William J. Blake: An American Looks at Karl Marx
The theory of the accumulation of capital is the crown of the Marxist economic state. Among its courtiers are found the distinguishing features that have made Marxian thought common property of the Socialist movements everywhere.
The concentration of capital, the tendency toward monopoly, the generation of ever more acute crises (culminating in an endemic general crisis), the increase of finance imperialism and finance capitalism, the relative and absolute impoverishment of the working class, the colonial economy, the frenzied search for markets, the drive toward militarism and war, the extinction of the middle class as owners and controllers of the means of production and their transformation into a petty-officer caste of the monopolists, the immense power of monopolies which seek to create and maintain artificial price structures that contradict competition but prove even more deforming, the “scissors” between industrial and agricultural prices, the emergence of contradictions that are insoluble in terms of the capitalist system, the greater, more naked, domination of the government as an organ of capital, the cross-currents of class resistance led by the proletariat—these and countless other actors in the stark tragedy of Capitalism stalk across the Marxist theater of accumulation.
Up to now, the system of capitalism has been treated under an artificial light. It has been assumed that exchange and wages, etc., are pure and theoretically valid; now the curtain is pulled aside, its two-dimensional beauties no longer suffice; the movement and growth of the living system must be revealed.
Until this study of accumulation it has been useful to speak of an isolated capitalist and selected laborers. But we have not considered the relations of labor and capital in the flow of history, in the capitalist system as it shows its dynamic qualities. Not that the previous treatment has been static. On the contrary, it has been shown to be a specific historic situation in a total process of production. But it has not given the movement of wages, or surplus-value, of reinvestment (accumulation), nor (this is later) of circulation, of disintegration.
In his chapters on accumulation Marx moves from the mere exploitation of the worker—that is, the use of some of his labor-power gratis—to appropriation, to the effort to obtain labor below its value. He shows, too, that the surplus-value does not remain only with the capitalist who exploits. For there are rent and interest, and neither of these come directly from the worker, that is, not in the sphere of production. And there are taxes, and other secondary divisions of the system in motion.
The Circulation of Capital
Money is converted into means of production and buys labor-power in the sphere of circulation; that is, these indispensable factors of production must be bought in the market. The sphere of production is also done with when the articles—or commodities, rather—have been produced. They enter the sphere of circulation again, but are now worth more than their component parts. For they contain surplus-value, from which comes profits. These products are sold, realized as money. This money is afresh converted into capital and so it proceeds forever. The turnover of a value into capital and its utilization to produce new value and surplus-value for a new turnover is the circulation of capital. Not all the profit is reinvested but the greatest part of it must be, if the system is to live.
The capitalist is by no means the ultimate owner of this surplus-value. It may not be he who reinvests that money but his landlord or his banker who take part of that surplus-value from him for the “service” of land monopoly, or the loans of money. He may have to part with a section of it in order to sell it to an ultimate consumer, and the man who intervenes between the producing or industrial capitalist and the consumer is the merchant.
But for the purposes of a study of accumulation the owner of surplus-value is the reinvestor. Or, let us say, he represents all the participants in the surplus-value. That means that we study accumulation only from the viewpoint of production, in order to build a foundation for a study of it as a totality later on.
The Simple Reproduction of Capital
The conditions of production are also those of reproduction. A part of society’s products must be constantly reconverted into means of production, or the elements of new products. The instruments of labor have to be replaced, raw materials grown again, mined further, plants maintained and extended, and for these purposes a part of production must be set apart.
These articles are not destined to be consumed; they are producers’ goods. By that we mean they are destined to be consumed in production but not in individual consumption. And as production is capitalistic, so must reproduction be. As the seed is destined to produce more and more crops containing seed, so is the endless renewal of capital.
If the revenue of capital is merely withdrawn for consumption by the capitalist, then only a simple reproduction of capital takes place. That is, he has $100,000 in capital, which makes $10,000 a year net, after the capital is intact. The capitalist spends the $10,000. He has the $100,000 again to purchase means of production and labor-power, but no more. He extracts a profit but does not expand his capital.
But the true capitalist does not do this. He makes $10,000, spends $4,000, and reinvests $6,000. Then he operates with $106,000, and if this continues for a long period he is a great capitalist indeed, and employs much more labor and uses more means of production than ever before.
The laborer is paid after he does his work and so provides a constant fund for his own payment, but only after he has produced a surplus-value for that privilege. Labor provides the variable capital. That is, it is labor that provides the only capital that creates a new value. Its employments last as long as it creates that variable capital. What flows back to the laborer in wages is a part only of the product that he has constantly reproduced.
The money payment, by which it seems that the capitalist pays him, is merely the worker’s own fund transformed into money. The laborer produces commodities, and after doing so receives order-notes called money, with which he buys back fewer commodities than he produced.1 The product has a commodity form but, as we saw in the study of exchange, the commodity takes a money form. The process of commodity production is thus masked.
Let us see what happens even in simple reproduction. A capital of $100,000 produces $20,000 a year net, all of which is consumed by the capitalist. At the end of five years he has consumed $100,000 in surplus-value. He has $100,000 for his capital is intact; it is merely the revenue he has consumed. But is this so? The $100,000 capital he has now has been provided by the surplus-value of five years; it is he who has eaten up the original capital. For if he had not extracted surplus-value he would have had nothing left.
So it is the workers who have supplied him with everything he has, even if we assume that by some mutation of the laws of history and nature he originally obtained his $100,000 by his own productive labor. It is the process of capital reproduction that creates all actual capital and does so by labor’s provision of surplus-value.
That capitalist thinking is the exact contrary of fact is normal, according to Marx, because every capitalist thinks of interest on his money as natural, and when, as in the above case, the amount of capital is unchanged, he cannot conceive that the same amount does not imply a wholly new creation.
So it is with all capitalists. When they have consumed the amount of their investment, all their present capital comes from the labor they have employed with that original capital.
All Capital Is Converted Surplus-Value
Thus, apart from origins, the mere continuity of the process of production, that is, simple reproduction, converts every capital into capitalized surplus-value.
The process of production converts all material wealth into capital for the moneyed men, but the laborer quits the process as he entered it. He is a source of wealth but has no means of making that wealth his own. His labor-power, sold by him, is alienated during production, in the shape of commodities which the capitalist sells. The laborer constantly produces material wealth, but in the form of capital. An outside power exploits him and controls him. The capitalist purchases labor-power, which is separated, by that sale, from the commodities it produces and by which it could be realized as value. The laborer is produced and reproduced only as a wage-laborer and never as anything more.2
Consumption by the workers serves as a reconversion of the means of subsistence given by capital for the use of labor-power, into fresh labor-power, which is further put at the disposal of capital. The means of subsistence of the worker, from the capitalist’s viewpoint, is a factor in the production and reproduction of capital.
That the worker enjoys his beef stew is not to the point. So does the donkey enjoy his lettuce, but no one would give it to him unless he were enabled thereby to carry loads. The maintenance and reproduction of the workers, as mere sellers of labor-power, is a necessity for the perpetuation of capitalism. The capitalist thus invests in means of production and also, through the purchase of labor-power, in means of subsistence, and both are factors in the continued process of production which reproduces capitalism. He kills two birds with one stone.
Productive and Unproductive Consumption
For this reason, political economists have held that only that part of labor’s individual consumption that can be converted into further labor is productive. Anything beyond is unproductive consumption. Both Malthus and Ricardo state nakedly that if the accumulation of capital were to cause a rise of wages and thus lead to more consumption by the workers without an increased use of their labor-power by capital the additional capital provided them would have been unproductively consumed.
As Marx points out, this is the contrary of truth. The consumption of the laborer is unproductive for himself, for it only reproduces him as a needy fellow who must continuously sell his labor-power to others. It is productive only to the capitalist and to the government.
Thus the worker, even when not engaged in production, is an appendage of capital like the machinery in the factory. It is essential that the nourishment of the workers be so costly, compared to their wages, that necessarily they can never accumulate capital. Their product must rest forever with the capitalists.
NOTE: They are permitted small savings, but as a class can never utilize these as capital. And for the few workers that escape into the employing class, sections of farmers and small shopkeepers, etc., become workers. The class relations as a totality remain, whatever the change in constituents.
The reproduction of the workers carries with it the accumulation of skill handed down from one generation of workers to the next. That the capitalists regard this skill, for which they paid nothing, as their property, is seen in crises. For example, in England, during the American Civil War, the government kept the spinning operatives and weavers on a pauper dole rather than permit their emigration to the United States. Thus the government kept their skill as a reserve for the capitalists, to be used when the import of raw cotton was resumed from the Southern states of America.
From the foregoing it is clear that the theory that labor freely sells its labor-power in a contract is merely formal. Actually the process of capitalist reproduction hurls the worker into the market as a seller for subsistence only, and with his product he gives another man the means with which to buy it. The worker provides his own chains. But as his sale of his labor-power is renewed periodically, as he often changes his employers, and as the price of his labor-power does oscillate around a level but still somewhat varies, the illusion of liberty is well maintained. Capitalism not only reproduces commodities and surplus-value, but it reproduces class relations as well.
Capitalist Production on an Increasing Scale. Production of Commodities Transformed into Capitalist Appropriation
The employment of surplus-value as capital—its reconversion into capital, that is—is called the accumulation of capital. It differs from simple reproduction, for not merely is the capital maintained but it is enlarged. This, and not simple reproduction, is the true movement of capital.
A cotton spinner invests $50,000, of which $40,000 is in cotton, machinery, etc., and $10,000 in wages. He produces 240,000 yarns with a value of $60,000. The rate of surplus-value is 100 per cent. Since 200,000 yarns represent five-sixths of 240,000, they reproduce the constant and variable capital. 40,000 yarns represent the surplus-value. They are worth $10,000. The $10,000 does not appear to be surplus-value; it looks like any other money. One has to know how it came about to recognize it.
This surplus-value of $10,000 is reinvested in the same proportions as the original capital, $8,000 for cotton and machinery and $2,000 for wages. For this $2,000 the capitalist requires one-fifth more spinners. The new capital of $2,000 in its turn brings a new surplus-value of $400. The capital is advanced as money, but the surplus-value is in the form of commodities that have to be sold so as to realize money.
But since the capitalist buys all his commodities in the market and sells his commodities there, and so do all the other capitalists, the mere transfer of these commodities cannot add to the total production of wealth. Hence the capitalist use of the total annual product must depend on the composition of that product, and not on circulation. To be more explicit: The annual production must recover the original capital. There is also a surplus, and of what does it consist? Is it made of things that satisfy the wants of the capitalists, which they consume? No, for in that case one would have only a simple reproduction of capital but not an increased capital.
Since the increased capital must serve to produce more surplus-value it can consist only of a means of production (constant capital) and means of subsistence for the workers (variable capital). Surplus-value, then, is convertible into additional capital only because it already is made up of the potential material elements of new capital, although it is realized in the form of money. But we are speaking of its substance.
The only apparent exception would be the export trade, in which a country sends out articles of luxury or superfluity and imports in exchange means of production and subsistence. (That will be considered in the theory of the circulation of capital.)
The Spiral of Accumulation
With his increased capital the employer has three alternatives: to use his labor more intensively, to use it for longer hours, or to hire new help. Once the new capital acquires new laborers it can go on forever not in a circle of simple reproduction but, as Sismondi3 well put it, in a spiral.
It does not matter from the standpoint of theory whether it is the same capitalist who uses the surplus or whether he invests it by way of another. We have dealt only with that section of surplus-value that is reinvested, that is, the small part used by employers for their consumption (consumption of personal wants) is not here in question.
It is clear that the $10,000 surplus capital that was reinvested was not produced by anyone but the workers. It is unpaid labor, nothing else. With that surplus the capitalist buys labor-power, that is, he exchanges the unpaid labor of his workers as the equivalent for the labor-power of the new workers.
Surplus-value arose out of capital and fresh capital arises from that surplus-value. The more the capitalist accumulates, the more he is enabled to accumulate. But now this process of the renewal of the laborer selling his labor-power and the capitalist buying it is increasingly performed with the unpaid labor of previous production, and this results in a transformation of all the laws of private property into their very opposite.
The Transformation of Capitalist Profit into Appropriation
There is no longer any exchange of equivalents. When a capitalist buys with his own money (we are assuming that he has acquired it originally) he buys with an equivalent. Now he buys with appropriated labor that he acquired without an equivalent. Further, he no longer requires the worker to reproduce the capital; he wants him to produce a new surplus for further purchase of labor-power. Under the form of purchase of labor-power now there goes on appropriation, without equivalent, by the capitalist, of the materialized results of former labor which he exchanges for a still greater quantity of living labor. The separation of property from labor has become the consequence of the laws of commodity production whereby a transaction beginning as the exchange of equivalents, by its very operation has become the opposite, pure appropriation.
It is best to recapitulate, however detailed, the stages of process of production to illustrate this vital point. They are:
1. A contracting party sells labor-power; the other buys it.
2. The seller receives the exchange-value of his commodity, labor-power.
3. The buyer obtains its use-value, he consumes it in production.
4. The buyer converts his means of production, through this use-value, into a new product belonging to him.
5. The value of this product includes the consumed means of production and use-value.
6. Labor could not consume (that is, use) these means of production without transferring their use-value into a new product.
7. The labor adds new value, and labor alone does this, as all other value is merely preserved, not added.
8. Labor has, however, sold its labor-power for value, and it produces more than that value.
9. The law of exchange was satisfied—the laborer sold at value, the capitalist bought at value; he consumed the labor-power sold to him, as is the right of every buyer of consumable goods.
10. Money was thus transformed into more money, that is, into capital, by a strict adherence to the laws of exchange.
11. Now the product of the laborer belongs to the capitalist.
12. The value of the product comprises a surplus-value which cost the laborer his labor-power but cost the capitalist nothing.
13. With the means of subsistence he has purchased, the laborer is able to offer himself once more as a seller of labor-power.
14. Up to this point the process of money becoming capital is merely repeated and nothing more.
15. With the surplus-value the capitalist acquires new means of production and further employs labor (more labor, that is).
16. But now the surplus with which he employs labor is not an equivalent, but the withheld amount of previous unpaid labor.
17. He thus purchases new labor-power with appropriated goods, that is, he pays new labor with the produce of dead labor, which produce he never paid for.
18. The capitalist mode of the production of commodities for sale and including a surplus, by which money becomes capital, that is, more money, has now become changed from a system of exchange into one of appropriation. Its character has turned into its opposite.
It can now be seen how closely linked is the Marxist chain. It is hard to think of a more apt illustration of what Marx and Engels meant by dialectics, that is, a process changing into its opposite by mere quantitative changes due to the laws of its development.
In the flood of production the original capital has been reduced to a vanishing point. The hundreds of years of capitalist production, all built on the reinvestment of surplus-value, must make the original capital a mere memory. Here and there a new original capital, tiny in amount, is built up of saved labor. But it can now be said that well over 99 per cent of capital, if not 99.9 per cent, is the gift of labor to its own exploitation.
Everyone knows the legend of compound interest.4 However theatrical (and inexact) may be its calculations, they are simply a heightened form of saying that all capital is accumulated interest, and interest, itself is merely a fragment of surplus-value.
The Separation of Surplus-Value into Capital and Revenue
We know that the capitalist employs a part of surplus-value for his own consumption, another for the increase or accumulation of capital. It is only as an accumulator that he is capital personified, for as a consumer he is not to be distinguished from the lavish feudal nobility, or any previous ruling class. He, as capitalist, shares with the miser or hoarder the passion for unlimited wealth that can never be consumed. It is this passion that is the motor-force of capitalist production. It is this obsession that so drives on mankind to produce, that the capitalist system has thereby become a producer of wealth infinitely above the merely consumptive and hoarding societies of the past. But this need of the capitalist for expansion is not a choice, it is forced on him. As a consumer he robs himself of his own accumulation.
Not All Profit Is Accumulated
But he is not a personification of capital only. Regrettably, he is also a man, with man’s foibles. At the dawn of a capitalist’s career he has to be single-minded in the pursuit of wealth. The greater his frenzy for wealth and its accumulation, expansion, growth, the more his possibilities. While his competitors sleep, he toils upward in the night.
But as he gets into the process of money-making, and speculation and credit open chances of sudden enrichment, he gets away from the primitive basis of sheer money-ambition. He needs to live luxuriously. For no matter what their need for accumulating capital, rich men live in mansions and not in hotels, own cars rather than walk, decorate their homes with paintings and not with the comic supplement, and go in heavily for decorative polygamy.
The capitalist is in a different position from the miser. Every time the miser buys a sandwich he parts with a coin, and so his digestion is impaired. But a capitalist can (if his workers abstain enough) get richer and still eat the bitter bread of exile at Monte Carlo.
(As the gaming tables of that famed Casino showed, the capitalist was never as open-handed as the lavish, extravagant, feudal nobility of Hungary and [Czarist] Russia. He, unlike them, can calculate.)
And so he is torn between two passions, accumulation and luxury. Malthus was so impressed by this separation of functions that he counseled the capitalist to go on accumulating as a monk or anchorite of productivity, and to let landlords, statesmen, and bishops do the spending.
But after the revolution of 1832 in Lyons and the Chartist agitation in England, and the creation of Socialism by St. Simon and Fourier in France and Owen in England, no more was heard of these speculations. The political economists, headed by Nassau W. Senior, pronounced that the word capital, considered as an instrument of production, should be substituted for by the word abstinence.
The Abstinence Theory
It appears that it is the abstinence of the capitalist from consumption that is the cause of his accumulation. He forbears to consume, to spend, he is abstemious, and by this self-sacrifice, the instruments of production are increased. It is a more journalistic way of saying that the capitalists derive their money from what they save, meaning not what they save out of surplus-value but of what they save from their own exertions.
The capitalists, say the abstinence school, lend the instruments of production to the workers, robbing themselves of their enjoyment by so doing. As they cannot eat locomotives or present actresses with manure-mixers, this must mean that they could use their money to buy consumption goods instead of producers’ goods. If they do not, capital is increased.
It means that the capitalist is in the same dilemma as the slave-holder who could not decide whether to use his profits in buying champagne or in acquiring more Negroes and more cotton land, a dilemma solved for him by the fiat of Mr. Abraham Lincoln. The Socialist polemist Lasalle ridiculed the abstinence theory with a picture of Paris: the workers gorged with caviar and, therefore, by failing to abstain, remaining in poverty, and then the Stock Exchange, in which men looked much hungrier because they had abstained and so had more capital, and finally he saw a wretch in rags, whose skin was falling apart from his bones, and this was of course the largest abstainer and therefore the richest man in the world, Baron Rothschild!
The Division between Revenue and Accumulation
The increase of capital having been accompanied also by an increase of luxurious expenditure by the capitalists, the economic problem, seriously, is to discover what circumstances, independently of the allocation of surplus-value between capital and revenue, determine the amount of accumulation. These are the degree of exploitation of labor-power, the productivity of labor, the growing difference in amount between capital employed and capital consumed, and the quantity of capital advanced.
Given any definite division of surplus-value into capital and revenue, the quantity of capital accumulated must be based on the magnitude of the surplus-value, that is, on its mass. Suppose that 80 per cent were reinvested and 20 per cent eaten up; if the surplus-value is $100,000 the new capital will be $80,000, or if the surplus-value is $50,000 the new capital will be $40,000. The rate of surplus-value, as before stated, is the degree of exploitation of labor-power.
Ricardo holds that the acceleration of accumulation due to the increased productiveness of labor is the same as that due to the increased exploitation of the laborer. One is the other. But in fact, the need to pay labor less than its value and the carrying out of that desire play a constant part in practice, in the accumulation of capital. It transforms a part of the consumption fund of the worker into a fund for capital accumulation.
Attempts to Lower the Value of Labor-Power
The present standard of living of the workers in any country is always compared to their disadvantage with that in more poorly paid countries. The English laborer is rebuked for his wasteful consumption of pipe tobacco, while the French laborer is content to roll his own cigarettes out of the debris of Virginia tobacco. The French laborer is rebuked because he insists on excellent white bread and common wine, whereas the German worker accepts rye bread and adulterated beer.
The American worker has been everlastingly reminded since 1916 by press and pulpit that once he was vicious enough to buy silk shirts. He always consumes too much.
Hence schemes abound to make him consume less. The number of calories in his food is calculated, and if the 2,500 required can be got out of potatoes rather than meat, meat is a waste. If the various vitamins can be got out of citrus fruits and fluid milk, the social experts regret that he thinks of certain savors and has just a touch of the connoisseur in him. Since the reproduction of labor-power is largely traditional, this attempt to depress the value of labor-power is a constant theme. During a crisis these maneuvers become successful and the minimum standard of life, fixed for relief or by minimum wage laws, tends to become the maximum. This is an important source of appropriation, of obtaining more than previous surplus-value.
Economy of Constant Capital
Economy of constant capital is another form. Suppose that 100 workers in a factory work 800 hours a day. If the capitalist can lengthen hours he does not have to invest in new equipment, but if he adds to his working staff, he must do so. The machines would be more quickly consumed, true. But if that consumption were slow and the saved outlay large, the rate of surplus-value, source of accumulation of capital, could be raised without any investment in constant capital to correspond. In the case of mines, where God furnishes the raw materials, the constant capital consists almost entirely of instruments of production which can absorb more labor. Here the mass and value of the product rise in proportion exactly as labor is expended. An increase in exploitation is enormously profitable. For this reason the temptation to exploit the last ounce out of the mine workers is constant and it is not for nothing that the most savage conflicts of labor and capital have converged in the mining industry.
Higher Degree of Productivity
Another factor in the accumulation of capital is the degree of productivity of social labor (apart from degree of exploitation).
By means of the increased productiveness of labor, the accumulation of capital is accelerated, although the additional capital has a smaller value since it is produced in less time. To explain: when the productive powers of labor increase, so does the mass of its products, in which a certain value is embodied, and in the bosom of which value is a certain surplus-value.
Even if the rate of surplus-value falls, and the productive power of labor rises more than that, the mass of surplus products is increased. The capitalist may take more for his consumption and yet not reduce the amount required for accumulation below that previously so set aside.
On a social basis, the accumulation fund may even gain relatively, strange as this seems, if the increased productivity of labor has cheapened the articles of consumption of the capitalist, for then he spends absolutely less on his consumption than before and has an additional contribution to make to accumulation beyond that due to greater productivity of labor.
But as the productivity of labor gains, the time required for the reproduction of labor-power also diminishes and so this increase is a cause of a higher rate of surplus-value, even if wages (real wages) have somewhat risen in the meantime. A great many factors that seem to contradict each other are in operation here, yet they all conform to the Marxian analysis of the foundations of capital accumulation.
But a far more important, because progressive, factor in accumulation, is in the development of technology. Here we graze on the frontiers of what is to become the widest field of Marxist theory, the operation of the organic composition of capital.
Cheapening of Constant Capital
The development of the productive power of labor has an effect on the original capital used in production. A part of capital consists of long-term installations which take years for their consumption. But every year a part of this installation reaches its productive limits. It must be replaced.
If labor has become more productive during the period of the employment of the old equipment, then cheaper tools, machines, apparatus, or other instruments can be substituted. The old capital is replaced in a more productive way, apart from the detailed improvements which go on all the time in machinery or processes.
The same is true of new materials whose use is introduced into chemistry, etc. Science and technology give capital a power of expansion independent of the quantity of capital employed in an enterprise. These in turn have an effect on the type of new capital which has to be introduced to replace that part of the original capital that has been used up.
In its new shape, the social advance made in the meantime is incorporated gratis. There is another side to the picture, for although productive capacities are gained for nothing, there are depreciation costs chalked up against the antiquated and superseded equipment. The capitalist tries to recover this depreciation from the workers, in his struggle to diminish competitive costs. This is attended with varying success, but in the case of certain English industries, parliamentary commissions have held that the worker must justly take a reduction in pay to compensate the factory owners for their losses due to their aging and archaic machines.
Labor transfers into its products the value of the means of production it uses, that is, of the constant capital. The value and the mass of this constant capital increases, as it is increasingly set in motion by more productive labor. The same quantity of labor adds always the same sum of new values, but the old capital-value, transmuted into the products of labor, becomes more important with the productivity of labor. Because the time consumed is the same, the value added by labor is the same.
Therefore, when we speak of increased productivity we mean more production in the same time, and this means that the only reflection of this increased productivity is the greater amount (old value, that is) passed on into the new products.
For example, in the same society a spinner who is working on a modern, automatic spindle, works the same hours as one on an older spindle. But if the labor of the worker on the better spindle is 3 to 1 in results, it does not mean that more new value is added, but that more old value (greater quantity of raw cotton, etc.) is passed on into the new yarn. It is the natural property of living labor to transmit old value while it creates new.
Labor, with increasing efficacy, keeps up and renders eternal an ever growing capital-value in ever new forms. This natural power of labor appears to be an intrinsic power of capital, in which it is incorporated. But the old capital would never have emerged as value except for the application of labor which, because it creates new value, in that very process perforce preserves old value.
The economic consequence, due to advance in the arts, is that with the consequent increase of capital, the difference between capital employed and capital consumed is increased. The amount of capital put into buildings, equipment, etc., is a constantly augmenting mass, and so the laborer is more and more transforming values that are incorporated piecemeal into his products.
A factory good for twenty years is replaced by 1/7300th part every day of production and enters to that extent into ribbons produced daily in a ribbon factory. A loom good for ten years is incorporated 1/3650th every day into ribbons. By being wholly employed at every instant but only partially consumed, they act very much like natural forces—water, steam, and electricity. The advancing accumulation thus puts more and more dead labor into production. The effect of this constantly increasing role of equipment as against new value leads to an important stagnation in production as well. (That becomes significant later in the theory of crises.)
Elasticity of Capital
With a given degree of exploitation of labor-power, the mass of surplus-value produced is determined by the number of workers exploited at a given time, and this crudely corresponds with the quantity of capital employed. The more capital is augmented by these successive accumulations, the more does the surplus-value gain, so that dead labor is an increasing gift to living profits.
The greater utilizations of labor-power, land, and science, give capital an elasticity, that is, a chance to go beyond the limits set by its quantity. And that elasticity, that ability to extract surplus products, itself increases with the greater quantity or accumulation of capital. The greater the capital the wider its independence from the limitations of its given magnitude! If we add the effects of circulation (but this takes us out of our scope, which is production) an even more complete picture can be given of the dynamic capacities of capital.5
1. It is often said the capitalist advances the wages because, although labor has produced goods, the products are not as yet sold. But everyone knows that banks habitually advance on goods in process or in stock; therefore they have exchange-value.
2. Note the phrase “only as a wage-laborer.” This means in his relation to capital as a worker. Naturally, within the working class, there are those who save little sums and become self-employers, while other self-employers sink back into workers. It is workers, as a class, confronting capitalists, of whom Marx speaks.
3. Nouveaux Principes d’Économie Politique (Paris, 1819).
4. Compound interest frightens parliaments. A French Huguenot banker once provided that his fortune, upon his death, should be reinvested to eternity. Pitt, realizing that this was already the largest fortune in London, and that there were no children to inherit, saw that the trustees of this money would eventually have more funds than the British treasury. The will was annulled by law. (Of course, the larger the sum, the more it would reduce interest rates by its own weight. Pitt exaggerated the danger.)
5. Capital is thus seen not as a fixed but as an elastic quantity. It is not the whole of society’s wealth but a special segment. It can prolong labor-time, increase productivity, exploit the ores and land more, utilize the heritage of science, and is enormously affected by the mass of accumulated fixed capital. This is the exact contrary of the idea that capital is a definite quantity, such as was held by the celebrated Wages Fund theory. The action of capital is given in analysis, but its real history permits of much latitude. When we come to the sphere of circulation its action will be known in full.