of production, and at the same time contains this element, that capital is posited as a mere point of transition.
All previous forms of society... foundered on the development of wealth. Those thinkers of antiquity who were possessed of consciousness therefore directly denounced wealth as the dissolution of the community. The feudal system, for its part, foundered on urban industry, trade, modern agriculture (even as a result of individual inventions like gunpowder and the printing press).
With the development of wealth -- and hence also new powers and expanded intercourse on the part of individuals -- the economic conditions on which the community rested were dissolved, along with the political relations of the various constituents of the community which corresponded to those conditions...
Capital posits the production of wealth itself and hence the universal development of the productive forces, the constant overthrow of its prevailing presuppositions, as the presupposition of its reproduction. Value excludes no use value; i.e. includes no particular kind of consumption etc., of intercourse etc. as absolute condition; and likewise every degree of the development of the social forces of production, of intercourse, of knowledge etc. appears to it only as a barrier which it strives to overpower...
The barrier to capital is that this entire development proceeds in a contradictory way, and that the working-out of the productive forces, of general wealth etc., knowledge etc., appears in such a way that the working individual alienates himself; relates to the conditions brought out of him by his labour as those not of his own but of an alien wealth and of his own poverty. But this antithetical form... produces the real conditions of its own suspension.
The result is: the tendentially and potentially general development of the forces of production -- of wealth as such -- as a basis; likewise, the universality of intercourse, hence the world market as a basis. The basis as the possibility of the universal development of the individual... [p.539-541].

Competition

Competition may well even out, equalize the level of profit, but in no way creates the measure of this level. Likewise, competition among the workers could press down a higher wages level etc., but the general standard of wages, or as Ricardo puts it the natural price of wages, could not be explained by the competition between worker and worker, but only by the original relation between capital and labour.
Competition generally, this essential locomotive force of the bourgeois economy, does not establish its laws, but is rather their executor. Unlimited competition is therefore not the presupposition for the truth of the economic laws, but rather the consequence -- the form of appearance in which their necessity realizes itself. For the economists to presuppose, as does Ricardo, that unlimited competition exists is to presuppose the full reality and realization of the bourgeois relations of production in their specific and distinct character. Competition therefore does not explain these laws; rather, it lets them be seen, but does not produce them. [p.552].

The economic effects of competition

Competition may well even out, equalize the level of profit, but in no way creates the measure of this level. Likewise, competition among the workers could press down a higher wages level etc., but the general standard of wages... could not be explained by the competition between worker and worker, but only by the original relation between capital and labour.
Competition generally, this essential locomotive force of the bourgeois economy, does not establish its laws, but is rather their executor. Unlimited competition is therefore not the presupposition for the truth of the economic laws, but rather the consequence -- the form of appearance in which their necessity realizes itself. For the economists to presuppose, as does Ricardo, that unlimited competition exists is to presuppose the full reality and realization of the bourgeois relations of production in their specific and distinct character. Competition therefore does not explain these laws; rather, it lets them be seen, but does not produce them. [p.552].
The laws of capital are completely realized only within unlimited competition and industrial production. Capital develops adequately on the latter productive basis and in the former relation of production; i.e. its immanent laws enter completely into reality. Since this is so, it would have to be shown how this unlimited competition and industrial production are conditions of the realization of capital, conditions which it must itself little by little produce... [p.559-60].
Production founded on capital for the first time posits itself in the forms adequate to it only in so far as and to the extent that free competition develops, for it is the free development of the mode of production founded on capital; the free development of its conditions and of itself as the process which constantly reproduces these conditions...
But free competition is the adequate form of the productive process of capital. The further it is developed, the purer the forms in which its motion appear...
Competition merely expresses as real, posits as an external necessity, that which lies within the nature of capital; competition is nothing more than the way in which the many capitals force the inherent determinants of capital upon one another and upon themselves... [p.649-51].

Competition and freedom

By some bourgeois economists, so Marx comments, free economic competition is seen:
... as the absolute mode of existence of free individuality in the sphere of consumption and of exchange. Nothing can be more mistaken...
It is not individuals who are set free by free competition; it is, rather, capital which is set free... Free competition is the real development of capital...
Free competition... is nothing more than free development on a limited basis — the basis of the rule of capital. This kind of individual freedom is therefore at the same time the most complete suspension of all individual freedom, and the most complete subjugation of individuality under social conditions which assume the form of objective powers, even of overpowering objects — of things independent of the relations among individuals themselves.
The analysis of what free competition really is, is the only rational reply to the middle-class prophets who laud it to the skies or to the socialists who damn it to hell... The assertion that free competition = the ultimate form of the development of the forces of production and hence of human freedom means nothing other than that middle-class rule is the culmination of world history - certainly an agreeable thought for the parvenus of the day before yesterday. [p.649-52].

Labour and labour-power

Living labour itself appears as alien vis-à-vis living labour capacity, whose labour it is, whose own life's expression it is, for it has been surrendered to capital in exchange for objectified labour, for the product of labour itself. Labour capacity relates to its labour as to an alien... Labour capacity's own labour is as alien to it -- and it really is, as regards its direction etc. -- as are material and instrument. Which is why the product then appears to it as a combination of alien material, alien instrument and alien labour - as alien property, and why, after production, it has become poorer by the life forces expended, but otherwise begins the drudgery anew...
What the capitalist acquires through exchange is labour capacity: this is the exchange value which he pays for. Living labour is the use value which this exchange value has for him, and out of this use value springs the surplus value and the suspension of exchange as such. Because Ricardo allows exchange with living labour -- and thus falls straight into the production process -- it remains an insoluble antinomy in his system that a certain quantity of living labour does not = the commodity which it creates, in which it objectifies itself, although the value of the commodity = to the amount of labour contained in it... [p.561-2].
Wages, however, express the value of living labour capacity, but in no way the value of living labour, which is expressed, rather, in wages + profit... The amount of labour which the worker works is very different from the amount of labour that is worked up into his labour capacity... He does not sell as commodity the use made of him, he sells himself not as cause but as effect. [p.571].
Labour capacity is not = to the living labour which it can do, = to the quantity of labour which it can get done -- this is its use value. It is equal to the quantity of labour by means of which it must itself be produced and can be reproduced. The product is thus in fact exchanged not for living labour, but for objectified labour, labour objectified in labour capacity. [p.576].
What is exchanged for wages is labour capacity, and this does not figure in production at all, but only in the use made of it -- labour. Labour appears as the instrument of the production of value because it is not paid for, hence not represented by wages. As the activity which creates use values, it likewise has nothing to do with itself as paid labour. In the hand of the worker, the wage is no longer a wage, but a consumption fund. It is wages only in the hand of the capitalist, i.e. the part of capital destined to be exchanged for labour capacity. It has reproduced a saleable labour capacity for the capitalist, so that in this regard even the worker's consumption takes place in the service of the capitalist. He does not pay for labour itself at all, only for labour capacity. [p.593-4].
The capitalist does not exchange capital directly for labour or labour time; but rather time contained, worked up in commodities, for time contained, worked up in living labour capacity. The living labour time he gets in exchange is not the exchange value, but the use value of labour capacity...
The exchange which proceeds between capitalist and worker thus corresponds completely to the laws of exchange; it not only corresponds to them, but also is their highest development. For, as long as labour capacity does not itself exchange itself, the foundation of production does not yet rest on exchange, but exchange is rather merely a narrow circle resting on a foundation of non-exchange, as in all stages preceding bourgeois production.
But the use value of the value the capitalist has acquired through exchange is... more labour time than is objectified in labour capacity, i.e. more labour time than the reproduction of the living worker costs. Hence, by virtue of having acquired labour capacity in exchange as an equivalent, capital has acquired labour time -- to the extent that it exceeds the labour time contained in labour capacity -- in exchange without equivalent; it has appropriated alien labour time without exchange by means of the form of exchange... and, as we saw, in the further development of capital even the semblance is suspended that capital exchanges for labour capacity anything other than the latter's own objectified labour; i.e. that it exchanges anything at all for it...
Thus the exchange turns into its opposite, and the laws of private property -- liberty, equality, property -- property in one's own labour, and free disposition over it -- turn into the worker's propertylessness, and the dispossession of his labour, [i.e.] the fact that he relates to it as alien property... [p.673-4].

The workers' combination as the capitalists' property

The collective power of labour, its character as social labour, is... the collective power of capital. Likewise science. Likewise the division of labour... All social powers of production are productive powers of capital, and it appears as itself their subject. The association of the workers, as it appears in the factory, is therefore not posited by them but by capital. Their combination is not their being, but the being of capital. Vis-à-vis the individual worker, the combination appears accidental. He relates to his own combination and cooperation with other workers as alien, as modes of capital's effectiveness. [p.585].
The combination of this labour appears... subservient to and led by an alien will and an alien intelligence - having its animating unity elsewhere... Just as the worker relates to the product of his labour as an alien thing, so does he relate to the combination of labour as an alien combination, as well as to his own labour as an expression of his life, which, although it belongs to him, is alien to him and coerced from him... Communal or combined labour... is... posited as an other towards the really existing individual labour - as an alien objectivity (alien property) as well as an alien subjectivity (of capital)... Capital... is the existence of social labour [p.470-1].
[In some industries, like mining, there is worker cooperation even before they are taken over by capital. There] capital does not create but rather takes over the accumulation and concentration of workers... [Or sometimes in its early stages] capital employs different hand weavers, spinners etc. who live independently and are dispersed over the land... Their unification by capital is thus merely formal, and concerns only the product of labour, not labour itself...
[Later capital] gathers them [the workers] in one spot under its command, into one manufactory, and no longer leaves them in the mode of production found already in existence, establishing its power on that basis, but rather creates a mode of production corresponding to itself, as its basis. It posits the concentration of the workers in production, a unification which will occur initially only in a common location, under overseers, regimentation, greater discipline, regularity... Now capital appears as the collective force of the workers, their social force, as well as that which ties them together, and hence as the unity which creates this force. [p.586-7]
'This continual progression of knowledge and of experience,' says Babbage, 'is our great power.' This progression, this social progress belongs [to] and is exploited by capital. All earlier forms of property condemn the greater part of humanity, the slaves, to be pure instruments of labour. Historical development, political development, art, science etc. take place in higher circles over their heads. But only capital has subjugated historical progress to the service of wealth. [p.589-90].

Pauperism

It is already contained in the concept of the free labourer, that he is a pauper: virtual pauper. According to his economic conditions he is merely a living labour capacity, hence equipped with the necessaries of life... [But] he can live as a worker only in so far as he exchanges his labour capacity for that part of capital which forms the labour fund. This exchange is tied to conditions which are accidental for him, and indifferent to his organic presence. He is thus a virtual pauper.
Since it is further the condition of production based on capital that he produces ever more surplus labour, it follows that ever more necessary labour is set free. Thus the chances of his pauperism increase. To the development of surplus labour corresponds that of the surplus population.
In different modes of social production there are different laws of the increase of population and of overpopulation... Only in the mode of production based on capital does pauperism appear as the result of labour itself, of the development of the productive force of labour. [p.604].

Labour as a curse in capitalist society; as substance of value; as self-realisation in future society

This is labour for Smith, a curse. 'Tranquillity' appears as the adequate state, as identical with 'freedom' and 'happiness'. It seems quite far from Smith's mind that the individual, 'in his normal state of health, strength, activity, skill, facility', also needs a normal portion of work, and of the suspension of tranquillity...
The overcoming of obstacles is in itself a liberating activity - and that, further, the external aims [of labour] become stripped of the semblance of merely external natural urgencies, and become posited as aims which the individual himself posits - hence as self-realization, objectification of the subject, hence real freedom, whose action is, precisely, labour.
He [Adam Smith] is right, of course, that, in its historic forms as slave-labour, serf-labour, and wage-labour, labour always appears as repulsive, always as external forced labour; and not-labour, by contrast, as 'freedom, and happiness'... [p.611].
For example, even the semi-artistic worker of the Middle Ages does not fit into his definition. [p.612].

[When] labour becomes attractive work, the individual's self-realization, [that] in no way means that it becomes mere fun, mere amusement, as Fourier... conceives it. Really free working, e.g. composing, is at the same time precisely the most damned seriousness, the most intense exertion.
The work of material production can achieve this character only (1) when its social character is posited, (2) when it is of a scientific and at the same time general character, not merely human exertion as a specifically harnessed natural force, but exertion as subject, which appears in the production process not in a merely natural, spontaneous form, but as an activity regulating all the forces of nature... [p.611-2]

Labour regarded merely as a sacrifice... is a purely negative characterization. This is why Mr Senior, for example, was able to make capital into a source of production in the same sense as labour, a source sui generis of the production of value, because the capitalist too brings a sacrifice, the sacrifice of abstinence, in that he grows wealthy instead of eating up his product directly. Something that is merely negative creates nothing. If the worker should, e.g. enjoy his work - as the miser certainly enjoys Senior's abstinence - then the product does not lose any of its value... [p.612].

Two things are only commensurable if they are of the same nature. Products can be measured with the measure of labour — labour time — only because they are, by their nature, labour. They are objectified labour.
As objects they assume forms in which their being as labour... has, apart from itself, no other features in common. They exist as equals as long as they exist as activity. The latter is measured by time, which therefore also becomes the measure of objectified labour...
In so far as the product has a measure for itself, it is its natural measure as natural object, mass, weight, length, volume etc. Measure of utility etc. But as effect, or as static presence of the force which created it, it is measured only by the measure of this force itself. The measure of labour is time.
Only because products are labour can they be measured by the measure of labour, by labour time, the amount of labour consumed in them.
The negation of tranquillity, as mere negation, ascetic sacrifice, creates nothing. Someone may castigate and flagellate himself all day long like the monks etc., and this quantity of sacrifice he contributes will remain totally worthless. The natural price of things is not the sacrifice made for them. This recalls, rather, the pre-industrial view which wants to achieve wealth by sacrificing to the gods. There has to be something besides sacrifice... [p.613].

Extra note: Geography and historical materialism

2007-01-01T21:59:00.001+10:00

Marx's classification of long-ago communal landownership into three species of system raises the question of what conditions might have determined the rise of different species in different areas (and, also, of course, whether there other species in other areas, unknown to or overlooked by Marx).
The question is at a tangent to Marx's immediate concerns in the Grundrisse, and he does not discuss it.
A recent book by Jared Diamond, Guns, Germs, and Steel, and a TV series based on it, have addressed similar questions.
Diamond sets out to explain why it was Europe which conquered or colonised the other continents, rather than vice versa. He adduces two main factors:
1. A sector of Eurasia, the Fertile Crescent, had a climate which favoured annual plants (which tend to have large seeds) and a species mix which included critical, large-seeded, self-pollinating grasses. For those geographical reasons, it became the first site of settled agriculture, and of the cultivation of most of the basic crops used to this day.
2. Eurasia was also favoured with almost all the species of large mammals suitable for domestication: horses, cows, sheep, pigs, etc.
3. Even highly-developed modern farming has found very few other plants or animals suitable for domestication. Almost all the plants and animals used in farming today were first domesticated in pre-historic times; almost all originated in Eurasia and were introduced into other regions later.
4. The axis of Eurasia runs east-west, while the Americas run north-south. Agricultural and cultural innovations could therefore easily diffuse in Eurasia, moving along lines of similar latitude and therefore similar climate. They could diffuse much less easily along north-south lines.
5. Those innovations allowed for the creation of reliable food surpluses, and thus for large, dense, sedentary, and stratified societies. Those in turn could develop "guns, germs, and steel".
I have nowhere near enough knowledge to judge whether Diamond is right. I am certain, though, that his ideas cannot be rejected out of hand, without examining the factual evidence; and that they in no way imply exculpating capitalism and imperialism.
Capitalist imperialism, as a system, exacerbated inequalities. But that fact does not explain why it was Europe which colonised the Americas, rather than the Americas colonising Europe. To explain that, we must turn to some species of geographical argument. Diamond's arguments may or may not be correct, but they cannot be dismissed out of hand.
Marxists in the past have recognised that geographical considerations may be important. For example, in his essay On the 60th anniversary of Hegel's death, Plekhanov (as part of an argument that Hegel was not as "idealist" as he seemed) cites Hegel's ideas on the influence of geographical environment as essentially materialist and (so Plekhanov thought) confirmed by later research.
Diamond argues that Hegel and others were wrong in seeing the presence of large rivers as crucial to the emergence of agriculture. For sure, Plekhanov's argument looks old-fashioned today. It may have been completely wrong in detail. But the general idea of seeing an element of "geographical materialism" in human history seems not wrong at all.
According to [Hegel] there are three typical varieties of geographical environment: 1) a waterless high plateau, with great steppes and plains; 2) low lands intersected by great rivers; 3) coastal lands having direct communication with the sea.
Cattle-rearing is dominant in the first, agriculture in the second, trade and the crafts in the third. The social relations of the inhabitants assume various characters according to these basic differences. The people inhabiting the high plateaux, the Mongols, for instance, lead a patriarchal nomadic life and have no history in the proper sense of the word. Only occasionally, assembling in great numbers, they swoop like a storm on the civilised countries leaving desolation and destruction in their wake. Cultural life begins in the lowlands, which owe their fertility to the rivers.
“Such a lowland we find in China, India ... Babylon ... and Egypt. Great empires arise in these lands and great states are formed there. For agriculture, which is dominant here as the first source of subsistence for individuals, is bound by the regularity of the seasons, by the regular occupations corresponding to them; here landed property and the relationships of right corresponding to them have their beginning.” But the agricultural peoples who live in the lowlands are distinguished by greater sluggishness, immobility and segregation; they are unable to use for their mutual relationships the means that nature places at their disposal.
This defect does not exist in peoples in a coastal country. The sea does not separate peoples, it unites them. That is why precisely in the coastal countries culture, and with it the development of human consciousness, reaches its highest development. There is no need to look far for examples, it is sufficient to point to ancient Greece.
Perhaps the reader knows L. Mechnikov’s book La civilisation et les grands fleuves historiques, which appeared in 1889... This materialist’s view of the historical significance of the geographical environment agrees almost entirely with that of the idealist Hegel, although Mechnikov would probably be very surprised to hear of such a resemblance.
Hegel also explains, in part, the rise of inequality among the more or less primitive societies by the influence of geographical environment. Thus, he pointed out that in the Attica of before Solon’s time, the differences between estates (by estates he means the various more or less well-to-do sections of the population: the inhabitants of the plains, those of the mountains, and those of the coastal areas – G. P.) were based on differences in the localities.

Extra note: more on "why the working class"

2007-01-01T21:58:00.001+10:00

Some people on the would-be revolutionary left - notably those connected in some degree with the SWP-UK - often argue that the central reason for socialists to turn the working class is that the workers are the people who have the power to change society. Nothing can be produced without workers; if the workers stop work, everything stops.
Nothing resembling this argument can be found in Marx's writings. The argument became well-known in the late 1960s and early 1970s, when a lot of students were radicalised, and there was an argument among them between those who wanted to stay within the student milieu and those who wanted to go out to the factories and offices and working-class communities.
Yes, said the go-out faction, activity in the working class can be arduous and slow to yield results. But it is worthwhile because the workers have more social power than students.
As far as it went, the argument was right, I think. But it did not go very far. To cite it as the central argument for an orientation to the working class is wrong. In Hal Draper's summary on "Why the working class?", used as a basic educational text by Workers' Liberty, the "workers-have-power" argument appears as only no.5 of five reasons adduced, and that seems about right to me.
The "workers-have-power" argument begs at least three questions:
1. Obviously workers have, and use, power to win better wages and social conditions, and to make some limited social reforms. But what reason is there to think that they - as a class - will want to use that power for revolutionary socialist measures, which are a very different matter?
2. Even if the workers want to use that power for revolutionary socialist measures, can they? Socialist revolution cannot be made just by stopping production.
3. What reason is there to suppose that the workers will be able to reconstruct society after they have used their power to destroy the capitalists (even assuming that the first two questions are somehow answered, i.e. that we can see why the workers should want to be able to do that, and how the power referred to should be sufficient for not only partial improvements but also revolution)?
The "workers-have-power" argument, if used as the central or first argument for turning to the working class, also has harmful political implications. It suggests a scenario in which socialists ("the brain") look round for muscle to help them, and decided that the workers are the most plausible foot-soldiers - a scenario contrary to the basic Marxist idea that:
The time of surprise attacks, of revolutions carried through by small conscious minorities at the head of masses lacking consciousness is past. Where it is a question of a complete transformation of the social organisation, the masses themselves must also be in on it, must themselves already have grasped what is at stake, what they are fighting for, body and soul. (Engels, Introduction to The Class Struggles In France).
As to the connection between the use of this defective argument by the currents linked to the SWP-UK, and the politics and political methods of those currents, that is another discussion.
Hal Draper, in another text, spelled out clearly what is wrong with seeing the case for orientation to the working class as residing in the fact that it constitutes a powerful "army".
Different socialist or revolutionary sects have oriented themselves... to the intellectuals and intelligentsia, and still others to the working class. They oriented themselves in these directions because they believed that these were green fields for recruitment. Now, that is one way of looking at social sections. It is not the movement of a class itself which will re-make society – it is your 'army.' And for the purpose of recruiting your army, you orient yourself to different sectors of society.
There is a difference between such orientations. For example, the first socialist to decide to adopt the working-class orientation was Saint-Simon. He was very clear in his mind – he was addressing himself to the working class, saying: 'My ideas are right, you adopt them and then convince your boss to do what he should do in order to carry out the ideas of Saint-Simonism.'
Lassalle very consciously oriented himself to the working class because he believed the liberal bourgeoisie was hopeless. He oriented to the working class to recruit the Lassallean army...
Now, that whole approach is completely alien to Marxism. For Marx and for Marx alone the significance of working class socialism was not simply that you orient to this class because you can get the most out of them, but that it is this class which, when it gets into motion, shakes the foundations of capitalist society. This is a statement about the working class which has no equivalent for these other orientations.
Marx himself put the case for seeing the working class as central to socialism in two ways. The first is negative - the working class as the totally-oppressed absolute negation of existing society - as expressed in Marx's 1844 Introduction to a Critique of Hegel's Philosophy of Right. The other is positive - the working class as a class with great skills and propensities generated by its inevitable struggles within capitalist society.
The second argument begins with Marx's discussion of trade-union struggles in The Poverty of Philosophy, but is expressed most vividly, perhaps, in the Grundrisse.
The second argument was much developed by the Marxists of the Second International. By some of them, to be sure, to a degree which reduced the socialist aim to a mere culmination of the economic and cultural progress which they saw the workers as making, bit by bit, within capitalism. Rosa Luxemburg referred scornfully to the "socialist" professors [who] acclaim the wearing of neckties, the use of visiting cards, and the riding of bicycles by proletarians as notable instances of participation in cultural progress".
But the reverse tendency - to fade out the second argument, and place almost all emphasis on the first argument - can be as grievous; and has been more grievous in the history of the Marxist movement over most of the last century.
After World War One, facing a capitalist system wallowing in crisis, the Communist International understandably and reasonably put its main emphasis on the way in which the sharper oppression of those crises could and would stir the working class to revolution. It took it for granted that in the main capitalist countries it was talking about a working class that had already been organised and educated by modern industry and by decades of labour-movement activity.
Then the Communist International succumbed to the leadership of Stalinists who saw the working class precisely as foot-soldiers, as a powerful lobby to be deployed to secure partial measures desired by its preordained leaders. The Trotskyist movement, beleaguered and after 1929 facing an even more drastically crisis-wracked capitalism, more or less inevitably put its emphasis on the hope that the whip of crises would spur an ever-more-oppressed working class into revolutionary explosion.
Grievously, Marxists in the long epoch of capitalist expansion that started in the late 1940s or early 1950s have remained stuck in the mindsets of the Trotskyists, or even sometimes of the Stalinists, of the 1930s.

Extra note: Productive and unproductive labour

2007-01-01T21:56:00.000+10:00

In many places in his writings, Marx is concerned to distinguish between modern wage-labour and (a) the sort of labour for wages or fees performed by large numbers of workers before capitalist production - soldiers, domestic servants, porters, etc.; (b) the vast variety of people in capitalist society who, while not wage-workers, produce some "service" or another.
It is plausible to "read forward" the distinctions which Marx makes in those respects into a distinction between sections of the modern working class - between those who are "productive" in a capitalist sense (they produce surplus value), and those who are "unproductive" in a capitalist sense (do not directly produce surplus value: retail and finance workers, public service workers, etc.)
We would then conclude that the "unproductive" workers are in some way "less" workers than the "productive" ones. Since on all estimates the percentage of "unproductive" workers is large and rising (despite privatisation, which tends to reduce that percentage), this conclusion is politically dramatic. Ideas of roughly that sort were common among the "Eurocommunists" of the 1970s, used by them to argue that politics based exclusively or primarily on the core working class were no longer viable.
I think such "reading forward" is wrong. Marx's basic distinction is between workers who are employed by capitalists acting as capitalists, and workers or other people who are employed, or paid, by capitalists acting as owners of revenue - the distinction between a cook employed by a restaurant-owner, and a cook employed by a rich person to provide meals in the plutocrat's own home.
Most modern "unproductive" workers are employed by capitalists acting as capitalists. Or, at least, that is so if we conceive that the capitalist state can act as a capitalist as well as sometimes acting as an owner of revenue (when distributing patronage of many sorts). But surely it can.
Note, however, that the "unproductive" workers (nurses in public hospitals, for example) are "fully" workers because they are employed by capital - not because they perform useful services for the maintenance of capitalist society.
Marx is vehement - and rightly so, I think - against the idea that "productive" labour can be defined as effort which provides useful services for the maintenance of capitalist society. Define it that way, of course, and it is impossible to argue that the capitalist is not "productive".
Marx made his point vividly by a sarcastic disquisition on how the criminal is "productive" in capitalist society.
A philosopher produces ideas, a poet poems, a clergyman sermons, a professor compendia and so on. A criminal produces crimes. If we take a closer look at the connection between this latter branch of production and society as a whole, we shall rid ourselves of many prejudices.
The criminal produces not only crimes but also criminal law, and with this also the professor who gives lectures on criminal law and in addition to this the inevitable compendium in which this same professor throws his lectures onto the general market as “commodities”. This brings with it augmentation of national wealth, quite apart from the personal enjoyment which — as a competent witness, Professor Roscher, [tells] us — the manuscript of the compendium brings to its originator himself.
The criminal moreover produces the whole of the police and of criminal justice, constables, judges, hangmen, juries, etc. ; and all these different lines of business, which form just as many categories of the social division of labour, develop different capacities of the human mind, create new needs and new ways of satisfying them. Torture alone has given rise to the most ingenious mechanical inventions, and employed many honourable craftsmen in the production of its instruments.
The criminal produces an impression, partly moral and partly tragic, as the case may be, and in this way renders a “service” by arousing the moral and aesthetic feelings of the public. He produces not only compendia on Criminal Law, not only penal codes and along with them legislators in this field, but also art, belles-lettres, novels, and even tragedies, as not only Mullner’s Schuld and Schiller’s Räuber show, but Oedipus and Richard the Third.
The criminal breaks the monotony and everyday security of bourgeois life. In this way he keeps it from stagnation, and gives rise to that uneasy tension and agility without which even the spur of competition would get blunted. Thus he gives a stimulus to the productive forces.
While crime takes a part of the redundant population off the labour market and thus reduces competition among the labourers — up to a certain point preventing wages from falling below the minimum — the struggle against crime absorbs another part of this population. Thus the criminal comes in as one of those natural “counterweights” which bring about a correct balance and open up a whole perspective of “useful” occupations.
The effects of the criminal on the development of productive power can be shown in detail. Would locks ever have reached their present degree of excellence had there been no thieves? Would the making of bank-notes have reached its present perfection had there been no forgers? Would the microscope have found its way into the sphere of ordinary commerce (see Babbage) but for trading frauds? Does not practical chemistry owe just as much to the adulteration of commodities and the efforts to show it up as to the honest zeal for production?
Crime, through its ever new methods of attack on property, constantly calls into being new methods of defence, and so is as productive as strikes for the invention of machines.
And if one leaves the sphere of private crime: would the world market ever have come into being but for national crime? Indeed, would even the nations have arisen? And has not the Tree of Sin been at the same time the Tree of Knowledge ever since the time of Adam?
(Economic Manuscripts of 1861-3, chapter 33).
As regards the wage-workers employed by those capitalists which are "unproductive" from the point of view of capital as a whole, Marx argues very differently.
What about the commercial wage-workers employed by the commercial capitalist...
In one respect, such a commercial employee is a wage-worker like any other. In the first place, his labour-power is bought with the variable capital of the merchant, not with money expended as revenue, and consequently it is not bought for private service, but for the purpose of expanding the value of the capital advanced for it. In the second place, the value of his labour-power, and thus his wages, are determined as those of other wage-workers, i.e., by the cost of production and reproduction of his specific labour-power, not by the product of his labour...
Since the merchant, as a mere agent of circulation, produces neither value nor surplus-value... it follows that the mercantile workers employed by him in these same functions cannot directly create surplus-value for him... merchant's capital derives profit from not paying in full to productive capital for all the unpaid labour contained in the commodities (in commodities, in so far as capital invested in their production functions as an aliquot part of the total industrial capital), and by demanding payment for this unpaid portion still contained in the commodities when making a sale...
[But] the mass of the individual merchant's profits depends on the mass of capital that he can apply in this process, and he can apply so much more of it in buying and selling, the more the unpaid labour of his clerks. The very function, by virtue of which the merchant's money becomes capital, is largely done through his employees. The unpaid labour of these clerks, while it does not create surplus-value, enables him to appropriate surplus-value, which, in effect, amounts to the same thing with respect to his capital. It is, therefore, a source of profit for him. Otherwise commerce could never be conducted on a large scale, capitalistically.
Just as the labourer's unpaid labour directly creates surplus-value for productive capital, so the unpaid labour of the commercial wage-worker secures a share of this surplus-value for merchant's capital...
(Capital volume 3, chapter 17)
Marx is clear that whether labour is capitalistically "unproductive" or "productive" does not depend on whether it produces a tangible "thing". For example, a school teacher in a private school is a "productive" worker; one in a state school is "unproductive".
"A schoolmaster is a productive labourer when, in addition to belabouring the heads of his scholars, he works like a horse to enrich the school proprietor. That the latter has laid out his capital in a teaching factory, instead of in a sausage factory, does not alter the relation. Hence the notion of a productive labourer implies not merely a relation between work and useful effect, between labourer and product of labour, but also a specific, social relation of production, a relation that has sprung up historically and stamps the labourer as the direct means of creating surplus-value. To be a productive labourer is, therefore, not a piece of luck, but a misfortune".
(Capital, chapter 16).
Marx took it as given that the bulk of the workers employed by capital were "productive", and the "unproductive" ones a small minority. The great bulk of "unproductive" workers in his day were domestic servants, employed by revenue rather than capital. Still, it is notable that in his discussion of "unproductive" workers employed by capital there is not the slightest hint that these workers are in any way "less" workers than the "productive" workers.
Some "unproductive" workers have different, and less "alienated", work conditions than the majority of the working class. But then so do some "productive" workers (software developers, for example). There are many important differences between sections of the working class. Only, the difference between "unproductive" and "productive" workers, as such, is not particularly important.
"Unproductive" workers generally have no tangible "product" they can point to. But as technology advances, that is also more and more true of "productive" workers. That development would not in the least dismay Marx.
On the contrary, he saw the tendency of production to become more and more social production, in which it was more and more difficult to identify an individual item as the individual product of an individual worker, as organic to capitalism. The individual tie between the individual worker and the individual product is characteristic not of developed capitalism but of an economy of small workshop masters or craft workers: it is more likely to generate craft economism than working-class socialism.
Yes, as capitalism develops, the argument about exploitation becomes more and more a "moral" argument about the general mass of riches produced by the working class, and less a crudely "material" argument about the arithmetic of the particular items produced by the particular worker. But that is another way of saying that it becomes more and more a class, socialist argument, rather than a craft or trade economistic argument.
"The product ceases to be the direct product of the individual, and becomes a social product, produced in common by a collective labourer, i.e., by a combination of workmen, each of whom takes only a part, greater or less, in the manipulation of the subject of their labour. As the co-operative character of the labour-process becomes more and more marked, so, as a necessary consequence, does our notion of productive labour, and of its agent the productive labourer, become extended. In order to labour productively, it is no longer necessary for you to do manual work yourself; enough, if you are an organ of the collective labourer, and perform one of its subordinate functions".
(Capital, chapter 16).
That the distinction between "productive" and "unproductive" worker is unimportant for the analysis of the working class does not mean that the distinction between "productive" and "unproductive" capitalists is unimportant. On the contrary.
My opinion is that it is extremely important, and that the writings on the rise of "unproductive" capital by Fred Moseley and Simon Mohun are among the most important work done in Marxist economic theory for many decades.

Key passages, pp. 458-533

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Labour-power and labour

"Living labour itself appears as alien vis-à-vis living labour capacity, whose labour it is, whose own life's expression it is, for it has been surrendered to capital in exchange for objectified labour, for the product of labour itself. Labour capacity relates to its labour as to an alien". [p.462].

Defining wage-labour

"(1)... living labour capacity... separated from the means of living labour as well as from the means of existence...
(2) ... accumulation... sufficiently large... for the absorption of surplus labour...
(3) a free exchange relation - money-circulation - between both sides...
(4) ... money-making as the ultimate purpose..." [p.463-4].

Analysis of the present, and description of history

"In order to develop the laws of bourgeois economy... it is not necessary to write the real history of the relations of production. But the correct observation and deduction of those laws... always leads to primary equations - like the empirical numbers e.g. in natural science - which point towards a past lying behind this system. These indications, together with a correct grasp of the present, then also offer the key to the understanding of the past - a work in its own right... This correct view likewise leads at the same time to the points at which the suspension of the present form of production relations gives signs of its becoming..."
"The bourgeois economists... attempt... to legitimise [capital] by formulating the conditions of its becoming as the conditions of its contemporary realisation, i.e. presenting the moments in which the capitalist still appropriates as non-capitalist... as the very conditions in which he appropriates as capitalist". [p.460].

Wage-payment without capitalist wage-labour

"The entire class of so-called services from the bootblack up to the king falls into this category. Likewise the free day-labourer... In Asiatic societies... whole cities arise... from the exchange of [the monarch's] revenue with the 'free hands'... The pay of the common soldier is also reduced to a minimum... but he exchanges the performance of his services not for capital, but for the revenue of the state..." [p.467].
"In bourgeois society itself, all exchange of personal services for revenue - ... cooking, sewing etc., garden work etc., up to and including... civil servants, physicians, lawyers, scholars, etc. - belongs under this rubric, within this category..." [p.468].

"Capital is the existence of social labour"

"The combination of... labour appears... subservient to and led by an alien will and an alien intelligence - having its animating unity elsewhere... Just as the worker relates to the product of his labour as an alien thing, so does he relate to the combination of labour as an alien combination, as well as to his own labour as an expression of his life, which, although it belongs to him, is alien to him and coerced from him... Communal or combined labour... is... posited as an other towards the really existing individual labour - as an alien objectivity (alien property) as well as an alien subjectivity (of capital)... Capital... is the existence of social labour" [p.470-1].
"The collective power of labour, its character as social labour, is... the collective power of capital. Likewise science. Likewise the division of labour... All social powers of production are productive powers of capital, and it appears as itself their subject. The association of the workers, as it appears in the factory, is therefore not posited by them but by capital. Their combination is not their being, but the being of capital. Vis-à-vis the individual worker, the combination appears accidental. He relates to his own combination and cooperation with other workers as alien, as modes of capital's effectiveness". [p.585].

The sequence of pre-capitalist societies

"Above all... dissolution of small, free landed property as well as of communal landownership resting on the oriental commune". [p.471].
Three communal forms:
(1) The "Asiatic" form. The despot, "the comprehensive unity standing above all these little communities appears as the higher proprietor or as the sole proprietor; the real communities hence only as hereditary possessors... The surplus product... automatically belongs to this highest unity [the despot]... Clan or communal property exists in fact as the foundation, created mostly by a combination of manufactures and agriculture within the small commune, which thus becomes altogether self-sustaining... A part of their surplus labour belongs to the higher community... and this surplus labour takes the form of tribute etc., as well as of common labour for the... despot" and religious purposes. [p.473].
(2) The "Roman" form. This "presupposes as base not the countryside, but the town as an already created seat (centre) of the rural population (owners of land). The cultivated field here appears as a territorium belonging to the town; not the village as mere accessory to the land". [p.474]. The society is dominated by war between communes over land. "Hence the commune consisting of families initially organized in a warlike way - as a system of war and army... The concentration of residences in the town, basis of this bellicose organization... Communal property - as state property, ager publicus - here separated from private property... Membership in the commune remains the presupposition for the appropriation of land and soil, but, as a member of the commune, the individual is a private proprietor." [p.474-5].
(3) The "Germanic" form. "In the Germanic form, the agriculturist not citizen of a state, i.e. not inhabitant of a city; [the] basis [is] rather the isolated, independent family residence, guaranteed by the bond with other such family residences of the same tribe, and by their occasional coming-together to pledge each others' allegiance in war, religion, adjudication etc. Individual landed property here appears neither as a form antithetical to the commune's landed property, nor as mediated by it, but just the contrary. The commune exists only in the interrelations among these individual landed proprietors as such... [It] is really the common property of the individual proprietors, not of the union of these proprietors endowed with an existence separate from themselves, the city itself". [p.484-5]
The three forms produce different relations of town and country:
"The history of classical antiquity is the history of cities, but of cities founded on landed property and on agriculture; Asiatic history is a kind of indifferent unity of town and countryside (the really large cities must be regarded here merely as royal camps...); the Middle Ages (Germanic period) begins with the land as the seat of history, whose further development then moves forward in the contradiction between town and countryside". [p.479].

Emancipation from the commune

"The reproduction of presupposed relations... of the individual to his commune, together with a specific, objective existence, predetermined for the individual, of his relations both to the conditions of labour and to his co-workers, fellow tribesmen etc. - are the foundation of development, which is therefore from the outset restricted...
Great developments can take place here within a specific sphere. The individuals may appear great. But there can be no conception here of a free and full development either of the individual or of the society, since such development stands in contradiction to the original relation.
Do we never find in antiquity an inquiry into which form of landed property etc. is the most productive, creates the greatest wealth? Wealth does not appear as the aim of production, although Cato may well investigate which manner of cultivating a field brings the greatest rewards, and Brutus may even lend out his money at the best rates of interest. The question is always which mode of property creates the best citizens. Wealth appears as an end in itself only among the few commercial peoples -monopolists of the carrying trade - who live in the pores of the ancient world, like the Jews in medieval society...
Thus the old view, in which the human being appears as the aim of production, regardless of his limited national, religious, political character, seems to be very lofty when contrasted to the modern world, where production appears as the aim of mankind and wealth as the aim of production.
In fact, however, when the limited bourgeois form is stripped away, what is wealth other than the universality of individual needs, capacities, pleasures, productive forces etc., created through universal exchange? The full development of human mastery over the forces of nature, those of so-called nature as well as of humanity's own nature? The absolute working-out of his creative potentialities, with no presupposition other than the previous historic development, which makes this totality of development, i.e. the development of all human powers as such the end in itself, not as measured on a predetermined yardstick? Where he does not reproduce himself in one specificity, but produces his totality? Strives not to remain something he has become, but is in the absolute movement of becoming?
In bourgeois economics - and in the epoch of production to which it corresponds - this complete working-out of the human content appears as a complete emptying-out, this universal objectification as total alienation, and the tearing-down of all limited, one-sided aims as sacrifice of the human end-in-itself to an entirely external end. This is why the childish world of antiquity appears on one side as loftier..." [p.487-8].
"In this [old] community, the objective being of the individual as proprietor, say proprietor of land, is presupposed, and presupposed moreover under certain conditions which chain him to the community, or rather form a link in his chain. In bourgeois society, the worker e.g. stands there purely without objectivity, subjectively; but the thing which stands opposite him has now become the true community, which he tries to make a meal of, and which makes a meal of him". [p.496].

The transition to capitalism

The transition "presupposes a process of history which dissolves the various forms in which the worker is a proprietor, or in which the proprietor works. Thus above all:
(1) Dissolution of the [worker's] relation to the earth - land and soil... [of] all forms... [of] community, whose members, although there may be formal distinctions between them, are, as members of it, proprietors...
(2) Dissolution of the relations in which [the worker] appears as proprietor of the instrument [of production]... Property of the worker in the instrument [of production] presuppose[s] a particular form of the development of manufactures, namely craft, artisan work; bound up with it, the guild-corporation system etc...
(3) [Dissolution of situations where the worker] has the means of consumption in his possession before production, which are necessary for him to live as producer... As proprietor of land he appears as directly provided with the necessary consumption fund. As master in a craft he has inherited it, earned it, saved it up... as an apprentice.. he... shares the master's fare in a patriarchal way...
(4) Dissolution likewise at the same time of the relations in which the workers themselves, the living labour capacities themselves, still belong directly among the objective conditions of production, and are appropriated as such - i.e. are slaves or serfs..." [p.497-8].
"The same process which placed the mass face to face with the objective conditions of labour as free workers also placed these conditions, as capital, face to face with the free workers... The separation of the objective conditions [the means of production] from the classes which have become transformed into free workers necessarily also appears at the same time as the achievement of independence by these same conditions at the opposite pole". [p.503].
"Capital proper does nothing but bring together the mass of hands and instruments which it finds on hand... There can... be nothing be nothing more ridiculous than to conceive this original formation of capital as if capital had stockpiled and created the objective conditions of production - necessaries, raw materials, instrument - and then offered them to the worker, who was bare of these possessions. Rather, monetary wealth in part helped to strip the labour powers of able-bodied individuals from these conditions..." [p.508-9].

Privatisation

"All general conditions of production, such as roads, canals, etc... presuppose, in order to be undertaken by capital instead of by the government which represents the community as such, the highest development of production founded on capital. The separation of public works from the state, and their migration into the domain of the works undertaken by capital itself, indicates the degree to which the real community has constituted itself in the form of capital..." [p.531].
"The highest development of capital exists when the general conditions of the process of social production are not paid out of deductions from the social revenue, the state's taxes - where revenue and not capital appears as the labour fund, and where the worker, although he is a free wage worker like any other, nevertheless stands economically in a different relation - but rather out of capital as capital. This shows the degree to which capital has subjugated all conditions of social production to itself, on one side; and, on the other side, hence, the extent to which social reproductive wealth has been capitalized, and all needs are satisfied through the exchange form; as well as the extent to which the socially posited needs of the individual, i.e. those which he consumes and feels not as a single individual in society, but communally with others - whose mode of consumption is social by the nature of the thing - are likewise not only consumed but also produced through exchange, individual exchange". [p.532].

Notes for our discussion on pp. 458-533

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Labour-power and labour

In the earlier parts of the Grundrisse, Marx makes no distinction between labour-power and labour. In the later parts, that distinction appears. The first clear statement is in these pages.
"Living labour itself appears as alien vis-à-vis living labour capacity, whose labour it is, whose own life's expression it is, for it has been surrendered to capital in exchange for objectified labour, for the product of labour itself. Labour capacity relates to its labour as to an alien". [p.462].

Capital as ongoing concern, and capital as first emerging

Once capitalism is up and going, it reproduces its own conditions. "Capital turns into capitalist" [p.462] and continuously nourishes itself; "living labour... after production... has become poorer by the life forces expended, but otherwise begins the drudgery anew..." [p.462-3].
But initially? How does capitalism get up and going in the first place?
Marx look at the "conditions... which have... arisen... historically, for money to become capital and labour to become capital-positing, capital-creating labour, wage-labour" [p.463].
First he defines more strictly what he means by wage-labour:
"(1)... living labour capacity... separated from the means of living labour as well as from the means of existence...
(2) ... accumulation... sufficiently large... for the absorption of surplus labour...
(3) a free exchange relation - money-circulation - between both sides...
(4) ... money-making as the ultimate purpose..." [p.463-4].

Analysis of the present, and description of history

On pages 460-1, Marx writes:
"In order to develop the laws of bourgeois economy... it is not necessary to write the real history of the relations of production. But the correct observation and deduction of those laws... always leads to primary equations - like the empirical numbers e.g. in natural science - which point towards a past lying behind this system. These indications, together with a correct grasp of the present, then also offer the key to the understanding of the past - a work in its own right... This correct view likewise leads at the same time to the points at which the suspension of the present form of production relations gives signs of its becoming..."
What Marx means here, I think, is:
(1) Once capitalism is up and going, it reproduces its own conditions. That process of reproduction has its own logic, and can be analysed as such without having to describe the whole history of how it got going.
In fact, Marx is highly critical of bourgeois economists who "attempt... to legitimise [capital] by formulating the conditions of its becoming as the conditions of its contemporary realisation, i.e. presenting the moments in which the capitalist still appropriates as non-capitalist... as the very conditions in which he appropriates as capitalist". [p.460].
Here Marx has in mind the sort of bourgeois economics which analyses production as requiring two inputs. The capitalist brings the means of production, as the fruit of saving and thrift. The worker brings nothing but his or her brains and brawn. Naturally, what's produced must be distributed in proportion to the inputs, so the capitalist having brought the impressive factory and the shiny equipment gets more than the feckless worker.
This approach skates over the fact that the factory and the equipment are nothing other than the material form of recent years' surplus-labour, and suggests instead that they have been accumulated by "saving" by the capitalist, in the same sort of way as many early capitalists were indeed small craft-workers or tenant-farmers who saved a sufficient pile from their own labour to be able to launch out on a larger scale.
(2) The reference to natural science is cryptic, but I think it may refer to such things as the fact that the equation for the movement of objects falling under gravity near the earth's surface contains a number, 9.81 metres/second/second, which for the purposes of that equation is just a bald fact. The number points us to further research into why it is 9.81 and not anything else, i.e. towards an investigation of the more general laws of gravity. Marx cannot have had anything in mind like Martin Rees's "just six numbers" - the remark by a present-day cosmologist that the viability of the universe depends on six physical constants having more or less the values which they do have, although, as far as we can tell at present, there is no logical or physical reason why they could not have had different values.
(3) Although capitalism, once underway, has its own logic, it is not a perfect, stable, conflict-free logic. On the contrary. Thus, Marx argues, investigation of the logic of capitalism once fully underway will point towards both the tendencies within it which will lead to the overthrow of capitalism, and to the special conditions which must have been needed for it to arise in the first place.
Marx makes a similar point more crisply in Capital, chapter 28:
"The dull compulsion of economic relations completes the subjection of the labourer to the capitalist. Direct force, outside economic conditions, is of course still used, but only exceptionally. In the ordinary run of things, the labourer can be left to the 'natural laws of production', i.e. to his dependence on capital, a dependence springing from, and guaranteed in perpetuity by, the conditions of production themselves. It is otherwise during the historic genesis of capitalist production. The bourgeoisie, at its rise, wants and uses the power of the state... to keep the labourer himself in the normal degree of dependence".

Capital without wage-workers? Wage-payment without capitalist wage-labour?

It is possible for capitalists to emerge without any large number of wage-workers. For example, merchant capitalists. Another example: "slavery is possible at individual points within the bourgeois system of production" [p.464]; "the plantation owners in America... are capitalists... based on their existence as anomalies within a world market based on free labour" [p.513].
Generalised wage-labour - wage-labour as the main form of deployment of labour - is impossible without capital; and generalised capital is impossible without wage-labour.
But sometimes large numbers of workers can be paid in the wage-form without being capitalist wage-workers. Workers living from a wage, salary, stipend, or fees are not necessarily wage-workers working for capital. For centuries there are many such workers, paid from revenue rather than capital.
"The entire class of so-called services from the bootblack up to the king falls into this category. Likewise the free day-labourer... In Asiatic societies... whole cities arise... from the exchange of [the monarch's] revenue with the 'free hands'... The pay of the common soldier is also reduced to a minimum... but he exchanges the performance of his services not for capital, but for the revenue of the state..." [p.467].
"In bourgeois society itself, all exchange of personal services for revenue - ... cooking, sewing etc., garden work etc., up to and including... civil servants, physicians, lawyers, scholars, etc. - belongs under this rubric, within this category..." [p.468].

Relevance of these distinctions in developed capitalist society?

Marx does not coin a term for this category of "wage-workers for revenue". In developed capitalist society, broadly speaking, all of what Marx elsewhere calls capitalistically unproductive wage-labourers fall into this category - health and education workers in the public domain; finance, retail, and sales workers; civil servants, etc. They constitute a large and growing proportion of the workforce, and work for capitalists or state-capitalists under conditions essentially similar to those of the capitalistically productive wage-workers. They may even be able to choke off the flow of surplus-value by going on strike: finance and retail workers can do that, although they do not strictly speaking produce surplus-value.
A question is posed. Maybe, historically, it is important to distinguish between the growth of large bodies of "wage-workers for revenue" - servants, porters, etc. - and the growth of wage-labour as the basis of production. But is the analytical distinction within the working class today, between capitalistically productive and capitalistically unproductive wage-workers, of strategic consequence? I think not.
Doctors, lawyers, accountants, and so on, working for fees, remain a distinct category, petty-bourgeois, more akin to independent craft workers or workshop-masters than to wage-workers.

Relevance to debates about Stalinism

What light does this discussion shed on the debates about Stalinism? Your conclusion as to whether the workers in the Stalinist states were wage-workers or not depends, up to a point, on how much you reckon Marx's third condition, "a free exchange-relation - money-circulation - between both sides", must be understood as requiring a fully, or nearly fully, free market, or only as requiring that the relationship be mediated through money, perhaps on a very imperfect market.
In fact labour markets are extremely "imperfect" in almost all capitalist states - for varying reasons, sometimes to do with trade unions - and the basic development of the concept of wage-labour presupposes only the money-relationship, not any particular level of freely-competitive price-setting, nor any particular level of individual legal freedom going with the money-relationship beyond the requirement that the worker not be a slave or a serf legally annexed to another individual.
That the worker is a "slave" to "capital in general" does not contradict wage-labour. "The free worker... sells the particular expenditure of force to a particular capitalist, whom he confronts as an independent individual. It is clear that this is not his relation to the existence of capital as capital, i.e. to the capitalist class". [p.464].
Logically, you could build on Marx and argue that in the USSR the bureaucrats formed a state-capitalist class while exploiting by methods other than wage-labour, because of their "existence as anomalies within a world market based on free labour". (That was approximately Tony Cliff's idea, though his summary was that the whole economy was capitalist despite no wage-labour). The more common view (e.g. of some Regulation School writers) that the Stalinist USSR was a wage-labour society, but not a capitalist one, seems harder to mesh with Marx's argument.

"Capital is the existence of social labour"

Before going on to his main discussion of pre-capitalist economic formations, Marx outlines an idea which he will summarise tersely in Capital, chapter 13.
"The productive power developed by the labourer when working in cooperation, is the productive power of capital... it appears as a power with which capital is endowed by Nature - a productive power that is immanent in capital".
The idea is expressed at greater length, and perhaps more vividly, in the Grundrisse.
"The combination of this labour appears... subservient to and led by an alien will and an alien intelligence - having its animating unity elsewhere... Just as the worker relates to the product of his labour as an alien thing, so does he relate to the combination of labour as an alien combination, as well as to his own labour as an expression of his life, which, although it belongs to him, is alien to him and coerced from him... Communal or combined labour... is... posited as an other towards the really existing individual labour - as an alien objectivity (alien property) as well as an alien subjectivity (of capital)... Capital... is the existence of social labour" [p.470-1].
"The collective power of labour, its character as social labour, is... the collective power of capital. Likewise science. Likewise the division of labour... All social powers of production are productive powers of capital, and it appears as itself their subject. The association of the workers, as it appears in the factory, is therefore not posited by them but by capital. Their combination is not their being, but the being of capital. Vis-à-vis the individual worker, the combination appears accidental. He relates to his own combination and cooperation with other workers as alien, as modes of capital's effectiveness". [p.585].

The sequence of pre-capitalist societies

Marx now goes on to look at the historical steps in the emergence of wage-labour and capital. Central, he asserts, is the separation of the worker from the land.
"Above all... dissolution of small, free landed property as well as of communal landownership resting on the oriental commune". [p.471].
When Marx discusses this issue in Capital, he looks more or less exclusively at the processes leading to the breakdown of feudal society and the emergence from it of widespread wage-labour and capitalist production.
"The economic structure of capitalistic society has grown out of the economic structure of feudal society. The dissolution of the latter set free the elements of the former". [Chapter 26].
In the Grundrisse, perhaps because Marx has not narrowed his focus enough yet, and is making notes for an overview of the whole of economic history, the approach is different. Marx discusses a wide variety of "forms which precede capitalist production", without any particular emphasis on feudalism.
Moreover, the discussion in the Grundrisse does not present the picture of a tidy sequence of modes of production, each emerging duly from the previous one, in a regular way, which is suggested by a famous sentence in the 1859 Preface to a Contribution to the Critique of Political Economy.
"In broad outline, the Asiatic, ancient, feudal and modern bourgeois modes of production may be designated as epochs marking progress in the economic development of society".
(Stalinist orthodoxy would later make this sequence even more mechanical, by erasing the Asiatic variant).
In the Grundrisse, Marx gives a picture of three variants based on communal landownership, none of which is "primitive communism", and none of which stands logically "after" the others. He then describes slavery and serfdom as representing breakdowns of systems of communal landownership.

The three communal forms

All three forms start from the "presupposition" of some form of clan communities and patches of land belonging to them. Then:
(1) The "Asiatic" form. The despot, "the comprehensive unity standing above all these little communities appears as the higher proprietor or as the sole proprietor; the real communities hence only as hereditary possessors... The surplus product... automatically belongs to this highest unity [the despot]... Clan or communal property exists in fact as the foundation, created mostly by a combination of manufactures and agriculture within the small commune, which thus becomes altogether self-sustaining... A part of their surplus labour belongs to the higher community... and this surplus labour takes the form of tribute etc., as well as of common labour for the... despot" and religious purposes. [p.473].
Sub-variants: labour within the communities may be organised communally, or may be mostly individual. There may be "a more despotic or a more democratic" organisation of the community. Aqueducts and means of communication, organised by the despot, may or may not play a big role.
(2) The "Roman" form. This "presupposes as base not the countryside, but the town as an already created seat (centre) of the rural population (owners of land). The cultivated field here appears as a territorium belonging to the town; not the village as mere accessory to the land". [p.474]. The society is dominated by war between communes over land. "Hence the commune consisting of families initially organized in a warlike way - as a system of war and army... The concentration of residences in the town, basis of this bellicose organization... Communal property - as state property, ager publicus - here separated from private property... Membership in the commune remains the presupposition for the appropriation of land and soil, but, as a member of the commune, the individual is a private proprietor." [p.474-5].
(3) The "Germanic" form. "In the Germanic form, the agriculturist not citizen of a state, i.e. not inhabitant of a city; [the] basis [is] rather the isolated, independent family residence, guaranteed by the bond with other such family residences of the same tribe, and by their occasional coming-together to pledge each others' allegiance in war, religion, adjudication etc. Individual landed property here appears neither as a form antithetical to the commune's landed property, nor as mediated by it, but just the contrary. The commune exists only in the interrelations among these individual landed proprietors as such... [It] is really the common property of the individual proprietors, not of the union of these proprietors endowed with an existence separate from themselves, the city itself". [p.484-5]
The three forms produce different relations of town and country:
"The history of classical antiquity is the history of cities, but of cities founded on landed property and on agriculture; Asiatic history is a kind of indifferent unity of town and countryside (the really large cities must be regarded here merely as royal camps...); the Middle Ages (Germanic period) begins with the land as the seat of history, whose further development then moves forward in the contradiction between town and countryside". [p.479].

Emancipation from the commune

In all these forms, the individual is submerged in the clan. Marx again restates his views on the emptiness and alienation characteristic of capitalist society, and at the same time the immense potential for future emancipation incubated in it, and the futility of backward-looking romantic reactions. Far from Marx endorsing any sort of beehive-communism, he exalts the emancipation of the individual from the commune as the precondition for the emancipation of human creative powers.
The same sort of idea would be developed later, by Russian Marxists like Lenin with no knowledge of the Grundrisse, in their insistence against the populists that the breakdown of the old Russian village community, the mir (seen by the populists as the basis to create a special Russian socialism), was progressive.
Lenin: "Tied to their allotment, to their tiny 'village community,' [the peasants] were completely fenced off even from the peasants of the neighbouring village community by the difference in the categories to which they belonged (former landowners’ peasants, former state peasants, etc.), [etc.]. Capitalism for the first time broke down these purely medieval barriers—and it was a very good thing that it did... Capitalism destroys local seclusion and insularity, and replaces the minute medieval divisions among cultivators by a major division, embracing the whole nation, that divides them into classes occupying different positions in the general system of capitalist economy.
"The mass of cultivators were formerly tied to their place of residence by the very conditions of production, whereas the creation of diverse forms and diverse areas of commercial and capitalist agriculture could not but cause the movement of enormous masses of the population throughout the country; and unless the population is mobile... there can be no question of developing its understanding and initiative" [Lenin, The Development of Capitalism in Russia, chapter 4].
Marx, in the Grundrisse: "The reproduction of presupposed relations... of the individual to his commune, together with a specific, objective existence, predetermined for the individual, of his relations both to the conditions of labour and to his co-workers, fellow tribesmen etc. - are the foundation of development, which is therefore from the outset restricted...
Great developments can take place here within a specific sphere. The individuals may appear great. But there can be no conception here of a free and full development either of the individual or of the society, since such development stands in contradiction to the original relation.
Do we never find in antiquity an inquiry into which form of landed property etc. is the most productive, creates the greatest wealth? Wealth does not appear as the aim of production, although Cato may well investigate which manner of cultivating a field brings the greatest rewards, and Brutus may even lend out his money at the best rates of interest. The question is always which mode of property creates the best citizens. Wealth appears as an end in itself only among the few commercial peoples -monopolists of the carrying trade - who live in the pores of the ancient world, like the Jews in medieval society...
Thus the old view, in which the human being appears as the aim of production, regardless of his limited national, religious, political character, seems to be very lofty when contrasted to the modern world, where production appears as the aim of mankind and wealth as the aim of production.
In fact, however, when the limited bourgeois form is stripped away, what is wealth other than the universality of individual needs, capacities, pleasures, productive forces etc., created through universal exchange? The full development of human mastery over the forces of nature, those of so-called nature as well as of humanity's own nature? The absolute working-out of his creative potentialities, with no presupposition other than the previous historic development, which makes this totality of development, i.e. the development of all human powers as such the end in itself, not as measured on a predetermined yardstick? Where he does not reproduce himself in one specificity, but produces his totality? Strives not to remain something he has become, but is in the absolute movement of becoming?
In bourgeois economics - and in the epoch of production to which it corresponds - this complete working-out of the human content appears as a complete emptying-out, this universal objectification as total alienation, and the tearing-down of all limited, one-sided aims as sacrifice of the human end-in-itself to an entirely external end. This is why the childish world of antiquity appears on one side as loftier..." [p.487-8].
"In this [old] community, the objective being of the individual as proprietor, say proprietor of land, is presupposed, and presupposed moreover under certain conditions which chain him to the community, or rather form a link in his chain. In bourgeois society, the worker e.g. stands there purely without objectivity, subjectively; but the thing which stands opposite him has now become the true community, which he tries to make a meal of, and which makes a meal of him". [p.496].

Slavery and serfdom

Marx presents slavery as an element in Roman society destroying its foundations.
"Among the Romans, the development of slavery, the concentration of land possession, exchange, the money system, conquest etc., although all these elements up to a certain point seemed compatible with the foundation, and in part appeared merely as innocent extensions of it..." [were destructive]. {p.487].
More generally, he suggests that both slavery and serfdom are phenomena of the decay of economic systems based on the local communities.
"Slavery, bondage etc., where the worker himself appears among the natural conditions of production for a third individual or community.... - i.e. property no longer the relation of the working individual to the objective conditions of labour - is always secondary, derived.." [p.495-6].

The transition to capitalism

Marx then rather abruptly discusses the transition to capitalism as one from feudal society, without having yet made more than passing remarks about feudal society, or about the transition from the old communal-based systems to feudalism.
The transition "presupposes a process of history which dissolves the various forms in which the worker is a proprietor, or in which the proprietor works. Thus above all:
(1) Dissolution of the [worker's] relation to the earth - land and soil... [of] all forms... [of] community, whose members, although there may be formal distinctions between them, are, as members of it, proprietors...
(2) Dissolution of the relations in which [the worker] appears as proprietor of the instrument [of production]... Property of the worker in the instrument [of production] presuppose[s] a particular form of the development of manufactures, namely craft, artisan work; bound up with it, the guild-corporation system etc...
(3) [Dissolution of situations where the worker] has the means of consumption in his possession before production, which are necessary for him to live as producer... As proprietor of land he appears as directly provided with the necessary consumption fund. As master in a craft he has inherited it, earned it, saved it up... as an apprentice.. he... shares the master's fare in a patriarchal way...
(4) Dissolution likewise at the same time of the relations in which the workers themselves, the living labour capacities themselves, still belong directly among the objective conditions of production, and are appropriated as such - i.e. are slaves or serfs..." [p.497-8].
This summary corresponds quite closely with Marx's discussion in Capital, and suggests a much more violent, struggle-filled history of transition to capitalism than some earlier passages in the Grundrisse which hint at pre-capitalist societies being transformed into capitalism by the gradual influence of trade.
Marx then comments: "But the question arises, on the other side, which conditions are required so that he finds himself up against a capital?" [p.498].
After much digression, his answer is: the same conditions which create wage-labour also create capital.
"The same process which placed the mass face to face with the objective conditions of labour as free workers also placed these conditions, as capital, face to face with the free workers... The separation of the objective conditions [the means of production] from the classes which have become transformed into free workers necessarily also appears at the same time as the achievement of independence by these same conditions at the opposite pole". [p.503].

The rise of the capitalists: Capital

In Capital, Marx divides his description of the rise of the capitalist producers into two chapters: "Genesis of the Capitalist Farmer", and "Genesis of the Industrial Capitalist".
The capitalist farmer? "In England the first form of the farmer is the bailiff, himself a serf... During the second half of the 14th century he is replaced by a farmer, whom the landlord provided with seed, cattle and implements. His condition is not very different from that of the peasant. Only he exploits more wage-labour... [Then he becomes] the farmer proper, who makes his own capital breed by employing wage-laborers, and pays a part of the surplus-product, in money or in kind, to the landlord as rent.
"So long, during the 15th century, as the independent peasant and the farm-laborer working for himself as well as for wages, enriched themselves by their own labor, the circumstances of the farmer, and his field of production, were equally mediocre. The agricultural revolution which commenced in the last third of the 15th century, and continued during almost the whole of the 16th (excepting, however, its last decade), enriched him just as speedily as it impoverished the mass of the agricultural people...
"[As a result of this polarisation} England, at the end of the 16th century, had a class of capitalist farmers, rich, considering the circumstances of the time". [Chapter 29].
The industrial capitalist? "Many small guild-masters, and yet more independent small artisans, or even wage-labourers, transformed themselves into small capitalists, and (by gradually extending exploitation of wage-labour and corresponding accumulation) into full-blown capitalists..."
But a huge part was played by the creation of large accumulations of wealth by merchant and usurer capital, and by colonial looting. In the cities, traditional restrictions prevented the transformation of those accumulations into productive capital.
"The new manufactures were established at sea-ports, or at inland points beyond the control of the old municipalities and their guilds. Hence in England an embittered struggle of the corporate towns against these new industrial nurseries".
Marx does not expand on the point, but the capitalists that built the new mills in the river valleys of Nottingham and Derbyshire and thereabouts were mostly of middle-class origin.
Richard Arkwright was the son of a barber and wigmaker. James Hargreaves was a weaver and carpenter. Henry Cort was a former clerk, thought to have been the son of a builder. Matthew Boulton's father owned a small metal-working shop. John Wilkinson's father worked at a blast furnace. Josiah Wedgwood's father was the master-potter at the churchyard works in Burslem.

The rise of the capitalists: Grundrisse

"The formation of capital [emerges]... from merchant's and usurer's wealth". [p.505]. But then, so Marx suggests, and so is (generally) the fact, it is not the merchants and usurers who become the industrial capitalists. "The capitalist inserts himself as (historic) middle-man between landed property, or property generally, and labour". [p.505]. Marx mentions the putting-out system, where a merchant became an organiser of production by supplying inputs for weavers and spinners, working in their own homes, and then taking and selling the cloth produced; but even in that form, the merchants involved were usually smaller, rural-based ones, rather than the richest big-city merchants.
A large accumulation of monetary wealth is necessary for capitalist production. "But the mere presence of monetary wealth, and even the achievement of a kind of supremacy on its part, is in no way sufficient for... dissolution into capital to happen". [p.506].
Marx emphasises repeatedly that capital does not create the means of production. "Capital proper does nothing but bring together the mass of hands and instruments which it finds on hand... There can... be nothing be nothing more ridiculous than to conceive this original formation of capital as if capital had stockpiled and created the objective conditions of production - necessaries, raw materials, instrument - and then offered them to the worker, who was bare of these possessions. Rather, monetary wealth in part helped to strip the labour powers of able-bodied individuals from these conditions..." [p.508-9].

Turnover and profit

On pages 518ff, Marx discusses the relation between rate of profit and speed of turnover in a way messed up by confusions which also mark the discussion in Capital (volume 3, chapter 18).
Marx does not distinguish clearly between stock and flow. Capital advanced is a stock, an amount. Profit is a flow, an amount per year or other unit of time. The rate of profit is not just a percentage, but a percentage per year.
Marx sometimes states it as a simplifying assumption that the constant capital is all used up in one time period, so that the stock of constant capital advanced is equal to the flow of constant capital (per unit time period). But this is a very improbable assumption.
The argument on pages 518ff and in Capital volume 3, chapter 18, depends on the idea that a variable capital of a given amount will generate more surplus value if the capital turns over more rapidly. Not necessarily. The real difference for capital between very slow turnover (say, growing a hardwood forest, or building a very large construction project) and fast turnover is that the slow-turnover capitalist needs very much more "working capital" in addition to his fixed capital. The equalisation of the rate of profit will tend to bring him a rate of profit in proportion to the total capital deployed, i.e., all other things being equal, in excess of the surplus value produced in that particular business. There is no special, different, process of equalisation of rates of profit for businesses of different turnover times.
According to Shane Mage's study of the tendency of the rate of profit to fall, in actual capitalist practice the amount of variable capital actually advanced is usually very small, and sometimes zero - i.e. because of workers being paid in arrears, the capitalists need no prior stash of cash to cover that expense. They can recoup enough revenue from sales to cover the wage bill by the time it comes due. This will not be true for capitalists in businesses with very slow turnover.
In these pages, there is also a confusion between speeding up the time of production of each item, and reducing the labour-time embodied in each item. The two often go together, but are not the same. A production process may require very few workers and so very little labour-time per unit of production, but be very slow (growing a hardwood forest, for example). Or it may be very fast, but require a large number of workers, and so a lot of labour-time per unit of production.

Privatisation

From the late 19th century through to the 1970s, it was Marxist orthodoxy that as capitalism progressed, the economic role of the state would inexorably increase. This was not entirely wrong. Vehemently pro-privatisation governments, like Blair's and Howard's, have often nonetheless actually increased the size of the public sector. But they have privatised, and that was not expected.
On pages 530-2 Marx suggests, contrary to the Marxist orthodoxy that grew up after his death, that privatisation is characteristic of the most advanced capitalism.
"All general conditions of production, such as roads, canals, etc... presuppose, in order to be undertaken by capital instead of by the government which represents the community as such, the highest development of production founded on capital. The separation of public works from the state, and their migration into the domain of the works undertaken by capital itself, indicates the degree to which the real community has constituted itself in the form of capital..." [p.531].
"The highest development of capital exists when the general conditions of the process of social production are not paid out of deductions from the social revenue, the state's taxes - where revenue and not capital appears as the labour fund, and where the worker, although he is a free wage worker like any other, nevertheless stands economically in a different relation - but rather out of capital as capital. This shows the degree to which capital has subjugated all conditions of social production to itself, on one side; and, on the other side, hence, the extent to which social reproductive wealth has been capitalized, and all needs are satisfied through the exchange form; as well as the extent to which the socially posited needs of the individual, i.e. those which he consumes and feels not as a single individual in society, but communally with others - whose mode of consumption is social by the nature of the thing - are likewise not only consumed but also produced through exchange, individual exchange". [p.532].
Actually, the historical record suggests that both Marx's argument here, and the 20th century Marxist orthodoxy, are too "broad-brush". The rise of the economic role of the state, and of nationalised industries, was tied up with a drive by the different capitalist nation-states each to create their own more-or-less autonomous integrated industrial base (partly to bolster them for war); the spread of privatisation is tied up with a drive by capitalist states to orient more to the world market and to abandon all projects of more-or-less integrated "capitalism in one country".

Extra note: The "civilising influence of capital"

2006-12-15T07:41:00.000+10:00

Does recognising the "great civilising influence" of capital make Marxists liable to drift to the right?

Marx's repeated returns, in the Grundrisse, to the idea, variously expressed, of the "great civilising influence of capital", prompted a discussion among us of whether this may be a "dangerous idea", liable to make Marxists drift to the right.
Of course many former revolutionaries shift to the right as they get older. No need to look at the Grundrisse to explain that.
Occasionally you get a cluster of ex-leftists who move to the right as a group, using the links and skills they developed as leftists for new purposes. The latest example is the group round Frank Furedi in England, once the Revolutionary Communist Party but now a prominent knot of right-ish media pundits (See Institute of Ideas; Furedi; comment by George Monbiot).
The Furedi group was a very strange little group when leftist, and very unstable in its politics then. It never paid any special attention to the ideas in the Grundrisse on the "civilising influence of capital", nor to the similar ideas in the Communist Manifesto: rather the contrary. There is no reason to connect their evolution, or, say, that of Lyndon LaRouche's group, to the ideas in the Grundrisse or the Communist Manifesto.
There are two historical examples of groups of ex-leftists moving right in a way that had some connection with their appreciation of the "civilising influence of capital".
Many of the "legal Marxists" of the 1890s in Russia - so called because they published works of Marxist theory abstruse enough to be legal under the Tsarist censorship - became bourgeois liberals. Trotsky described the process like this:
"Until the nineties, the greater part of the Russian intelligentsia was stagnating in Populist theories with their rejection of capitalist development and idealization of peasant communal ownership of the land.
And capitalism in the meantime was holding out to the intelligentsia the promise of all sorts of material blessings and political influence. The sharp knife of Marxism was the instrument by which the bourgeois intelligentsia cut the Populist umbilical cord, and severed itself from a hated past. It was this that accounted for the swift and victorious spread of Marxism during the latter years of the last century.
As soon as Marxism had accomplished this, however, it began to irk this same intelligentsia. Its dialectics were convenient for demonstrating the progress of capitalist methods of development, but finding that it led to a revolutionary rejection of the whole capitalist system, they adjudged it an impediment and declared it out of date.
At the turn of the [19th/20th] century, at the time when I was in prison and exile, the Russian intelligentsia was going through a phase of wide-spread criticism of Marxism. They accepted its historical justification of capitalism, but discarded its rejection of capitalism by revolutionary means. In this roundabout way the old Populist intelligentsia, with its archaic sympathies, was slowly being transformed into a liberal bourgeois intelligentsia". [My Life, chapter 10].
Yes, the former radical populists on the way to becoming bourgeois liberals used, as a stepping stone, an element that really was there in Marxist theory. But the element was in the theory because it was in the reality! Denying the reality, and the real effects, of capitalist development, as the populists did, was no answer.
Then in the 1960s, the elderly Max Shachtman, and a small circle of followers, notably Tom Kahn and Don Slaiman, moved from being revolutionary socialists to becoming deeply immersed in Fabian-type politicking within US trade-union officialdom and the Democratic Party. They supported the US-sponsored attempt to invade Cuba at the Bay of Pigs, and semi-supported the Vietnam war. Kahn and Slaiman (though never Shachtman) came to describe themselves as social-democrats, and rose to high places in the AFL-CIO.
Many of Shachtman's former comrades, such as Hal Draper and Julius Jacobson, protested, and remained true to revolutionary socialism. Even of those who moved with Shachtman away from revolutionary socialism, many - Michael Harrington, for example - refused to go with him on Vietnam. Shachtman's little group was given more resonance, however, by the existence in the USA of a veritable milieu of one-time leftists who - one by one, and over three decades - shifted into, and shaped, a particular strand of US bourgeois politics: secular, would-be rationalist, liberal-imperialist. (See Alan Wald's book The New York Intellectuals).
In so far as an element of Marxist theory is involved here, it is the element that says that bourgeois democracy is better, for the working class, than the suppression of independent life for the labour movement, even a suppression justified in leftish, populist, or Stalinist terms. The people involved took that element, and let it swallow the rest of their politics, so that they became just advocates of bourgeois democracy, and sometimes of attempts to "impose" bourgeois democracy through US power across the world.
As with the "legal Marxists", the answer is not and cannot be to try to deny the element of Marxist theory. That element of theory corresponds to an element of reality. The answer is, as Trotsky put it, to hold on to the other side of the "dialectics", which "lead to a revolutionary rejection of the whole capitalist system".
There is another twist to the story with Shachtman and his friends. Another element of theory was implicated in their political drift: and that, paradoxically, was that they largely denied, or rejected, or considered out-of-date, the broad Marxist idea which Marx summarises as "the civilising influence of capital". That influence, they believed, had once existed; but now, since around the First World War, capitalism was in an "epoch of decay". Bourgeois democracy, though valuable, was only a remnant, a residue.
"Paradoxically, the idea of the Epoch Of Decay led Max Shachtman, once the foremost champion of Third Camp politics, to the converse position of supporting US capitalism. As late as 1961 he insisted on the idea of capitalist decline in a flat, straightforward sense by then unusual among Marxists: "The famous 'dynamism' of the Stalinist world... appears... only in contrast to the unarrested decline and helplessness of the capitalist world... [Therefore] so long as the choice before the world is only between these two [capitalism and Stalinism], it is Stalinism - totalitarian collectivism - that will gain, at one or another rate of speed".
Capitalism was "nearing the end of its historical rope", whereas Stalinism was not. (The Bureaucratic Revolution, p.3, 2, 293). Stalinism, with its totalitarian control over the working class and its ability to "solve basic social problems" in its own way (p.338), cut off the possibility of socialism, whereas, so long as this half-dead capitalism survived, the chance remained that its ever-worse decay would be resolved by working-class socialism rather than Stalinism.
The socialist movement was weak. From this gloomy perspective followed not just politically-independent joint action with bourgeois forces to defend democratic rights against Stalinism - which might have the immediate result of preserving bourgeois capitalism, but made working-class sense - but de facto critical rallying to the bourgeois camp.
Oddly, Shachtman's former comrade Hal Draper, who defended a continuing revolutionary socialist perspective against him, never so far as I know explicitly rejected or tackled the idea of capitalist decline" [Workers' Liberty 63. See also the subsequent debate].

Notes for our discussion on pages 266-458

2006-11-29T13:24:00.000+10:00

Exploiting, destructive, civilising, creative...

Reprise

In the Introduction, Marx has discussed method; in the essay on Bastiat and Carey, he has sketched in polemical form his focus on identifying the real subversive, creative impulses within capitalist development; in pages 115-172, he has started his substantive economic discussion by criticising the Proudhonists and showing that any serious critique of capital must also be a critique of the basic social relations involved in exchange-value.
He then moves on to start that critique. Pages 172 to 250 are a draft, or notes, for chapters 1 to 3 of Capital, covering commodities, exchange, and money. In pages 250-266 Marx moves on from money to capital, the terrain of chapters 4 to 6 of Capital.
In pages 266-458 Marx's notes cease to correspond so closely with what he will later write in Capital. These pages correspond roughly to chapters 7 to 15 in Capital, the chapters that move from the labour process (in general) through to the modern factory system, developing the concept of surplus value along the way.
After page 458 Marx will move back to studying the genesis of capitalism - its contrast to, and evolution from, pre-capitalist economic formations (corresponding to chapters 26-31 of Capital).

Outline

Pages 266-274: how, among all the other economic exchanges in capitalist society, the exchange between capital and labour (though obeying the same laws as the other exchanges) has a special, and pivotal, character.
Pages 274-281: interrelation between capital, wage-labour, and landed property.
Pages 282-333: further expansion on the exchange between capital and labour.
Pages 333-401: investigation, through numerical examples, of the relations between labour productivity and surplus value.
Pages 401-424: the problem of how the surplus value is "realised", i.e. of how the capitalist gets to sell the products at a price which brings to him the added value which the workers' labour has contributed. Interspersed in these and later pages are comments on propensity of capitalism to crisis.
Pages 426-433: further numerical examples on similar lines to pages 333-401.
Pages 433-450: equalisation of the rate of profit (what will become the "transformation problem" in Capital volume 3).
Pages 450-458: how capitalist production not only produces goods and services, but, "even more important", reproduces capitalist relations on an ever-expanding scale. (This corresponds to chapter 24 in Capital).

Grundrisse and capital on exploitation

In the Grundrisse, unlike Capital, Marx uses many pages, and much vivid prose, to explain why it is labour, and not anything else, that capital sustains itself from, and to showing how the interchange between labour and capital simultaneously produces wealth for capital and poverty, exclusion, and oppression for labour.
In Capital, Marx is much more laconic about why it is labour that sustains capital.
"In order to be able to extract value from the consumption of a commodity, our friend, Moneybags, must be so lucky as to find, within the sphere of circulation, in the market, a commodity, whose use-value possesses the peculiar property of being a source of value, whose actual consumption, therefore, is itself an embodiment of labour, and, consequently, a creation of value. The possessor of money does find on the market such a special commodity in capacity for labour or labour-power". [Chapter 6].
It just so happens that way, and that's that.
Describing exploitation in Capital, Marx starts off very neutral and "matter-of-fact", and lets his picture of the class oppression involved build up over hundreds of pages, with much empirical input, from chapter 7 to chapters 25 and 32. When he first introduces the concept of surplus value, he starts by imagining that wages are equal to the amount of value added by a worker in a day, and showing that is impossible under capitalism. An insoluble conundrum? No, because in fact the value of labour-power (which underpins wages) is determined by the labour-time embodied in working-class subsistence, not by the labour done by the worker after the capitalist has bought the labour-power.
"The owner of the money has paid the value of a day’s labour-power; his, therefore, is the use of it for a day; a day’s labour belongs to him. The circumstance, that on the one hand the daily sustenance of labour-power costs only half a day’s labour, while on the other hand the very same labour-power can work during a whole day, that consequently the value which its use during one day creates, is double what he pays for that use, this circumstance is, without doubt, a piece of good luck for the buyer, but by no means an injury to the seller". [Chapter 7]
Note the neutral, indeed mollifying, language: "by no means an injury to the seller". Only over hundreds of pages will Marx build up the picture which shows that the market criterion, "by no means an injury to the seller", is only a half, or quarter, or one-tenth truth. In Capital, Marx does not even use the words "exploit" or "exploitation" until chapter 11. Even there, those words are mostly used in a fairly neutral way. Only very briefly, by way of signalling what he will develop later, does he mention the more vivid connotations.
"Capital further developed into a coercive relation, which compels the working class to do more work than the narrow round of its own life-wants prescribes. As a producer of the activity of others, as a pumper-out of surplus-labour and exploiter of labour-power, it surpasses in energy, disregard of bounds, recklessness and efficiency, all earlier systems of production based on directly compulsory labour". [Chapter 11].
It is easy to understand why Marx chose this "objective", take-nothing-for-granted, assert-nothing-until-proved, give-your-opponent-their-strongest-argument approach in Capital. It means, however, that the treatment in the Grundrisse is much more fast-burning and vivid.
It dispels one common misunderstanding about exploitation: that it is an arithmetical problem, a problem of workers having less (of the same sort of thing) and capitalists having more. It makes it easier to understand Marx's comment in the Critique of Gotha Programme. About a clause in the programme which said that the problem with wage-labour was an "iron law" keeping wages too low, he complained that:
"It is as if, among slaves who have at last got behind the secret of slavery and broken out in rebellion, a slave still in thrall to obsolete notions were to inscribe on the program of the rebellion: Slavery must be abolished because the feeding of slaves in the system of slavery cannot exceed a certain low maximum!"
Of course slaves generally did not get enough food. Of course Marx would sympathise with slave revolts even if limited to demanding bigger food rations. Of course it is inherent in the system of capitalist wage-labour that workers do get less. Of course it is right and important that workers struggle to get even a little bit more. But Marx did theory so as to encourage workers to revolt against wage-labour as a whole, not just against low wages, just as, in their time, slaves had eventually revolted against slavery as such, and not just against small food rations.

Capital and labour

Marx's argument that "the real non-capital is labour" [p.274] is couched in very "Hegelian" terms. I'll comment on that later in these notes. Just note, for now, that this "philosophical" argument is wrong, in terms of Marx's later conclusions. In those terms, the "opposite of capital" is not labour. It is labour-power, and the distinction between labour and labour-power is highly important.
In Capital, Marx does not just leave it at the deadpan comment that it just so happens that there is a suitable commodity available, namely labour-power. He follows up immediately with a passage showing that special social relations are required in order that labour-power be thus available. "Nature does not produce on the one side owners of money or commodities, and on the other men possessing nothing but their own labour-power. This relation has no natural basis, neither is its social basis one that is common to all historical periods. It is clearly the result of a past historical development, the product of many economic revolutions, of the extinction of a whole series of older forms of social production". [Chapter 6].
But is it possible to "go behind" the initial deadpan, rabbit-out-of-hat comment that it so happens that labour-power is available and is a commodity such as capital requires for its sustenance? Can the notes in the Grundrisse help us with that?
Maybe. Marx's demonstration [p.271] that capital cannot sustain itself by exchange with ordinary particular commodities does hold (so long as we assume a society where exchange relations are fairly all-encompassing; for centuries before full-scale capitalism, merchant capital was able to sustain itself precisely by "buying cheap and selling dear" in such exchanges with particular commodities, taking advantage of the fact that they were exchanged between communities without fully-developed internal markets and without an impersonal world market connecting them).
Capital must exchange with a commodity whose "use-value possesses the peculiar property of being a source of value". But that labour-power is such a commodity is no happenstance. If labour is the substance of value, then labour-power is the unique commodity whose use-value is to produce new value.

Exploitation

Read Marx. "The exchange between capital and labour, then we find that it splits into two processes which are not only formally but also qualitatively different, and even contradictory:
(1) The worker sells his commodity... for a specific sum of money... (2) The capitalist obtains labour itself.. the productive force...
The worker cannot become rich in this exchange, since, in exchange for his labour capacity as a fixed, available magnitude, he surrenders its creative power, like Esau his birthright for a mess of pottage. Rather, he necessarily impoverishes himself... the creative power of his labour establishes itself as the power of capital, as an alien power confronting him..."
The worker gets a pittance, smaller or greater, but a pittance. The capitalist gets the general, ever-increasing power of human creativity. The exchange produces exclusion and alienation and (relative) poverty for the worker, and spiralling riches for the capitalist. It is not, or not primarily, that it yields less for the worker than for the capitalist. It yields different things for the two classes, and it yields a class opposition between them.

Marx and the working class: the "civilising influence of capital"

While more vivid in its denunciation of capitalist exploitation than Capital is (at least in the early chapters of Capital, where Marx first introduces the concept), the Grundrisse also seems to be at pains to "balance" this with a greater appreciation of what Marx calls the "civilising influence of capital".
I don't think it is really a matter of "balance". Marx is clear that the "positive aspects" of capitalist development are inextricably intertwined with - really, are the same thing as - the "negative aspects". They are the same process looked at from a different angle. And they are "positive" not because they make capitalism not so bad after all, but because they create within capitalism an immense potential for abolishing and going beyond capitalism.
It is precisely the drive to exploit - to extract more and more surplus-labour and then to "realise" it (by selling the products) - that drives the "civilising influence".
"The great historic quality of capital is to create this surplus labour... develop general industriousness as the general property of the new species... develop the productive powers of labour... drive labour beyond the limits of its natural paltriness, and thus create the material elements for the development of the rich individuality...
A system of general exploitation of the natural and human qualities... while there appears nothing higher in itself, nothing legitimate for itself, outside this circle of social production and exchange... Hence the great civilizing influence of capital; its production of a stage of society in comparison to which all earlier ones appear as mere local developments of humanity and as nature-idolatry..."

What makes the working class subversive; and crisis

The Grundrisse marks a decisive shift in Marx's view of the revolutionary role of the working class. And it is a shift which is registered there much more clearly than anywhere else. The same ideas are visible in Capital, in chapter 15, where Marx argues that modern industrial conditions create a more potently and multivalently creative and subversive working class than older conditions, but there they are very much more "tucked away". Quite likely Marx was keeping back a further, finished development of the ideas for the book on wage labour which he planned as a sequel to Capital but never wrote.
In the first text in which he identified the working class as the agency of socialist revolution, his Introduction to the Critique of Hegel's Philosophy of Right (1844), Marx put it like this:
"Where, then, is the positive possibility of a German emancipation?
Answer: In the formulation of a class with radical chains, a class of civil society which is not a class of civil society, an estate which is the dissolution of all estates, a sphere which has a universal character by its universal suffering and claims no particular right because no particular wrong, but wrong generally, is perpetuated against it; which can invoke no historical, but only human, title; which does not stand in any one-sided antithesis to the consequences but in all-round antithesis to the premises of German statehood; a sphere, finally, which cannot emancipate itself without emancipating itself from all other spheres of society and thereby emancipating all other spheres of society, which, in a word, is the complete loss of man and hence can win itself only through the complete re-winning of man. This dissolution of society as a particular estate is the proletariat".
The working class is able to create a new, more human, society because it has been dehumanised and brutalised, "is the complete loss of man". There is nothing but dialectical flourish to explain this postulated transition.
This exposition takes us no further than the hopeful but puzzled comments by Engels in a letter to Marx of October 1844:
"As it is, the workers had already reached the final stage of the old civilisation a few years ago, and the rapid increase in crime, robbery and murder is their way of protesting against the old social organisation. At night the streets are very unsafe, the bourgeoisie is beaten, stabbed and robbed; and, if the proletarians here develop according to the same laws as in England, they will soon realise that this way of protesting as individuals and with violence against the social order is useless, and they will protest, through communism, in their general capacity as human beings. If only one could show these fellows the way! But that’s impossible".
In the Communist Manifesto (1848), Marx has moved forward. Building on the prefigurations of "the brotherhood of man" which he has seen in his association with organised French socialist workers in Paris in 1844, and on the understanding of the importance of trade-union struggles which he has developed from studying the English experience and in his polemic against Proudhon (1846), he adduces positive properties of the working class itself - its self-organisation in economic struggles, its building of links using modern communications, its learning about political action thanks to the bourgeoisie being compelled to draw it into that action - rather than simply postulating it as the negation of capitalist society.
He also distinguishes between the working class, as a revolutionary force, and those who are most brutalised and dehumanised by capitalism, the lumpenproletariat, whom he considers more likely to be reactionary.
Even in the Communist Manifesto, though, Marx has not emancipated himself from the old "iron law of wages" (the idea, commonplace among socialists at the time, that capitalism necessarily limited wages to physical-subsistence level), and so there are still large elements of his view of the working class as the epitome of brutalisation and dehumanisation.
"It is only the most simple, most monotonous, and most easily acquired knack, that is required of him. Hence, the cost of production of a workman is restricted, almost entirely, to the means of subsistence that he requires for maintenance, and for the propagation of his race. But the price of a commodity, and therefore also of labour, is equal to its cost of production. In proportion, therefore, as the repulsiveness of the work increases, the wage decreases..."
In the Grundrisse and in chapter 15 of Capital, Marx argues differently. Developed capitalist production, precisely because of its drive to extract and realise surplus value, has no choice but to "drive labour beyond the limits of its natural paltriness", to replace "labour in which a human being does what a thing could do", to create a workforce of varied and wide potentialities, and also to create new aspirations and needs among the working class.
Marx's discussion of all this in the Grundrisse is, I think, still limited by a tendency to see "crisis" as being, in some rather mysterious way, the thing that will finally trigger all these potentialities. In his book, Marx's Theory of Crisis, Simon Clarke has shown convincingly that, in the years after the Grundrisse, Marx moved decisively away from that equation of revolution with crisis, and came to see revolution more as the culmination of the build-up of subversive working-class potential within capitalism.
Quite a lot of this section of the Grundrisse deals with the propensity of capitalism to crisis, but I think everything on that subject here represents only a very sketchy and initial version of ideas developed much better later (notably in Theories of Surplus Value), and has no independent value.

The limits of "consumerism"?

There can be no doubt about it: in contrast to most socialist thinking, Marx, in the Grundrisse, sees capitalist consumerism as a highly "progressive" force. Of course he was aware of the "other side". Marx could not and did nopt anticipate our contemporary environmental concerns, but he did point out:
"All progress in capitalistic agriculture is a progress in the art, not only of robbing the labourer, but of robbing the soil; all progress in increasing the fertility of the soil for a given time, is a progress towards ruining the lasting sources of that fertility. The more a country starts its development on the foundation of modern industry, like the United States, for example, the more rapid is this process of destruction. Capitalist production, therefore, develops technology, and the combining together of various processes into a social whole, only by sapping the original sources of all wealth - the soil and the labourer". [Chapter 15].
His emphasis, however, was on the way that capitalist development enlarged needs and aspirations, and thus created the force which could eventually make a better society.
Do we need to adopt a more "pessimistic" view today? Although large-scale capitalist agriculture today is actually more careful about the soil than much 19th-century agriculture was, in general capitalist industry imposes a much bigger threat to "the original sources of all wealth" now than in the 19th century.
A long series of studies have shown that increased income and consumption levels did produce more health and happiness up to a certain point, somewhere around the mid-'70s, but since then it is not true that having more stuff in your house - more electronic gadgets, exotic foods, designer clothes - makes you happier, even on average.
We know that, for a fully communist society to be possible, there has to be a certain limit to people's desire to have more stuff. As Trotsky put it: "The deathblow to money fetishism will be struck only upon that stage when the steady growth of social wealth has made us bipeds forget our... humiliating fear about the size of our ration". If, when everyone has enough of the basics, we are still anxiously jostling each other to see who can get the most luxurious car or the newest widescreen tv, then there will be no full communism.
There is plenty of good reason to suppose that the anxious jostling can be got rid of, over generations. Plenty of human societies in history have seen excessive consumption, and outdoing your neighbours, as bad. They have rejected the capitalist credo, "greed is good". Even in present-day capitalist society, bombarded with advertising and all the rest, a fair number of people reject "greed is good".
But then the question is, where's the limit? It doesn't have to be, and can't be, something fixed, but there has to be a ballpark limit. Plainly the limit has to be high enough to give everyone food, clothing, shelter, and reasonable access to culture and travel. Plainly also, if the limit is so high that in any future human society large numbers will have an irrepressible, aching desire to live like Paris Hilton, then communism is impossible.
Maybe the level reached by the better-off sections of the working class in the most prosperous countries by the 1970s marks the approximate limit, and expansion of consumerism beyond that is more regressive than progressive?
On the other hand, back in 1986 Ernest Mandel was debating this issue of limits to consumer desire with Alec Nove, a "market socialist" who insisted that the unlimited nature of consumer desire meant that any future society would have to be dominated by markets - the only alternative being rationing of the scarce desired goods from above, which would bring worse evils than markets would. To prove his case, Mandel had to suggest that there were some consumer goods which people would really not mind doing without. Casting around for an example, he picked on the video cassette recorder, then an expensive new luxury.
"Might it not be preferable to forego the Betamax [i.e. VCR], the second car (perhaps even the first, if adequate public transport were available), the electrical meat-cutting knife, and to work ten hours fewer a week, with much less stress - if the satisfaction of all primary needs were not endangered by such a reduction?" (New Left Review I/159, September-October 1986).
Today, it is not just that almost all working-class people in prosperous countries have VCRs or DVD players. Apparently it's commonplace in Third World shanty-towns to find dwellings which have no running water but still have a TV and VCR, run off pirate cables. In Kabul under the Taliban, one of the things that people would risk terrible reprisals for was to gather in cellars and watch videotapes of the film Titanic on VCRs and TVs carefully hidden from the religious police.
An Indian film-maker once described to me his attempt to shoot footage in a village chosen to be untouched by the 20th century. His researchers found a village in Indonesia which they said fitted the bill. After a difficult journey by boat down a river, he eventually got there, and yes, it did seem untouched. A few hours later he saw another boat come down the river. On the front of it, a sign - "Blockbuster Video".
In short, it would not go down well to tell the working class, even the working class in poorer countries, that communism will be good, but some luxuries like VCRs may be unavailable.
The answer may be that there is a limit, but it is inherently blurred. There will always be new things coming within the limit, but at the same time there will be things going out of it, too. After all, in Marx's day most middle-class families, and even some better-off working-class families, would regard it as ridiculously austere to say that under communism domestic servants would no longer be available.
But again, maybe the expansion of capitalist consumerism in the last 20 years has had as progressive a character as any expansion of capitalist consumerism ever has? VCR, DVD players, iPods, personal computers, the Internet - haven't these all expanded working-class people's culture and cultural aspirations, despite all the dross connected with them?
When considering the way that workers had been able to get "a share of civilization which distinguishes [them] from the slave", Marx adduced "participation in the higher, even cultural satisfactions, the agitation for his own interests, newspaper subscriptions, attending lectures, educating his children, developing his taste etc".
But Marx would have known very well that the workers who used their little discretionary income to read newspapers and books, attend lectures and political or trade-union meetings, visit art galleries, and so on were the minority. So even were those who used it for other "cultural" activities such as the more varied forms of religious service newly available, or sports. The typical new goods of mass consumption at the time were tea, spirits, opium, sugar, processed foods, and mass entertainment of a sort which makes Home And Away or Big Brother look hochkultivierte.
Public executions were still a major form of mass entertainment in England until they were ended as late as 1868. The newer forms of mass entertainment, available in the most prosperous countries, were epitomised by P T Barnum.
Barnum began his career as a showman in 1835 with his purchase and exhibition of a blind and almost completely paralysed African-American slave woman, Joice Heth, claimed by Barnum to have been the nurse of George Washington, and to be over a hundred and sixty years old.
He then ran a museum in New York, where he made a special hit in 1842 with the exhibition of Charles Stratton, the celebrated midget "General Tom Thumb" and the Fiji Mermaid. His collection also included the original Siamese twins, Chang and Eng Bunker.
After a temporary retirement, and a couple of failures, he opened his last enterprise in 1871 - P T Barnum's Grand Traveling Museum, Menagerie, Caravan & Hippodrome, a travelling amalgamation of circus, menagerie and museum of "freaks".

Culture and stupidity

Marx sees great subversive and creative potential in capitalism's creation of a system of "artificial" needs, i.e. of culture. He knows that capitalism intertwines the creation of that system with an inculcation of "stupidity", which includes driving us towards trying to satisfy all needs with ever-more private possessions. "Private property has made us so stupid and one-sided that an object is only ours when we have it – when it exists for us as capital, or when it is directly possessed, eaten, drunk, worn, inhabited, etc., – in short, when it is used by us". "Das Privateigentum hat uns so dumm und einseitig gemacht, daß ein Gegenstand erst der unsrige ist, wenn wir ihn haben, also als Kapital für uns existiert oder von uns unmittelbar besessen, gegessen, getrunken, an unsrem Leib getragen, von uns bewohnt etc., kurz, gebraucht wird". [1844 Manuscripts, section on "Private Property and Communism"].
The emancipation of culture from that "stupidity" can come only through human activity pushing through and beyond capitalist development, not by an attempt to back out of it into an earlier, simpler era.
"Crude communism... how little this annulment of private property is really an appropriation is in fact proved by the abstract negation of the entire world of culture and civilisation, the regression to the unnatural simplicity of the poor and crude man who has few needs and who has not only failed to go beyond private property, but has not yet even reached it. The community is only a community of labour, and equality of wages paid out by communal capital – by the community as the universal capitalist. Both sides of the relationship are raised to an imagined universality – labour as the category in which every person is placed, and capital as the acknowledged universality and power of the community". [1844 MS, ibid].

The "Hegelian Marx"

After his initial statement on labour as the "opposite of capital", the force which sustains capital, Marx devotes pages 275-8 to demonstrating a dialectical interrelation between the three concepts capital, wage-labour, and landed property, each generating a "transition" to the next concept.
The basic problem here is one we've discussed earlier - that Marx tends to present the transition to capitalism in England, where it proceeded through a long and comprehensive "agricultural revolution" long before the industrial revolution, as the universal template. In fact, in most countries the transition has been quite different. In some countries, Tsarist Russia for example, advanced industrial capitalism has grown up in the cities while the transformation of landed-property relations lags long behind.
Another question is raised, that of the "Hegelian", or supposedly "Hegelian", character of the Grundrisse. Martin Nicolaus's foreword to the English translation of the Grundrisse places great stress on this (pp.26-43), and Nicolaus follows up by adding footnotes to the text with references to Hegel's Logic wherever he can.
Nicolaus justifies all this by reference to a letter from Marx to Engels of 14 January 1858.
"I am getting some nice developments. For instance, I have thrown over the whole doctrine of profit as it has existed up to now. In the method of treatment the fact by mere accident I have again glanced through Hegel's Logic has been of great service to me - Freiligrath found some volumes of Hegel which originally belonged to Bakunin and sent them to me as a present. If there should ever be time for such work again, I should greatly like to make accessible to the ordinary human intelligence, in two or three printer's sheets, what is rational in the method which Hegel discovered but at the same time enveloped in mysticism".
This is thin stuff. Notice, for a start, that this January letter comes very late in the process of Marx writing the Grundrisse - he started in August 1857 and finished in March 1858 - yet no-one can separate out the supposedly unenlightened earlier bits of the Grundrisse, before Marx "again glanced through" the Logic, from the supposedly more enlightened later bits.
Nicolaus interprets Marx's comment that he has discovered new things about profit as a reference to Marx's argument that the rate of profit (surplus-value divided by capital advanced) misrepresents exploitation (surplus-value divided by payment for labour-power). Why and how is that argument particularly "Hegelian"? Nicolaus refers to pages 373-86 of the Grundrisse, part of the section we are studying this week; but those pages are largely taken up with numerical examples ("the devil take this wrong arithmetic!", writes Marx [p.377]), and much of what the numerical examples purport to prove is, as we shall see, wrong.
There is a simple explanation for Marx's frequent use of Hegelian tropes in private notebooks, hurriedly scribbled down, like the Grundrisse: namely, that the Hegelian style of argument and exposition was what he had been trained in as a young man. To write "in Hegelian" was for Marx not a peculiar effort, as it would be for us today, but a drilled-in instinct. That style was all-pervading in early writings like The Holy Family and The German Ideology. Marx increasingly eliminated it from his later published works, but when writing private notes he might well fall back on it.
Why did he eliminate the style from his later published works? Out of deference to philistine public opinion? I doubt it. Marx was not that sort of person. The obvious explanation is that his considered opinion was that the style of argument, however suggestive and illuminating it might be in private notes, just did not stand up as scientific demonstration.
My argument is not, of course, that there was no influence of Hegel on Marx - but that it is not the case that more "Hegelian" passages in Marx are necessarily more profound, or more insightful, than non-"Hegelian" ones. Rather the opposite.
Rather than base ourselves, as Nicolaus does, on Marx's offhand remark in his 1858 letter, we would do better to base ourselves on Marx's considered and detailed, but so-often-ignored, argument in his "Critique of the Hegelian Dialectic" of 1844.
Marx there concludes that Hegel's philosophy is pervaded by the "illusions of speculation", by a sort of "false positivism, or of his merely apparent criticism... reason is at home in unreason... There can be [no] question about an act of accommodation on Hegel’s part vis-à-vis religion, the state, etc. [i.e. a pragmatic adaptation in conflict with his basic outlook], since this lie is the lie of his principle".

Marx's numerical examples. C/v and the tendency of the rate of profit to fall

Pages 333-401, and 426-433, are largely taken up with investigations through numerical examples. Marx knew that he was frequently getting himself tangled up here, making comments to himself like "this highly irksome calculation" and "the devil take this wrong arithmetic!"
As regards positive results from all the number-bashing, there is essentially only one: that if labour productivity rises, then so does surplus value, but generally in a smaller proportion. If the working day is 8 hours, and the value of labour-power corresponds to 4 hours' labour time, then a doubling of labour productivity (assuming workers' level of subsistence stays the same) will increase surplus-value by 50%, from 4 hours to 6. And so on.
Embedded among the number-bashing, however, are two wrong assumptions. Marx corrected one in Capital. He never corrected the other.
Firstly, around page 352, Marx follows an argument fairly commonplace in his day - that accumulation of capital will lead to to increased wages, but that this tendency will eventually be counterbalanced by the increased wages encouraging workers to have more children, and allowing more of those children to survive, thus creating a surplus population. Such a "counterbalancing" mechanism would be too slow to be effective (even in Marx's day, 12 years or so before the increased birth-rate filters through into an increased workforce); in the meantime, of course, capital would have accumulated further, so very likely the counterbalancing would not be effective even with delay; and, also in the meantime, the larger number of children to be looked after, however much the workers could be coerced to neglect them, could not but reduce the effective availability of labour-power. Moreover, in modern societies, and even in not-so-modern ones like late 19th century France, capitalist advance means a fall in the working-class birth-rate, not a rise.
in Capital, Marx corrected himself on this point by showing that the accumulation of capital also produces a strong drive to replace workers by machines. "The labouring population therefore produces, along with the accumulation of capital produced by it, the means by which it itself is made relatively superfluous, is turned into a relative surplus-population; and it does this to an always increasing extent. This is a law of population peculiar to the capitalist mode of production; and in fact every special historic mode of production has its own special laws of population, historically valid within its limits and only in so far as man has not interfered with them". [Chapter 25]
More seriously, everywhere in Marx's numerical examples he assumes that the total capital advanced will not decrease when labour productivity rises. Mostly he just assumes it. On page 390 he explains the assumption. He argues that it is "false" to suppose "that, despite the double force of production, capital [would] continue to operate... without spending more for raw material and instrument of labour". In other words, the constant capital (capital advanced for means of production) must increase relative to variable capital (capital advanced for labour-power) as labour productivity rises.
In a footnote on that same page, he considers a possible exception. The "false" supposition is in fact correct "for every industrialist if the force of production doubles not in his branch, but in the branch whose output he uses".
But the possible "exception" is in fact the general rule. There is absolutely no reason to suppose that labour productivity will rise less in the industries producing inputs for other industries than in those producing final consumer goods. Increased labour productivity generally means a reduction of constant capital as measured in labour-time terms, though not necessarily as measured in physical-bulk or in paper-money terms.
The error here is the fundamental one underpinning Marx's mistaken idea of a "tendency of the rate of profit to fall". We will have to discuss that again, when we come to page 748, where Marx declares that tendency to be "in every respect the most important law of modern political economy, and the most essential".
There is evidence that Marx, on a re-reading, would have, maybe not identified his earlier error, but at least crossed out those words as foolish exaggeration. In any case, he never asserted any "tendency of the rate of profit to fall" in any of the many writings which he finished for publication.

Key passages from section 5

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Pages 172-250

"Economy of time, along with the planned distribution of labour time among the various branches of production, remains the first economic law on the basis of communal production. It becomes law, there, to an even higher degree. However, this is essentially different from a measurement of exchange values (labour or products) by labour time. The labour of individuals in the same branch of work, and the various kinds of work, are different from one another not only quantitatively but also qualitatively. What does a solely quantitative difference between things presuppose ? The identity of their qualities. Hence, the quantitative measure of labours presupposes the equivalence, the identity of their quality..." [p.172].

"Exchange value, posited in the character of money, is price..." [p.189]."The commodity is not price, in the way in which its social substance stamped it as exchange value; this quality is not immediately coextensive with it; but is mediated by the commodity’s comparison with money; the commodity is exchange value, but it has a price. Exchange value was in immediate identity with it, it was its immediate quality, from which it just as immediately split, so that on one side we found the commodity, on the other (as money) its exchange value; but now, as price, the commodity relates to money on one side as something existing outside itself... The price is a property of the commodity, a quality in which it is presented as money. It is no longer an immediate but a reflected quality of it". [p.190]. (As it stands, Marx contradicts himself here. He is working towards the concept of value as distinct from exchange value. In the terms used in Capital, commodities are values, but have exchange-values or prices. Exchange-value is synonymous with price if there is a developed money system).

Marx goes on to discuss the different "characters" of money - as measure, as means of exchange, as store of value, etc. - and the relation between price levels and the volume of money in circulation. Anticipating the discussion of capital which he will undertake full-scale some pages later, he distinguishes between C-M-C and M-C-M+.

"If circulation is looked at not as a constant alternation, but as a series of circular motions which it describes within itself, then this circular path appears as a double one: Commodity–Money–Money–Commodity; and in the other direction Money–Commodity–Commodity–Money; i.e. if I sell in order to buy, then I can also buy in order to sell. In the former case money only a means to obtain the commodity, and the commodity the aim; in the second case the commodity only a means to obtain money, and money the aim...
To exchange commodity for commodity makes sense, since commodities, although they are equivalent as prices, are qualitatively different, and their exchange ultimately satisfies qualitatively different needs. By contrast, exchanging money for money makes no sense, unless, that is, a quantitative difference arises, less money is exchanged for more...
It already implies that money functions neither only as measure, nor only as medium of exchange, nor only as both; but has yet a third quality. It appears here firstly as an end in itself... as material representative of wealth". [p.210-3].

Marx notes that for circulation, money-tokens will function just as well as precious metals. "If a fake pound were to circulate in the place of a real one, that would render absolutely the same service in circulation as a whole as if it were genuine". [p.210].

But when money becomes a general material representative of wealth, something more happens.

"Before it is replaced by exchange value, every form of natural wealth presupposes an essential relation between the individual and the objects, in which the individual in one of his aspects objectifies [vergegenständlicht] himself in the thing, so that his possession of the thing appears at the same time as a certain development of his individuality: wealth in sheep, the development of the individual as shepherd, wealth in grain his development as agriculturist, etc.
Money, however... does not at all presuppose an individual relation to its owner; possession of it is not the development of any particular essential aspect of his individuality; but rather possession of what lacks individuality, since this social [relation] exists at the same time as a sensuous, external object which can be mechanically seized, and lost in the same manner. Its relation to the individual thus appears as a purely accidental one; while this relation to a thing having no connection with his individuality gives him, at the same time, by virtue of the thing's character, a general power over society, over the whole world of gratifications, labours, etc.
It is exactly as if, for example, the chance discovery of a stone gave me mastery over all the sciences, regardless of my individuality. The possession of money places me in exactly the same relationship towards wealth (social) as the philosophers' stone would towards the sciences.
Money is therefore not only an object, but is the object of greed [Bereicherungssucht]...
Monetary greed, or mania for wealth, necessarily brings with it the decline and fall of the ancient communities [Gemeinwesen]. Hence it is the antithesis to them. It is itself the community [Gemeinwesen], and can tolerate none other standing above it". [p.221-3].

"But this presupposes the full development of exchange values, hence a corresponding organization of society. In antiquity, exchange value was not the nexus rerum; it appears as such only among the mercantile peoples, who had, however, no more than a carrying trade and did not, themselves, produce. At least this was the case with the Phoenicians, Carthaginians, etc. But this is a peripheral matter. They could live just as well in the interstices of the ancient world, as the Jews in Poland or in the Middle Ages". [p.223].

Marx, continuing, links the development of money into capital with the development of social, value-creating labour.

"It is inherent in the simple character of money itself that it can exist as a developed moment of production only where and when wage labour exists; that in this case, far from subverting the social formation, it is rather a condition for its development and a driving-wheel for the development of all forces of production, material and mental...
As material representative of general wealth, as individualized exchange value, money must be the direct object, aim and product of general labour, the labour of all individuals. Labour must directly produce exchange value, i.e. money. It must therefore be wage labour. Greed, as the urge of all, in so far as everyone wants to make money, is only created by general wealth. Only in this way can the general mania for money become the wellspring of general, self-reproducing wealth. When labour is wage labour, and its direct aim is money, then general wealth is posited as its aim and object. (In this regard, talk about the context of the military system of antiquity when it became a mercenary system.)
Money as aim here becomes the means of general industriousness. General wealth is produced in order to seize hold of its representative. In this way the real sources of wealth are opened up. When the aim of labour is not a particular product standing in a particular relation to the particular needs of the individual, but money, wealth in its general form, then, firstly the individual's industriousness knows no bounds; it is indifferent to its particularity, and takes on every form which serves the purpose; it is ingenious in the creation of new objects for a social need, etc....
General industriousness is possible only where every act of labour produces general wealth, not a particular form of it; where therefore the individual's reward, too, is money. Otherwise, only particular forms of industry are possible. Exchange value as direct product of labour is money as direct product of labour. Direct labour which produces exchange value as such is therefore wage labour. Where money is not itself the community [Gemeinwesen], it must dissolve the community..." [p.223-4].

"It is the elementary precondition of bourgeois society that labour should directly produce exchange value, i.e. money; and, similarly, that money should directly purchase labour, and therefore the labourer, but only in so far as he alienates [veräussert] his activity in the exchange. Wage labour on one side, capital on the other, are therefore only other forms of developed exchange value and of money (as the incarnation of exchange value). Money thereby directly and simultaneously becomes the real community [Gemeinwesen]..." [p.225].

"When the economic form, exchange, posits the all-sided equality of its subjects, then the content, the individual as well as the objective material which drives towards the exchange, is freedom. Equality and freedom are thus not only respected in exchange based on exchange values but, also, the exchange of exchange values is the productive, real basis of all equality and freedom. As pure ideas they are merely the idealized expressions of this basis; as developed in juridical, political, social relations, they are merely this basis to a higher power. And so it has been in history. Equality and freedom as developed to this extent are exactly the opposite of the freedom and equality in the world of antiquity...
In present bourgeois society as a whole, this positing of prices and their circulation etc. appears as the surface process, beneath which, however, in the depths, entirely different processes go on, in which this apparent individual equality and liberty disappear..." [p.245, 247].

Notes from our discussion on pages 172-250

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Money and community

Reprise

In the Introduction, Marx has discussed method; in the essay on Bastiat and Carey, he has sketched in polemical form his focus on identifying the real subversive, creative impulses within capitalist development; in pages 115-172, he has started his substantive economic discussion by criticising the Proudhonists and showing that any serious critique of capital must also be a critique of the basic social relations involved in exchange-value.
He then moves on to start that critique. This whole section of the Grundrisse can be read as a draft, or notes, for chapters 1 to 3 of Capital:
Ch. 1: Commodities
Ch. 2: Exchange
Ch. 3: Money, or the Circulation of Commodities

There are long passages which are false starts, or digressions (some of them amusing, as when we discover on page 178 that a source for Marx's discussion of the qualities, and methods for extracting, gold is a handbook produced by the British Government School of Mines for emigrants going to Australia to join the 1850s gold rush).
But there are also passages where we can gain insight from seeing Marx work out - in detail, over many pages - ideas which he will later express very tersely, in one or two sentences, in Capital. And there are interesting extrapolations and digressions which Marx will omit from Capital as too speculative.

Money and community

In the second category are Marx's comments on money and community. On pages 221-2 Marx shows that money, once developed, goes beyond its "servile role" as "mere medium of circulation". It becomes "the lord and god of the world of commodities".
Before the full development of money, says Marx, the possession of wealth, which was always particular wealth, was also "a certain development of [the owner's] individuality". Possession of money, however, is "possession of what lacks individuality".
When money-relations have spread to cover the whole of society, then money itself "is the community, and can tolerate none other standing above it". "Monetary greed, or mania for wealth, necessarily brings with it the decline and fall of the ancient communities". "Money becomes the real community".
This community becomes "a mere abstraction, a mere external, accidental thing for the individual, and at the same time merely a means for his satisfaction as an isolated individual". But do not suppose that Marx is falling into the romantic critique of capitalism.
In a developed money system, "money becomes the means of general industriousness... the real sources of wealth are opened up... the individual's industriousness knows no bounds; it is indifferent to its particularity, and takes on every form which serves the purpose; it is ingenious in the creation of new objects for a social need". It is to the contradictions in the development of this new human creativity that Marx looks for revolutionary possibilities, not a reversion to the old community.

Wage-labour. What distinguishes capitalism from other money systems

In this section Marx starts to argue that a fully-developed money system must be a wage-labour system. The argument is that a fully-developed money system means that everyone buys their means of subsistence. That presupposes that they are separated from the means of subsistence, but have some way of getting money, i.e. by selling the only thing they have for sale if separated from the means of subsistence, labour-power. They are wage-labourers. If there is wage-labour, then there must also be capital, i.e. the mass of wealth which buys wage-labour and sells products.
Thus [p.205]: "Exchange value presupposes social labour as the substance of all products, quite apart from their natural make-up... Since labour is motion, time is its natural measure... labour as substance and labour-time as the measure of commodities".
[p.223]: "Money... can exist as a developed moment of production only where and when wage-labour exists".
[p.240]: "... exchange-value and the social mode of production corresponding to it".
But this all begs several questions. Marx knows, indeed insists, that money and merchant capital can and do develop partially for centuries, "in the interstices" of pre-capitalist societies, without dissolving them.
Where is the threshhold? The dividing line? The tipping-point? Marx offers other ideas which are relevant - though not really any answers - later in the Grundrisse, and we should discuss the issue again in relation to them.

Edging towards...

In these pages we see Marx edging towards (but not yet arrived at) some of the key ideas in Capital. Notice, by the way, that nowhere in the Grundrisse does he concern himself with "proving the labour theory of value": he simply alludes to it as an obvious, accepted fact, that labour is the substance of value.
1. The difference between value and price. Here, he says exchange-value and price, because he has not yet distinguished between value and exchange-value. Exchange-value is in fact, once a fully monetary economy is in operation, the same as price; value is not only numerically different from price, but a different sort of thing.
2. Abstract and concrete labour. In Capital, Marx will write that the "twofold nature of the labour contained in commodities", the fact that "so far as it finds expression in value, it does not possess the same characteristics that belong to it as a creator of use values", is "the pivot on which a clear comprehension of political economy turns". Here, and in the following pages, he is edging towards this idea - see, for example, his comment that "Exchange value presupposes social labour as the substance of all products" - but he has not actually reached it. The discussion in the Grundrisse strongly suggests, I think, that the distinction between abstract labour and concrete labour, and the distinction between labour and labour-power, are inseparably linked.
By 1861-3, in the manuscripts later published as Theories of Surplus Value, Marx will have clarified his views, via a critique of Ricardo. "Ricardo does not examine the form - the peculiar characteristic of labour that creates exchange-value or manifests itself in exchange-values - the nature of this labour. Hence lie does not grasp the connection of this labour with money or that it must assume the form of money. Hence he completely fails to grasp the connection between the determination of the exchange-value of the commodity by labour-time and the fact that the development of commodities necessarily leads to the formation of money...
[When discussing wages,] Instead of labour, Ricardo should have discussed labour-power. But had he done so, capital would also have been revealed as the material conditions of labour, confronting the labourer as power that had acquired an independent existence and capital would at once have been revealed as a definite social relationship". [Theories of Surplus Value, Part 2, chapter X.A.2 and chapter XV.A.6].
3. Commodity fetishism. For example, a little later on Marx argues that "bourgeois wealth is always expressed to the highest power as exchange value, where it is posited as mediator" - and he compares this with the fact that "in the religious sphere, Christ, the mediator between God and humanity - a mere instrument of circulation between the two - becomes their unity, God-man, and, as such, becomes more important than God; the saints more important than Christ; the popes more important than the saints". [p.332].
4. "Liberty, Equality, Freedom and Bentham". Several pages of this section are given over to developing the idea which Marx will later express crisply, in just eight sentences, at the end of chapter 6 of Capital.
"This sphere... within whose boundaries the sale and purchase of labour-power goes on, is in fact a very Eden of the innate rights of man. There alone rule Freedom, Equality, Property and Bentham. Freedom, because both buyer and seller of a commodity, say of labour-power, are constrained only by their own free will. They contract as free agents, and the agreement they come to, is but the form in which they give legal expression to their common will. Equality, because each enters into relation with the other, as with a simple owner of commodities, and they exchange equivalent for equivalent. Property, because each disposes only of what is his own. And Bentham, because each looks only to himself. The only force that brings them together and puts them in relation with each other, is the selfishness, the gain and the private interests of each. Each looks to himself only, and no one troubles himself about the rest, and just because they do so, do they all, in accordance with the pre-established harmony of things, or under the auspices of an all-shrewd providence, work together to their mutual advantage, for the common weal and in the interest of all.
On leaving this sphere of simple circulation or of exchange of commodities, which furnishes the 'Free-trader Vulgaris' with his views and ideas, and with the standard by which he judges a society based on capital and wages, we think we can perceive a change in the physiognomy of our dramatis personae. He, who before was the money-owner, now strides in front as capitalist; the possessor of labour-power follows as his labourer. The one with an air of importance, smirking, intent on business; the other, timid and holding back, like one who is bringing his own hide to market and has nothing to expect but - a hiding".

Notes on our discussion of pages 135-172

2006-11-28T15:04:00.000+10:00

Labour-money, money, and a beginning of the discussion on money and community

Reprise

In the Introduction, Marx discussed method. He rejected an approach which would start off from supposed eternal constants in favour of probing, from the start, the characteristic structures of the particular society he is dealing with. The Introduction, to my mind, is a bit of a false start, since Marx gets involved in attempts to prove the primacy of production more or less a priori - "confusing to anticipate results which still have to be substantiated", as he would later write - and his actual choice of starting point in Capital had more to do with his analytical conclusions from probing the connection between the basic commodity-form and capital (as he does in his critique of the Proudhonists) than with any a priori argument.
The section on Bastiat and Carey stands somewhat apart from the whole, but there already you find the theme sketched out in the Communist Manifesto but developed in the Grundrisse more than any other of Marx's writings - that working-class socialism builds on and grows out of the potentialities and contradictions generated by capitalist development, that it is a matter of "pushing through" and eventually beyond the limits of capitalist development rather than of trying to stop it being capitalist.
In the Grundrisse proper, Marx starts with a discussion of the free credit scheme of the Proudhonist Darimon. The reasons for that starting point? Perhaps because Proudhonism was a strong force at the time. Perhaps because Marx wanted to "work through" the influence which Proudhon had had on him in Paris in 1844 and late 1843, the time when Marx himself became a communist. Perhaps because he considered the critique of Proudhonism, i.e. of the then-dominant form of "bourgeois socialism", central for creating a distinctively working-class socialism free of bourgeois assumptions and limits.
The first part of the discussion (see pages 115-134) is mostly concerned with Darimon's idea that the banking system can be re-cast so as to eliminate interest and the restrictions on credit caused by limited supplies of the money-standard (gold).
This second part looks in more detail at the idea of "labour-money" or "time-chits". "Labour money" had been advocated long before Proudhon. In fact, there was a real attempt to put it into practice in Britain in the 1830s. A "National Equitable Labour Exchange" was founded in 1832 by Robert Owen. It was located in Grays Inn Road and then in Charlotte Street, in London. It operated as a depot where workers could exchange products they had made by means of labour notes representing hours of work.
The Exchange was initially successful. Branches opened in South London and Birmingham. But gradually they filled up with unsaleable and unwanted furniture. Furniture-makers, apparently, were particularly keen on using the Exchanges - and liable to take along to them the items they had made but been unable to sell on the regular capitalist market. All the branches closed in 1834.

Labour money/ time-chits

Marx argues (pp.137-9) that time-chits cannot resolve the social problems created by money. It is in the nature of commodity exchange that price diverges from value. Prices may be based on labour-time, but - since they are market prices, not the results of a priori calculations of labour times - they may and indeed must oscillate away from labour-time. In any case (p.139) labour productivity is constantly increasing, so any set system of labour-money valuations would immediately become out of date.
To work, a time-chit system presupposes a bank which would in fact be a general ruler of production. In which case, if that bank planned everything, what would be the purpose of the chits? The bank would have to be either "a despotic ruler of production and trustee of distribution" or "a board which keeps the books and accounts for a society producing in common" (notice, having in mind debates about the nature of Stalinism, that Marx assumes that these two possibilities are radically different from each other). (p.115-6).
In short, "This demand [for labour money] can be satisfied only under conditions where it can no longer be raised." [p.172]. Marx is quite clear that fully-developed communism is a society without money. Money cannot be abolished overnight. But to try to replace capitalist money by a sort of socialist money (labour-money) is foolish on two grounds. Firstly, it is unworkable. Secondly, despite the proposal's unworkability, it is too limited, too lacking in radicalism, too tied to present-day assumptions.
(The same sort of criticism is relevant to false-radical demands in other spheres, too. Take the demand for a single secular-democratic state in Israel-Palestine. This can be satisfied only under conditions where the two nations, Israeli Jews and Palestinian Arabs, have already, by some other means, become reconciled and friendly to a very high degree - higher than all the other neighbouring pairs of nations in the world who are not yet ready to merge into a single state. If that reconciliation and friendliness does not exist, then the single state cannot be democratic, but only the product of the conquest of one nation by the other. If the reconciliation and friendliness does exist, why ever would the two friendly nations want to create a new small state rather than both merging into a larger regional unit? "This demand can be satisfied only under conditions where it can no longer be raised".)

Labour-money after the Grundrisse

Surprisingly, after his devastating critique of the labour-money idea, in the Critique of the Gotha Programme (1875) Marx would suggest labour-money as a makeshift to be introduced in "a communist society just as it emerges from capitalist society". The worker "receives a certificate from society that he has furnished such-and-such an amount of labour (after deducting his labor for the common funds); and with this certificate, he draws from the social stock of means of consumption as much as the same amount of labour cost. The same amount of labour which he has given to society in one form, he receives back in another".
This does not make sense, though. Marx had already shown in the Grundrisse that for labour-money to be possible, all labour must be directly social labour. That is, labour must be so organised that all production is equally advanced and efficient, and what is produced corresponds exactly to what is wanted. If such perfect social planning is achieved, then who would want any sort of money, time-chit or otherwise? If it is not, then labour-money won't work.
Actually, in "a communist society just as it emerges from capitalist society", and for a long while after, generations maybe, we will be far from ensuring that all labour is directly social labour to any adequate approximation. There will be nothing for it but to use money for distribution - real money, not labour-money. Karl Kautsky explained this clearly enough while Engels was still alive, in his 1892 exposition of the Erfurt Programme: "It is entirely utopian to imagine that a special system of distribution is to be manufactured... Socialist society... will go on from the point at which capitalist society ceases. The distribution of goods in a socialist society might possibly continue for some time under forms that are essentially developments of the existing system of wage-payment. At any rate, this is the point from which it is bound to start". Engels seems to have tacitly conceded that the labour-certificate scheme in the Critique of the Gotha Programme was a nonsense.
In 1936 Trotsky would criticise the Stalinists for false radicalism as regards the monetary system of the USSR. At the stage the USSR was at, and probably for a very long time, a stable monetary system was necessary, if only for the information it would grant to the planners in their necessarily imperfect schemes to direct the economy. "Such characteristically anarchist demands as the 'abolition' of money, 'abolition' of wages, or 'liquidation' of the state and family, possess interest merely as models of mechanical thinking. Money cannot be arbitrarily 'abolished', nor the state and the old family 'liquidated'. They have to exhaust their historic mission, evaporate, and fall away..."
The Critique of the Gotha Programme does explain very clearly the folly of the "principle" upon which the whole labour-money scheme was founded: returning to the producer the full "proceeds" of his or her labour.
This is a petty-bourgeois, not a working-class demand - a demand tailored to the situation of the small producer producing goods by his or her individual effort, and wanting a "fair" price for them. In developed capitalist production, it is simply impossible to identify the individual "proceeds of labour" of the individual worker. Moreover, the basic drive of socialist development must be to convert more and more of the social product to general social use, not individual consumption.
And the demand for the worker to get the full proceeds of his or her labour necessarily means that all non-workers (children, sick people, elderly people) become dependent on a worker for their subsistence - through the family, in fact. (Thus Proudhon, as Marx put it - in a letter to Annenkov, in 1846, summarising the ideas of The Poverty of Philosophy - "sings the praises of the petty bourgeoise and of the miserable patriarchal amorous illusions of the domestic hearth").

Money and community

Woven into the time-chit argument is a development by Marx of the idea - much returned to by Marx later in the Grundrisse - that a comprehensive money economy is indeed cruelly shaking up human social relations, but that in doing so it is expanding human potentialities and creating the basis for communism.
Very many thinkers in the 19th century were shocked by the way in which developed capitalism was atomising human relations. Engels' comment in The Condition of The Working Class in England (1845) is especially vivid:
"One realises for the first time that these Londoners have been forced to sacrifice the best qualities of their human nature, to bring to pass all the marvels of civilisation which crowd their city... The very turmoil of the streets has something repulsive, something against which human nature rebels. The hundreds of thousands of all classes and ranks crowding past each other, are they not all human beings with the same qualities and powers, and with the same interest in being happy? And have they not, in the end, to seek happiness in the same way, by the same means? And still they crowd by one another as though they had nothing in common, nothing to do with one another...
The brutal indifference, the unfeeling isolation of each in his private interest, becomes the more repellent and offensive, the more these individuals are crowded together, within a limited space. And, however much one may be aware that this isolation of the individual, this narrow self-seeking, is the fundamental principle of our society everywhere, it is nowhere so shamelessly barefaced, so self-conscious as just here in the crowding of the great city. The dissolution of mankind into monads, of which each one has a separate principle, the world of atoms, is here carried out to its utmost extreme.
Hence it comes, too, that the social war, the war of each against all, is here openly declared... People regard each other only as useful objects; each exploits the other, and the end of it all is that the stronger treads the weaker under foot; and that the powerful few, the capitalists, seize everything for themselves, while to the weak many, the poor, scarcely a bare existence remains.
What is true of London, is true of Manchester, Birmingham, Leeds, is true of all great towns. Everywhere barbarous indifference, hard egotism on one hand, and nameless misery on the other, everywhere social warfare..."
Marx had neither forgotten nor become indifferent to this inhumanity. But he had gone beyond simply recoiling from it. He had diagnosed the immense subversive potential within it.
"Within bourgeois society, the society that rests on exchange value, there arise relations of circulation as well as of production which are so many mines to explode it. (A mass of antithetical forms of the social unity, whose antithetical character can never be abolished through quiet metamorphosis. On the other hand, if we did not find concealed in society as it is the material conditions of production and the corresponding relations of exchange prerequisite for a classless society, then all attempts to explode it would be quixotic.)" [p.159]
"Universally developed individuals, whose social relations, as their own communal [gemeinschaftlich] relations, are hence also subordinated to their own communal control, are no product of nature, but of history. The degree and the universality of the development of wealth where this individuality becomes possible supposes production on the basis of exchange values as a prior condition, whose universality produces not only the alienation of the individual from himself and from others, but also the universality and the comprehensiveness of his relations and capacities.
The degree and the universality of the development of wealth where this individuality becomes possible supposes production on the basis of exchange values as a prior condition, whose universality produces not only the alienation of the individual from himself and from others, but also the universality and the comprehensiveness of his relations and capacities. In earlier stages of development the single individual seems to be developed more fully, because he has not yet worked out his relationships in their fullness, or erected them as independent social powers and relations opposite himself." [p.162]

Notes from our discussion on pages 250-266

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From money to capital

Reprise

In the Introduction, Marx has discussed method; in the essay on Bastiat and Carey, he has sketched in polemical form his focus on identifying the real subversive, creative impulses within capitalist development; in pages 115-172, he has started his substantive economic discussion by criticising the Proudhonists and showing that any serious critique of capital must also be a critique of the basic social relations involved in exchange-value.
He then moves on to start that critique. Pages 172 to 250 are a draft, or notes, for chapters 1 to 3 of Capital, covering commodities, exchange, and money.
In pages 250-266 Marx moves on from money to capital, the terrain of chapter 4 of Capital.

Capital

Marx rejects the conventional definition of capital as "accumulated labour" or "objectified labour". "The catch is that if all capital is objectified labour which serves as means for new production, it is not the case that all objectified labour which serves as means for new production is capital. Capital is conceived as a thing, not as a relation..." [p.258]
"To develop the concept of capital", he continues, "it is necessary to begin not with labour but with value, and, precisely, with exchange value in an already developed movement of circulation. It is just as impossible to make the transition directly from labour to capital as it is to go from the different human races directly to the banker, or from nature to the steam engine". [p.259].
This makes it clear that in the opening chapters of Capital, Marx is not developing some sort of historical exposition - simple commodity production in chapter 3, moving on to capitalist production in chapter 4, or something of that short. When he starts off with the commodity, he starts off with the commodity as it appears in "those societies in which the capitalist mode of production prevails", as he explains in the opening sentence of chapter 1.
We cannot understand capital just by deducing it from labour - as, say, "accumulated labour", or "objectified labour" - argues Marx. We have to understand it in relation to the particular form of labour existing in a society with "already developed" domination of exchange-value.
Marx arrives at the following explanation of capital: "Money (as returned to itself from circulation), as capital, has lost its rigidity, and from a tangible thing has become a process. But at the same time, labour has changed its relation to its objectivity; it, too, has returned to itself. But the nature of the return is this, that the labour objectified in the exchange value posits living labour as a means of reproducing it, whereas, originally, exchange value appeared merely as a product of labour. Exchange value emerging from circulation, a presupposition of circulation, preserving and multiplying itself in it by means of labour". [p.263-4].
In Capital, he will be much more terse, discussing the circuit M-C-M+ and its difference from C-M-C, and concluding: "Value therefore now becomes value in process, money in process, and, as such, capital". [Capital, chapter 4].

From pre-capitalist money-economy to capitalism

Marx makes many comments relevant to, but leaves open the answers to, a big question raised by his discussion: the threshhold at which an economy using money steps over into the "general" development of value and "a mode of production founded on capital".
In some places Marx seems to suggest that the gradual influence of increasing trade can change a society bit by bit from pre-capitalist to capitalist. Thus, for example, on page 257 he seems to credit the influence of Netherlands trade in the 16th century with a decisive role in the capitalist transformation of England. He makes a qualification - "the degree to which the movement towards the establishment of exchange-value then attacks the whole of production depends... on the degree of development attained by the elements of domestic production" - but does not expand on it.
Elsewhere he seems emphatic that a certain degree of development of industrial productivity is a precondition for the transition to capitalism. Mere changes of form in the distribution of products - an increasing role for market exchange - will not be sufficient. "Production resting on capital and wage labour differs from other modes of production not merely formally, but equally presupposes a total revolution and development of material production..." [p.277]. "The relation of production... becomes real only with the development of a particular material mode of production and of a particular stage in the development of the industrial productive forces". [p.296-7].
It is hard to see how these two different strands of thought - the impulse from trade, and the impulse from technology - mesh together. Worse, both are too "disembodied", too abstracted from specific class interests and processes of class struggle, to be an adequate account of social transformation. And both sit at some distance from the defining idea stated emphatically by Marx in Capital chapter 6 (and elsewhere): "The essential difference between the various economic forms of society, between, for instance, a society based on slave-labour, and one based on wage-labour, lies only in the mode in which this surplus-labour is in each case extracted from the actual producer, the labourer". Even more emphatically: "The historical conditions of its existence are by no means given with the mere circulation of money and commodities. It can spring into life only when the owner of the means of production and subsistence meets in the market with the free labourer selling his labour-power. And this one historical condition comprises a world’s history. Capital, therefore, announces from its first appearance a new epoch in the process of social production".
Returning to this issue in the last section of Capital, Marx ties the ideas together much more clearly. "The historical movement which changes the producers into wage-workers, appears, on the one hand, as their emancipation from serfdom and from the fetters of the guilds, and this side alone exists for our bourgeois historians. But, on the other hand, these new freedmen became sellers of themselves only after they had been robbed of all their own means of production, and of all the guarantees of existence afforded by the old feudal arrangements. And the history of this, their expropriation, is written in the annals of mankind in letters of blood and fire.
"The industrial capitalists, these new potentates, had on their part not only to displace the guild masters of handicrafts, but also the feudal lords, the possessors of the sources of wealth. In this respect, their conquest of social power appears as the fruit of a victorious struggle... against feudal lordship.." - but simultaneously they waged a struggle to reduce the workers to wage labour. [chapter 26].
Even then, Marx nowhere says anything much about the role of the bourgeois revolution in England in this process. In Capital he notes that the process "in different countries, assumes different aspects, and runs through its various phases in different orders of succession, and at different periods. In England alone, which we take as our example, has it the classic form"; but, the problem is, in most countries of the world the process has had forms so radically different from the "classic" English one that they cannot be understood as slight variations on it.

Three questions

Maybe the later sections of the Grundrisse, on pre-capitalist economic formations, will offer more light on this question.
For the present, we can sketch out three questions.
1. In England, there was an "agricultural revolution" - a big increase in productivity, and a shift to capitalist relations - on the land before the industrial revolution. Marx tacitly takes that as the norm of capitalist development. But in most countries of the world, capitalist development has not happened that way. It has taken root, often in the form of large-scale modern enterprises, in the cities, the ports, the mines, and the plantations, with much of the countryside left in pre-capitalist relations and being transformed only tardily.
Tsarist Russia is a classic example. In such countries, the workers are not only forced off the land by destruction of the "guarantees of existence afforded by the old feudal arrangements" (though that happens, too), but also, and maybe more extensively, positively pulled into the cities by the chances of participating even in some marginal way in advanced bourgeois civilisation. What you get of advanced bourgeois civilisation living in a shanty-town in Sao Paulo, and relying on odd jobs, petty trading, or petty theft, is meagre. But it can still exert an attractive pull on the rural poor. Rather than developing capitalistically, agriculture may in fact wither and collapse as capitalist industry grows. Iraq is a prime example of that.
So, to summarise: a society where the most dynamic element, in the big cities, comprises more or less modern industrial capitalism, but where the majority of the population lives in a hinterland dominated by pre-capitalist and semi-capitalist relations - is it capitalist? Plainly the odd capitalistically-run mine or plantation set up within a pre-capitalist society does not make the whole society instantly capitalist. But, as that capitalist enclave expands - to create railways, ports, cities, ancillary manufacturing industries, and so on - it can become not an enclave but decisive. At what point?
2. At least for England - and Marx evidently considered the history in England "classic" enough to set the template for all other countries - Marx suggests that the influence of external trade can be decisive in pushing a society over the threshhold into capitalism.
Such a view would give direct support to a view that would be influential later, in the 1960s and 1970s, about capitalist development in Latin America.
The official Communist Party doctrine had been that the countries of Latin America were still "feudal" (and so the next stage was an alliance with "patriotic" capitalist interests to carry through a "bourgeois revolution", to be followed only in the remote future by a second socialist "stage").
In polemic against that view, Andre Gunder Frank wrote a book, Capitalism and Underdevelopment in Latin America, which argued that Latin America had been capitalist ever since its integration into the world market by Spanish and Portuguese colonialism. Only, this was a peculiar form of capitalism, "the development of underdevelopment". Despite his furious hostility to the official Communist Parties, Frank was highly influenced by Stalinist modes of thinking, and particularly the Stalinist redefinition of socialism as developmentalism. (He got that from his teacher Paul Baran, a dissident non-CP Stalinist, and Baran's book The Political Economy of Growth). Frank's stated conclusion was that socialist revolution was the only way forward in Latin America, and indeed, not just the only way to liberation, but the only way to economic development. Paradoxically, this led him to the idea that any sort of vigorous economic nationalism in Latin America, however obviously bourgeois its proponents, could not but be somehow proto-socialist or crypto-socialist, and thus deserving of support.
In 1971, Ernesto Laclau wrote a polemic against Frank [New Left Review I/67, May-June 1971]. Laclau's case was that capitalism is a mode of production, not just a society of extensive trade. Capitalism in Latin America was indeed becoming dominant, but relatively recently. Large areas of hinterland remained dominated by pre-capitalist relations; one could very well reject the official CP's stageist strategy without denying that fact.
Whatever about Laclau's politics at the time (a sort of Maoism, as far as I can make out: see his article in New Left Review I/62, July-August 1970) or later (he has become a well-known "post-Marxist", i.e. a species of pretentious bourgeois liberal), and indeed whatever about the rather pompous and logic-chopping character of his article, it seems undeniable that he was essentially right against Frank. In other words, if Marx was right about the role of external trade in the English development - and was he? - the conclusion could not be extended to other countries.
In fact there are plenty of counter-examples. The Black Death of 1348-9 shook up society all across Europe, and sharpened conflict between lords and peasants. In England, at one extreme, the outcome was the abolition of serfdom. By the 15th century, only remnants of feudal relations remained on the land. In Eastern Europe the outcome was the exact opposite. Serfdom which had been gradually weakening was reimposed in fiercer form. As Engels put it, there was "a second serfdom after the middle of the fifteenth century... the general re-introduction of serfdom was one of the reasons why no industry could develop in Germany in the seventeenth and eighteenth centuries... In England at this stage migration to the territory outside the guild took place, but in Germany this was prevented by the transformation of the country people and the inhabitants of the agricultural market towns into serfs" [Letter to Marx, 15/12/1882].
This "second serfdom" was nailed down, and made a very lucrative business for the lords of Eastern Europe, precisely by the growth of international trade. Vast amounts of goods, extracted from the peasants of Eastern Europe by feudal exploitation, were exported via the Baltic to Western Europe.
In Capital, chapter 10 section 2, Marx recognised that involvement in capitalist international trade could actually reinforce and sharpen pre-capitalist relations of exploitation, rather than dissolving them in favour of more modern relations. "As soon as people, whose production still moves within the lower forms of slave-labour, corvée-labour, &c., are drawn into the whirlpool of an international market dominated by the capitalistic mode of production, the sale of their products for export becoming their principal interest, the civilised horrors of over-work are grafted on the barbaric horrors of slavery, serfdom, &c. Hence the negro labour in the Southern States of the American Union preserved something of a patriarchal character, so long as production was chiefly directed to immediate local consumption. But in proportion, as the export of cotton became of vital interest to these states, the over-working of the negro... became... a calculated and calculating system... So was it also with the corvée [feudal labour obligation], e.g., in the Danubian Principalities (now Rumania)".
Capitalist trade does not automatically or quickly generate capitalist relations of production wherever it touches. In Capital volume 3 Marx is at pains to emphasise that merchant capital could coexist with pre-capitalist modes of production for centuries. Moreover, even if proper capitalist production is established in some area, it does not necessarily spread like wildfire.
Marx, in Capital, identified the cities of northern Italy, in the 14th century, as the first site of capitalist production. But he noted that this capitalist development was soon set back - by the rise of the world market! "In Italy, where capitalistic production developed earliest, the dissolution of serfdom also took place earlier than elsewhere. The serf was emancipated in that country before he had acquired any prescriptive right to the soil. His emancipation at once transformed him into a free proletarian, who, moreover, found his master ready waiting for him in the towns, for the most part handed down as legacies from the Roman time. When the revolution of the world-market, about the end of the 15th century, annihilated Northern Italy’s commercial supremacy, a movement in the reverse direction set in. The labourers of the towns were driven en masse into the country, and gave an impulse, never before seen, to the petite culture, carried on in the form of gardening". [Chapter 26].
3. Marx identifies capitalism indiscriminately with a society where exchange-value dominates, and a society where wage-labour dominates. He bridges the gap by arguing that the domination of one must mean the domination of the other. For example, if exchange-value dominates, then the mass of the population have no direct access to the means of subsistence, but have to buy them for money. Since they do not own the means of subsistence, they can get that money only by selling what they do still own - their own labour-power.
On the very broadest scale this equation may work. But in actual history there is a lot of slippage.
Some societies may be more or less dominated by exchange-value while wage-labour is still secondary. In the countryside, the working population has some access to the land, but uses that more to grow cash-crops than to supply itself directly, and moreover every household depends on bits and pieces of paid labour for others as well as its own work on its own land. Paid labour takes place under a variety of relations, but rarely in straightforward capitalist forms. Some of it is tied into quasi-feudal relations of dependence, for example by "debt servitude". Some of it has more the character of an exchange of services between neighbours on not-very-different economic levels than of capitalist employment.
Conversely, take the Stalinist states. Some Marxists deny that wage-labour existed there at all. Leave that debate aside for a moment, and consider the debate among the large and diverse number who agree that wage-labour (in impure, distorted forms) did exist there. Many of them would still say that, because exchange-value did not dominate sufficiently there, the Stalinist states were not (state-)capitalist.
True, the workers were paid wages and had to buy their means of subsistence in the market, or rather in a variety of markets (official publicly-run markets; officially-licensed free markets; grey and black markets). Even if those markets were very far from a neo-classical economist's ideal, they were still markets. But for producer goods the role of the market was much smaller. There were grey markets operating between different enterprises, but to a large degree the enterprise's acquisition of consumer goods depended on government allocation rather than on straightforward purchasing-power. Therefore (they say) not capitalist. Some even argue that state capitalism, in contradistinction to competitive capitalism, is a contradiction in terms, because if the state dominates capital then exchange-value cannot dominate the distribution of producer goods.