Sunday, April 17, 2016

Marx’s Capital, Volume 1, Chapter 26: A Critical Summary

This chapter begins Part 8 of Capital called “So-Called Primitive Accumulation” (comprising Chapters 26, 27, 28, 29, 30, 31, 32, and 33).

Chapter 26 of volume 1 of Capital is called “The Secret of Primitive Accumulation” and examines how capital was first accumulated before surplus value. In other words, this looks at the historical process by which feudalism was transformed into capitalism, and how peasants were stripped of any means of production and made into free wage-labourers.

Money and commodities per se do not function as capital, but need to be transformed into capital (Marx 1990: 874).

It is important to remember Marx’s definition of “capital” in this context. For Marx, money (M) in the formula M–C–M′ (where M′ = money plus an increment), describing the capitalist mode of production, is defined as capital (Marx 1990: 250). As Marx says, there is “a palpable difference between the circulation of money as capital, and its circulation as mere money” (Marx 1906: 166). Capital is a type of “value in motion” that is used by capitalists to create more value, but the “value in motion” can appear in the form of either money or commodities (Harvey 2010: 90). So, for Marx, capital is money or commodities (both with embodied labour value) used to create more value by employing labour-power to produce commodities, and in the process involving the extraction of surplus-value. That is, capital is a certain sum of value repeatedly “being transformed from money to commodities and back again” to produce more value (Brewer 1984: 35).

Marx explains:
In Chapter 4 of Capital, however, Marx stated the following:
First, Marx’s belief that capitalism will continue to create proletarians on a “continually extending scale” is also consistent with his prediction that the working class will continue to grow and grow until the collapse of capitalism (though this did not happen, as the working class as a class stabilised and the middle class became larger and larger).

Secondly, early Western European capitalism began with merchants in long distance trade and banking.

But, in other passages (despite the one above) in Capital, Marx does not regard early merchants and usurers as proper capitalists.

In Chapter 5, Marx states that “merchants’ capital and interest-bearing capital are derivative forms, and at the same time … these two forms appear in the course of history before the modern standard form of capital” (Marx 1906: 183).

But, since the business activities of merchants only take place “within the sphere of circulation” (Marx 1906: 182) and “surplus-value cannot be created by circulation” (Marx 1906: 183), merchants do not create surplus value and cannot be true capitalists in Marx’s sense of this term.

For example, if a merchant capitalist buys commodities for $100 and sells them for $110 has he created surplus value by his labour? (Engels, for instance, once proposed a question similar to this one to Marx.) It would seem that Marx merely thinks that the initial $100 is only “circulating money capital” and any surplus obtained in this way is done so “by trickery, or by speculation on the oscillation of commodity prices” (letter, Marx to Engels, London, 30 April 1868; elsewhere Marx sees gambling in a comparable way). Though the transaction can be explained as M–C–M′, the value is not created by the labour power of the merchant or speculator, but can only be created by labour-power engaged in capitalist production.

Marx, then, cannot think that, say, medieval Italian merchant traders were real capitalists.

This is confirmed in Chapter 16:
So here banks, moneylenders and merchant traders are not productive capitalists, but parasites. Their “form of exploitation” was just a “transition” to the modern “capitalist mode of production.”

Because of his mystical labour theory of value, this is another gaping hole in Marx’s theory. Early accumulation of money partly for investment was undoubted linked to merchants and banking to some extent, who can legitimately be regarded as capitalists.

Capitalism, for Marx, grew out of feudalism and there was an historical transformation from feudalism to capitalism:



So this is how the labour-power of people became a commodity.

Marx dates capitalism from the 16th century, and sees the “expropriation of the agricultural producer” as the fundamental basis of capitalism.

There is also a very profound insight that can be drawn from this Chapter of Capital, but it never occurred to Marx: if in the early history of capitalism very brutal and coercive polices were necessary to create an industrial proletariat and class of people who accumulate sufficient levels of capital for industrialisation, how can communism in the Third World trying to effect industrialisation escape such brutality as well?

In fact, that is actually what happened in communist countries engaged in forced industrialisation of largely backward agrarian economies, as in the Soviet Union: extremely brutal state violence and coercion to create a proletariat and enough accumulation of capital.

If capitalism’s early history of accumulation and the creation of a class of labourers was brutal, then so was that of communism!

Arguably, it was more so: the history of communism is also “written in the annals of mankind in letters of blood and fire,” but to an even worse extent. We see that history in Stalin’s Five-Year Plans, the forced collectivisation, the theft of the agricultural surplus through the forced collectivisation, the driving of Russian peasants to the towns, and the Soviet famine of 1932–1933. And that is before we get to the brutal consequences and abuses of the authoritarianism and totalitarianism that communist transitional states inevitably descended into.

Even if one were to construe capitalism as a “disease,” history shows us that the communist “cure” was worse than the disease.

Finally, in some respects, Marx really needed capitalism, because the full development of a capitalist society was the necessary precondition for a transitional communist state leading to stateless communism.

So in that respect, for Marx, capitalism has a vital and necessary historical role and was a necessary stage of history, and so whatever coercive, exploitative factors needed for its establishment and complete development were also historically necessary. This can be seen in Marx’s remarks on the transition to capitalism in India wrought by the British empire:
“... we must not forget that these idyllic [sc. Indian] village-communities, inoffensive though they may appear, had always been the solid foundation of Oriental despotism, that they restrained the human mind within the smallest possible compass, making it the unresisting tool of superstition, enslaving it beneath traditional rules, depriving it of all grandeur and historical energies. ....

Marx, Karl. 1853. “The British Rule in India,” New York Daily Tribune, June 25, 1853.






    You do realise that the history of capitalism has confirmed Marx's analysis here? The move from self-employment to wage-labour for most workers is well documented.

    For example, in 1910 21.5% of the workforce was self-employed in America compared to 12.5% in 1998. It is around 10% now -- and these figures include employers (i.e., capitalists).

    Wage-labour is the norm for both the "working class" and the "middle class" these days. A doctor who is employed by a company is just as much a wage-worker as someone who works in a factory or a cleaner. So most of the "middle-class" are wage-workers who happen to have a better-paid job which, perhaps, needs qualifications.

    As for the Soviet Union, well being state-capitalist (the state owned and ran the economy, not the workers) you would expect it to be as brutal as normal capitalism in accumulating capital. Indeed, there was a demand in the 1920s over "primitive socialist accumulation" within the ruling class:

    Trotsky and the Left Opposition advocated it while Stalin imposed it (Trotsky denounced its brutality, of course, but he still advocated extracting surpluses to fund industrialisation).

    Marx was wrong about "normal" capitalism not needing state intervention and putting "primitive accumulation" into the past. As Anarchists noted, the state always interfers in the economy on behalf of the ruling class -- just look at, for example, the numerous anti-union laws imposed by the Thatcherites in the UK (so much for free markets and less state intervention!).

    As for as what is "capital", Marx does seem to have two definitions -- one is self-expanding value and the other is employing workers. This leads to much confusion in Marxist circles -- but, then, Marxism can lead to many confusions (like thinking the Soviet Union was anything but a horrible state-capitalist dictatorship).

    An Anarchist FAQ

    1. "You do realise that the history of capitalism has confirmed Marx's analysis here?"

      No, it hasn't. The proletarians are wage labourers forced to live on wages tending to subsistence levels in Marx's theory.

      Marx's theory requires this to allow increasing theft of surplus value and unpaid labour time.

      But the very fact that real aged have soared, both for workers and middle class people refutes Marx's theory. Marx's theory does not predict a large, rising and prosperous middle class with high wages, as in fact happened.

  2. "Marx's theory requires this to allow increasing theft of surplus value and unpaid labour time."

    Nope, it's possible for the rate and mass of surplus value can rise even if real wages rise.