Capital class 5: Notes for ch. 16 – 24

Central Indiana Radical Reading Group &
Notes for class 5 (ch. 16-24)

Chapter 16: Absolute and relative surplus-value

One way to understand this chapter is Marx is bringing labor down to a lower level of abstraction.

As capitalism develops, the definition of productive labor widens and narrows. It widens in the sense that it refers to a collective laborer as a whole; all of society cooperates in production. It narrows because capitalism isn’t about the production of commodities, but the production of surplus-value. Before capitalism all work was productive, but under capitalism only that work that produces surplus-value for the capitalist is productive.

To be a productive laborer is “not a piece of luck, but a misfortune” (477). Marx is not making a value judgment here and saying that workers who don’t produce surplus-value aren’t integral to capitalism or society. Instead, he is making an analytical distinction for his study of capitalist production. Non-productive labor is absolutely necessary for capitalism.

We arrive at a definition of formal and real subjection he has hinted at throughout the book. Capitalism takes production and labor relations as it finds them and subjects them to its logic and forms of organization. This is formal subjection. Real subjection occurs when capitalism has introduced relative surplus-value Note that this is a key distinction between the Moore/Aveling translation and others.

It’s crucial to recognize that Marx is utilizing formal and real subjection as a model to analyze capitalism. He is not writing that capitalism has “completely subsumed” society, as some argue. There are all sorts of gaps and outsides, as well as other modes of production.

When capitalism expands into an area, it benefits, Marx says from “a gift, not of Nature, but of a history embracing thousands of centuries” (480). Remember from an earlier class that Marx and Engels dismissed “nature” as something distinct from “humanity” or “society” as early as The German Ideology. Marx is acknowledging that capitalism benefits from previous modes of production, although as he says on page 483 (as he has said several times), that it appears as though this is the productiveness of capital itself.

The last few pages are a polemic against John Stuart Mill (and by consequence, Ricardo), namely because he “confounds the duration of labour-time with the duration of its products” (483).

Chapter 17: Changes of magnitude in the price of labour-power and in surplus-value

Reminder: V of LP is determined the V of necessaries of life habitually required by the average labourer. Can be treated as a constant magnitude, because we can know them.

What changes is the value of this quantity. 1) the expenses of developing that power, 2) natural diversity, difference between the LP of men and women, children an adults. We are excluding these for now.

Relative magnitudes of SV and the P of LP are determined by 3 circumstances: 1) length of working-day, 2) normal intensity of labour, 3) productiveness of labour (486).

Basically, what Marx is doing here is describing different ways to produce surplus value; different strategies capitalist deploy to exploit workers.

Chapter 18: Various Formulae for the rate of SV

The rate of surplus-value = S/V = surplus value/value of LP = surplus labour/necessary labor.

Have been expressed in bourgeois political economy as: Surplus value/working-day = surplus value/value of the product = surplus-product/total product. Same ratio but is expressed as a ratio of labour-times, of the values in which those labour-times are embodied, and of the products in which those values exist. However, in these the degree of exploitation is falsely expressed.

But, according to this, rate of SV could never be 100 percent.

Capital is therefore not only command over labor but, more specifically, command over unpaid labor (500).

Chapter 19: The transformation of the value (and respectively the price) of labour-power into wages

On the surface of capitalism it appears as thought the wage is payment for a certain quantity of labor, but because the commodity labor-power “must at all events exist before it is sold,” the wage is “the quantity of living labor necessary for its production” (502). This is what we might call the “wage fetish,” or the way in which it appears that we are paid for what we produce, when in reality we are paid for the commodity of labor-power that already produced. The capitalist form by nature hides surplus-labor/surplus-value from all those involved in the transaction:

“This phenomenal form, which makes the actual relation invisible, and indeed, shows the direct opposite of that relation, forms the basis of all the juridical notions of both labourer and capitalist, of all the mystifications of the capitalist mode of production, of all its illusions as to liberty, of all the apologetic shifts of the vulgar economists” (505-6).

The juridical superstructure of capital arises out and justifies this material basis, and so the legal system under capitalism is a mystification of what is really happening, and therefore can’t be appealed to other than for reforms.

Chapter 20: Time-wages

In the next two chapters, Marx is giving us some insights into our increasingly precarious situation regarding work (e.g., adjunct labor in higher education).

In this chapter, Marx is ultimately showing how the day is still the basic unit of work. There are to fundamental forms that wages take and bourgeois political economy has not dealt with: time wages and piece wages.

Time wages are “the quotient of the value of a day’s labour-power, divided by the number of hours of the average working-day” (510). This can be of benefit to the capitalist because it frees up capital, as the capitalist doesn’t have to pay a week’s wage but only the “hours during which he chooses to employ the labourer” (510).

At the end of the chapter Marx notes again how the capitalist doesn’t see unpaid labor time at all. It is hidden behind the wage fetish. “The capitalist does not know that the normal price of labour also includes a definite quantity of unpaid labor… The category, surplus labour-time, does not exist at all for him, since it is included in the normal working-day, which he thinks he has paid for in the day’s wages” (514). He does, however, know about overtime, so the capitalist thinks that overtime is a nice gift to the worker. Marx shows how it merely makes up for previous unpaid labour.

Chapter 21: Piece-wages

You can have day and piece wages side by side in the same industry (516). “But it is moreover self-evident that the difference of form in the payment of wages alters in no way their essential nature, although the one form may be more favourable to the development of capitalist production than the other” (517).

For one, piece-wages can cut down the need for supervision (518). When you are paid for what you produce during an hour and not the hour, you discipline yourself.

The capitalist uses piece-wages to drive down the price of labor-power: “Given piece-wage, it is naturally the personal interest of the labourer to strain his labour-power as intensely as possible; this enables the capitalist to raise more easily the normal degree or intensity of labour” (519). The wage of an individual worker increases while the average wages are lowered (520). Workers paradoxically have a stake in lowering average wages.

Piece wages can work against the wage fetish and help the worker realize his exploitation—increases awareness of the alienation from the product, because we see that “his product is paid for, and not his labour-power” (523).

Chapter 22: National differences of wages

The nation is a helpful unit for analyzing capitalist production and the nation-state regulates capitalism in many ways (minimum wage laws, social benefits, etc.). There are differences in wages resulting from differences in productivity (technique, technology, etc.). The same goods produced in different countries will have different values, as will money (as the general equivalent).

Part 7: The accumulation of Capital

This part examines the production of capital as a whole. In order to do so, Marx has to make a series of assumptions. Keep these in mind when reading what follows. He is setting up a model for analysis, and in reality these assumptions do not hold.

  1. Money buys means of production and LP in sphere of circulation.
  2. Production happens, so LP adds value and MOP transfers value to commodity, we end up with “commodities whose value exceeds that of their component parts” and contains a surplus.
  3. These commodities are put into circulation and sold.
  4. The commodity value realized in money, we return to step 1.

In reality the capitalist has to share surplus-value with capitalists, landowners, and others (government). SV splits up into various parts. We are not taking into account these modified forms of SV (this is what happens in volume 3). Not all commodities are sold.

Chapter 23: Simple reproduction

Simple reproduction is when all of the surplus-value produced is consumed by the capitalist. This, of course, never happens. But this chapter is necessary for setting the stage for what follows.

Society has to continuously produce and consume. “… every social process of production is, at the same time, a process of reproduction” (531).

Part of production is reserved for productive consumption (to be thrown back into the production process. “If production be capitalistic in form, so, too, will be reproduction” (531).

Workers advance labor to the capitalist, and are paid a part of the portion of the commodities produced in the form of wages. As such, “variable capital is therefore only a particular historical form of appearance of the fund for providing the necessaries of life, or the labour-fund which the labourer requires for the maintenance of himself and family, and which, whatever be the system of social production, he must himself produce and reproduce” (533).

Marx shows how this happens with previous forms of production.

This all looks like voluntary paid labor that the capitalist advances, but in reality it is not.

From the standpoint of the reproduction of capital, VC “loses its character of a value advanced out of the capitalist’s funds” (534) Furthermore: When the capitalist “has consumed the equivalent of his original capital [that capital advanced to buy MOP and LP], the value of his present capital represents nothing but the total amount of the surplus-value appropriated by him without payment. Not a single atom of the value of his old capital continues to exist” (534-535).

In other words, even if we assume that the capitalist is owed surplus-value because they are the ones who advanced the capital, after a few production cycles this has all been returned, and after another cycle or two surplus has been returned. As such, even under bourgeois assumptions there is no good reason for the capitalist to continue always to appropriate the surplus product, rather than the workers.

Laborer consumes 1) in the process of production, consumes MOP productively, 2) individual consumption (536).

When considering the capitalist reproduction process as a whole, we see that capitalists profit from both forms of consumption: 1) by augmenting value, and 2) by realizing the values produced sells the commodities to laborers (536): “From a social point of view, therefore, the working-class, even when not directly engaged in the labour-process, is just as much an appendage of capital as the ordinary instruments of labor” (538).

Marx is showing how the class relation is reproduced again and again through the capitalist mode of production. However, the state is also necessary, and Marx brings this up specifically with the case of surplus population and how police are necessary to repress discontent (541, here he is quoting The Times).

Thus, capitalism is a process of producing commodities, surplus-value, and the capitalist relation (542).

Chapter 24: Conversion of surplus-value into capital

Having already seen how SV comes from capital, we have to see how capital comes from SV. Taking SV and turning it into capital “is called accumulation of capital” (543). Here we begin to see how “simple reproduction” is only possible in theory.

A part of surplus-value must be applied to the production of additional means of production and labor: “Fro a concrete point of view, accumulation resolves itself into the reproduction of capital on a progressively increasing scale. The circle in which simple reproduction moves, alters its form… changes into a spiral” (545).

What the workers create one year is the capital that will exploit them the next year, “and this is what is called: creating capital out of capital” (546).

“The exchange of equivalents… has now become turned around in such a way that there is only an apparent exchange. This is owing to the fact, first, that the capital which is exchanged for LP is itself but a portion of the product of others’ L appropriated without an equivalent; and, secondly, that this capital must not only be replaced by its producer, but replaced together with an added surplus” (547). The law serves not just commodity production but “capitalist appropriation” (551).

Section 2: Here Marx is addressing Adam Smith’s wrong assumption (that Ricardo and others take up) that all capital produced transforms into variable capital, which is then spent on goods produced.

Section 3: Except as the personification of capital the capitalist “has no historical value, and no right to that historical existence” (555). The capitalist is driven only by value production, by exchange-value and not use-value. As the personification of capital, the capitalist “forces the development of the productive powers of society, and creates those material conditions, which alone can form the real basis of a higher form of society, a society in which the full and free development of every individual forms the ruling principle” (555). Here Marx is saying that the capitalist builds the material foundation of socialism.

The capitalist acquires riches not by hoarding but by exploiting (557). “Accumulate, accumulate! That is Moses and the prohpets!… Accumulation for accumulation’s sake, production for production’s sake: by this formula classical economy expressed the historical mission of the bourgeoisie, and did not for a single instant deceive itself over the birth-throes of wealth” (558).

The capitalist doesn’t get rich by abstinence, but by setting in motion the means of production and labor-power. Capitalists can’t produce surplus-value through abstinence.

Section 4: The magnitude of surplus-value determines the magnitude of accumulation (more surplus-value, more accumulation) (561). Surplus-value goes into a consumption fund and an accumulation fund. As capital accumulates, as its scale increases, it becomes more elastic (and crises will therefore be more generalized and extreme) (570).

Section 5: Classical economy imagined “social capital as a fixed magnitude of a fixed degree of efficiency” (thanks Jeremy Bentham). Capital is constantly in motion and is necessarily expansive.