Marx’s Capital – Philosophy and Political Economy. Geoff Pilling 1980
Chapter 3. The Concepts of Capital
These philosophical observations are of direct significance for a consideration of Capital. Let us start from Marx’s avowed aim ‘to lay bare the law of motion of modern society’. In order to carry out this task successfully, Marx had to demonstrate how the universal features common to all economic formations were expressed in a determinate form within ‘modern society’. Only in this way could Marx disclose the peculiarities of capital, peculiarities which indicated that it was not some eternal timeless mode of production, as its apologists maintained.
Capital, by expressing the universal laws of every mode of production in its own specific form, aided enormously the development of the productive forces; but at the same time, this specific social form is the very source of capitalism’s definite (objective) historical limits. Capitalism played a definite and great (progressive) role in the development of man’s productive forces. And Marx, unlike Utopian Socialism, fully grasped this role, so brilliantly depicted in the Manifesto. But he was able to understand this contradictory role played by capital and thereby overcome a purely moralistic opposition to capitalism only because he related capitalism to the whole line of social development. The point here is this: the concept of capital was not formed on the basis of seeking some abstract qualities which capital shared with all other modes of production (a view which reaches its most absurd in modern economics’ notion of a quite timeless and asocial ‘economic problem’). Nor was the concept of the nature of capital achieved by seeking those features which separated it absolutely from all previous economic forms.
Marx proceeded quite otherwise. As an illustration, let us take the labour process. Marx does not start with an examination of the labour process as it manifests itself in its specifically capitalist form. On the contrary, he begins when considering the process of labour with those universal (general) features common to all societies. He tells us:
The fact that the production of use-values, or goods, is carried out under the control of a capitalist and on his behalf does not alter the general character of that production. We shall, therefore, in the first place, have to consider the labour process independently of the particular form is assumes under given social conditions. (Capital vol I, p. 177)
Having dealt with the universal aspects of the labour-process (work) Marx only then deals with it in its specifically capitalist form:
It must be borne in mind, that we are now dealing with the production of commodities, and that up to this point, we have only considered one aspect of the process. Just as commodities are, at the same time, use-values, so the process of producing them must be a labour-process, and at the same time, a process of creating value. (Capital v I,, p. 186)
To put this last point from a different angle. The labour-process (the general) is the pre-condition for all human life, the process in which man effects an exchange of matter between himself and Nature, ‘the everlasting Nature-imposed condition of human existence, and therefore common to every such phase’ (I, p. 184). But this process cannot exist in this general form. Man never confronts Nature outside of definite social relations.
In production, men not only act on nature but also on one another. They produce only by co-operating in a certain way and mutually exchanging their activities. In order to produce, they enter into definite connections and relations with one another and only within these social connections and relations does their action on nature take place.
Stressing that man must always be conceived concretely, Marx and Engels tell us that they always set out
from real, active men, and on the basis of their real life; process we demonstrate the development of the ideological reflexes and echoes of this life-process.... This method of approach is not devoid of premises. It starts out from the real premises and does not abandon them for a moment. Its premises are men, not in any fantastic isolation or abstract definition, but in their actual, empirically perceptible process of development under definite conditions. (The German Ideology)
So this general process (of labour) exists only in connection with a definite, specific social form. And because of this – and here is the crucial point for the argument – the general is here, never produced completely in some, ‘unadulterated’ form. This is not the ‘fault’ of thought; on the contrary it is an expression of the rich and contradictory nature of all development. All the concrete phenomena under investigation can never be contained completely in any abstract general conception. All Marx’s laws – the law of value, law of the falling rate of profit – are always approximations, in the sense of tendencies and not laws, in the sense that they coincide with immediate reality. And this must always be the case – precisely because these laws have been abstracted from reality. The contradiction between ‘value’ and ‘price’ for instance reflects no weakness of the law of value – it expresses the actual movement of capital and its accumulation. This approximate nature of all Capital’s concepts as true of every (adequate) concept in science and in history:
Did feudalism ever correspond to its concept? Founded in the kingdom of the West Franks, further developed in Normandy by the Norwegian conquerors, its formation continued by the French Norsemen in England and Southern Italy, it came nearest to its concept – in the ephemeral kingdom of Jerusalem, which in the Assize of Jerusalem [The collection of laws of the kingdom of Jerusalem in the eleventh to thirteenth centuries] left behind it the most classical expression of the feudal order. Was this order a fiction because it achieved only a short-lived existence, classically expressed throughout, and only in Palestine, and even that mostly on paper only? (Marx and Engels, Selected Correspondence, p. 565)
This same methodological principle concerning the nature of the general and its relation to the particular can be seen right at the outset of Capital when Marx investigates the commodity. In the analysis of the commodity, we find him starting not with ‘value’ but ‘use-value’. He begins, that is, with the substance of wealth, and therefore with a universal category, common to all societies. Only after making clear that commodities are ‘in the first place’ use-values does Marx deal with the peculiar feature of modern society, namely that use-values are the bearers of a definite social relation, the value relation. ‘Use-values ... constitute the substance of all wealth, whatever may be the social form of that wealth. In the form of society we are about to consider they are, in addition, the material depositories of exchange-value’ (I, p. 36). The importance of Marx’s statement here is that he is stressing and starting from the objective nature of the labour process in which use-values are created. Man’s struggle against nature is in no way an arbitrary process- it takes place only in accordance with the laws of nature (matter). And because the labour process is eternal – and with it, therefore, the process of creating use-value (‘an eternal nature-imposed necessity’, (I, pp. 42-3)) – it cannot be dispensed with in any epoch. It is universal. This any child knows. But the implications are crucial. It would be a mistake to deal with the labour process as though it were some natural, technical process, separate from social relations. In the labour process men create their physical existence and this must not be lost sight of. But they create more than this – in the labour process is produced and reproduced their social existence. This mode of production, Marx reminds us: ‘Must not be considered simply as being the production of the physical existence of the individuals. Rather it is a definite form of activity of these individuals, a definite form of expressing their life, a definite mode of life on their part’ (The German Ideology).
But if it is a mistake to see production as a merely non-social (technical) matter it is equally erroneous to conceive of production as purely social, that is as one having no natural basis. Clearly involved here is the philosophical problem of the relationship of the ‘social’ to the ‘natural’. While all aspects of this question cannot concern us here, this much can be said: all those who want to draw a rigid distinction between the ‘natural’ and the ‘social’ (essentially after the fashion of Kantianism) and who deny the dialectical character of natural phenomena must incline towards this latter mistake. To take one instance of such a mistake in relation to Capital: it would be wrong to treat the composition of capital in purely value (that is social) terms. When dealing with the organic composition of capital (the relationship of constant to variable capital) Marx insists that the social composition of capital is a mirror of the technical composition. This confusion of the social and the technical sides of the organic composition of capital is clear in Sweezy’s work; it is a mistake which leads directly to errors in connection with Marx’s falling rate of profit, as Yaffe (1973 and 1975) and others have correctly pointed out. It is in fact quite impossible to understand the basic laws of accumulation and turnover of capital if this two-sided character of capital (as a social phenomenon, but one affixed to things) is not recognised. Similarly it would be a fundamental mistake to believe that use-value plays no role in Marx’s investigation of capital, as Hilferding (1973) in his reply to Bohm-Bawerk wrongly thought. (We will return to this point, but see Rosdolsky’s discussion of this matter Rosdolsky, 1977 Ch. 3.)
It should be clear from this last example that the problem of the nature of concepts is in effect the same problem as that concerning the relationship between the individual and the general. We have already had occasion to draw attention to the role of the concept of capital in general – again Rosdolsky’s work has here been of considerable importance. Let us review what we said earlier about this concept. Marx could not start from the existence of each individual unit of capital, taken in isolation in an external form, as seen on the surface of economic life. It is this surface of economic life which the ‘vulgar’ economists regard as the essence of things and the only valid source of knowledge about bourgeois economy. But, beneath this surface and through all the contradictions of competition, there remains the fact that all individual capitals constitute the capital of the whole of society. The existence of the individual capitals in their movement reflects social laws; because of the inherent anarchy of capitalist economy these social laws can only assert and reveal themselves behind the backs of individual capitalists and in opposition to their consciousness in a roundabout, mediated manner and only on the basis of continual deviations from an average. For this reason any adequate theory in political economy cannot study economic processes from what would be the entirely superficial standpoint of the market – this would be in fact to study economic processes from the point of view of the consciousness of the individual capitalist.
Capital in general was not merely the summation of all individual capitals as they appeared in competition. This political economy understood, but only partially. For its efforts to abstract from the immediate way in which capital appeared (competition) were both formal and incomplete. It had tried to reduce all the economic relations to a common element (labour). It constructed its general notions by taking this common element in all economic forms. Marx’s approach is quite different. In seeking the essential nature of capital (‘capital in general’) he traces the origin and development of capital out of its lower forms (commodities, money). And in doing this Marx reveals the real connection between capital and these lower forms while at the same time pointing to its peculiarities, peculiarities which separated it from these lower forms. Marx shows, to give a specific instance of the results of this approach, that while capital cannot exist independently of money, equally it cannot be reduced to this lower form. There have been many mistakes in the history of political economy arising from efforts to separate out completely the economic forms which, in their process of development, actually constitute a unity. The notion that the contradictions of capital could be overcome through the abolition of money provides one such example. But equally serious mistakes have occurred when higher economic forms have been mechanically reduced to their lower forms when, for example, capital has been confused with one of its forms such as money capital. Marx’s dialectical method alone enabled him to avoid these mistakes. His conclusion: capital is value, but value of a peculiar type, namely self-expanding value; it is a social relation attached to things which appropriates surplus value created in a definite process of production, and it thereby continually reproduces both capital and the relation of capital itself. The origin of this surplus value (which was taken as given by classical economics) was revealed by Marx without any reference whatsoever to individual capitals or the relations between them. Indeed, this point must be even more strongly put. To have dealt with the immediate form of economic relations (as they emerged in the sphere of competition) would have rendered impossible an uncovering of the process by and through which surplus value is extracted from the working class. In the form it takes as profit, surplus value seems to be produced in equal amounts by all sections of capital and as such capital appears to be the source of wealth, independent of labour. It was therefore essential that Marx should disclose the nature of this ‘capital in general’ before he dealt with its specific, immediate forms and why capital in general is dealt with before its forms profit, interest, rent; these latter forms are explicable in terms of particular forms of capital. It is no accident that along with the notion of abstract and concrete labour, Marx considered this latter point to be one of the two best in his entire work. In short, it would have been impossible to get to the essence of what Marx calls the ‘finished forms of capital’ (G, p. 209) without this abstraction ‘capital in general’, or what Marx calls ‘capital as such, capital in the process of becoming’ (Grundrisse).
The notion of capital in general is a dialectical abstraction and one which enabled Marx to get to capital in the process of its arising – enabled him to reveal what it held in common with lower forms and at the same time what qualitatively new features it incorporated. This same dialectical method was at the very centre of Lenin’s struggle to understand the historical significance of the imperialist stage of capitalism in his fight against Kautskyism. To illustrate this point we can take Lenin’s definition of imperialism and compare it with that given by Kautsky.
Imperialism is Capitalism at that stage of development at which the dominance of monopolies and finance capital is established; in which the export of capital has acquired pronounced importance; in which the division of the world among the international trusts has begun, in which the division of all territories of the globe amongst the biggest capitalist powers has been completed.
Imperialism is a product of highly developed industrial capitalism. It consists in the striving of every industrial capitalist nation to bring under its control or to annex all large areas of agrarian territory, irrespective of what nations inhabit.
Kautsky’s definition of imperialism is entirely abstract and quite worthless. It is abstract because it can in no way disclose the connection between the highest phase of capitalist development and the lower forms from which it emerged. It is a formal definition arrived at by abstracting a feature common to all imperialist powers – the tendency to annexation. But this is a political not an economic phenomenon. Kautsky’s definition went hand-in-hand with the notion that imperialism had no necessary, historical, relationship to capitalism in its competitive phase. For him imperialism was merely a reactionary policy carried out by a predatory wing of the bourgeoisie. For Lenin it was inadequate (and ultimately reactionary) to designate imperialism as merely ‘violent’; the roots of this violence had to be discovered – only then would it be possible to point to the means by which this violence could be overcome. Lenin’s definition of imperialism was correct because it explained the peculiarities of the latest phase of capitalism; these peculiarities had grown out of nineteenth century competitive capitalism producing a situation where monopoly became decisive and where financial capital became the predominant form of capital. Lenin’s conception of capitalism was arrived at not by picking out a single feature common to each capitalist power (Kautsky’s false procedure) but by tracing the actual concrete development of capitalism. All the facets of capitalism in their interconnection had to be studied, and studied in their self-movement. And once more Lenin’s conception of imperialism has to be seen as a tendency. It is quite worthless to think that Lenin can be ‘refuted’ by, for example, showing that monopoly in late nineteenth-century Britain did not reach the predominant position it ‘should’ have done according to Lenin’s theory. This ‘exception’ can only be understood dialectically – by tracing its connection to the growth of world economy and Britain’s specific, historical relationship to that world economy. The growth of monopoly (and of protectionism) was arrested in Britain because she was the first industrial capitalist nation who established a specific division of labour with world economy (importing food and raw materials, exporting finished manufactured goods). Similarly Lenin’s point about the crucial role played by the export of capital as an important feature of imperialism cannot be considered in isolation from all the other features of capitalism noted by Lenin. Only in their combination, in their ensemble, do we get a ‘definition’ of imperialism which gets near to the driving forces of this new, higher stage of capitalist development. Whereas Kautsky’s method (which derived from neo-Kantianism) allowed the reformists and centrists to concentrate on the purely secondary, episodic features of imperialism, Lenin’s method alone leads to the conclusion that imperialism as the highest stage of capitalism opened up the epoch of wars and proletarian revolution. Here is but one instance of the immediate and practical implications of differences which at first sight might appear to be of a purely methodological character.
To understand the role of abstraction in the approach to any so-called ‘concrete’ question in Capital let us consider a recent writer (Hodgson, 1973) on Marx’s concept of ‘capital in general’. We have already met this writer as an explicit opponent of dialectics and an upholder of formal logic. It should, therefore, come as no surprise to discover that he rejects this notion of ‘capital in general’ which as we have seen is a concept arrived at only by dialectical abstraction. Yet it is the nature of this abstraction that is of interest to us at this point. Let us first see what Hodgson says on this matter and then we will examine his statement. Dealing with the ‘basic flaw’ in Marx’s solution to the transformation problem, he says, ‘It must be remembered that the capitalists are primarily concerned [author’s italics] to increase their profits in money terms. This is essentially the meaning of Marx’s well-known diagram M-C-M' ‘ (1973, p. 51). Having ‘explained’ this for us, he then proceeds: ‘Money capital M is invested in constant and variable capital, production takes place, commodities C are produced, and finally they are sold to reap an enlarged money revenue, M'. It was Marx’s aim to explain the source of the profit, the difference between M and M' ‘ (p. 51).
The capitalists, Hodgson now tells us,
will calculate their rate of profit on capital invested in terms of prices, not values . . . this is the rate of profit that the capitalists themselves ‘perceive’ and upon which they base their investment decisions. The goad to accumulate takes the form of prices as the capitalists are not aware of, or disposed towards a calculation in terms of values. (p. 51, author’s italics)
Finally Hodgson comes to ‘capital in general’: Marx’s ‘error’ in connection with the value-price relationship, we are told, ‘Stems from his arbitrary assumption that we may treat the social capital as a whole, regarding the capitalist economy as one giant firm. Hence he avoids the main problem: to determine the general rate of profit that pertains to separate firms’ (p. 52). By the number of basic errors compressed into so short a space one can only be ‘disposed’ to the view that Hodgson has understood nothing about Capital. Let us try to untangle some of these errors.
1 Hodgson is utterly wrong in his interpretation of the M-C-M’ circuit. He believes that it indicates that capitalists are ‘primarily concerned’ as he puts it to increase their profits in money terms. In fact when Marx analyses this circuit he is not at all concerned with the subjective motives of the capitalists. Nor is he interested in either profits or production. It is in the fourth chapter of Capital that Marx starts his discussion of the ‘General formula for Capital’. As we shall see in a moment this chapter is entirely and explicitly concerned with capital in general and Marx’s discussion abstracts at this stage specifically from any consideration of the material composition of capital. Nor is Marx, at this point, concerned with exchange. He deals with the general economic form taken by capital in circulation:
If we abstract from the material substance of the circulation of commodities, that is from the exchange of the various use-values, and consider only the economic forms produced by this process of circulation, we find its final result to be money: this final product of the circulation of commodities, is the first form in which capital appears. (I, p. 146)
Marx is here deliberately putting aside the question of the particular forms of capital as well as a consideration of individual capitals until later. He is dealing with capital in general. Throughout this chapter (Chapter 4) there is no mention of production, nor is Marx concerned with profit as Hodgson asserts, but only with surplus value. In fact Marx’s discussion is about merchant’s capital, for the very good reason that the first form assumed by capital is that of money and as such it constitutes the germ which is sublated in all the higher, more developed forms:
As a matter of history, capital as opposed to landed property invariably takes the form at first of money; it appears as moneyed wealth, as the capital of the merchant and the usurer. But we have no need to refer to the origin of capital in order to discover that the first form of appearance of capital is money. We can see it daily under our eyes. All new capital, to commence with, comes on the stage, that is on the market, whether of commodities, labour, or money, even in our days, in the shape of money that by a definite process has to be transformed into capital. (I, p. 146)
Thus the circuit M-C-M’ is not concerned with any one particular form of capital but with the essence of all forms of capital, in short with capital in general. This is made clear by Marx at the end of this chapter in a passage, which makes it clear that Hodgson has got everything wrong:
Buying in order to sell, or more accurately, buying in order to sell dearer, M-C-M’, appears certainly to be a form peculiar to one kind of capital alone, namely merchants’ capital. But industrial capital too is money, that is changed into commodities, and by the sale of these commodities, is reconverted into more money. The events that take place outside the sphere of circulation, in the interval between the buying and selling, do not affect the form of this movement. Lastly in the case of interest-bearing capital, the circulation M-C-M’ appears abridged. We have its result without the intermediate stage, in the form M-M’, ‘en style lapidaire’ so to say, money that is worth more money, value that is greater than itself. (I, p. 155)
2 Yet these errors, serious though they are, do not arise merely from a misreading of certain passages in Capital. When Hodgson tells us that the capitalist is ‘not disposed’ to or ‘aware’ of value-magnitude, he only reveals that he rejects the basic point of materialism, and with it the corner-stone of Marxism. For he starts from the consciousness of the capitalist! It is entirely irrelevant whether the capitalist is aware or unaware of the law of value. However the capitalist computes his rate of profit, the formation and movement of the rate of profit is explicable only in terms of the law of value. It is this law of value and its developed forms which determine the movement of capitalist economy, laws to which the owner of capital is entirely subordinated. He may, as an owner, not recognise the law of value, but it certainly recognises him! The capitalist may ‘conceive’ his capital in money form and ‘calculate’ his rate of profit in money terms – these are entirely secondary questions. But Marxists certainly do not confuse capital with one of its forms, money. Capital is a process which appears in the antithetical forms of money and commodities, it is therefore vital to grasp the nature of this antithesis. To take capital in only one of its forms (money) is precisely to reduce it to a ‘thing’ to make of it a fetish.
In the circulation M-C-M', both the money and the commodity represent only different modes of existence of value itself, the money its general mode, and the commodity its particular, or so to say, disguised mode. It is constantly changing from one form to the other without thereby becoming lost, and thus assumes an automatically active character. If we now take in turn each of the two different forms which self-expanding value takes in the course of its life, we then arrive at these two propositions: Capital is money; Capital is commodities. In truth, however, value is here the active factor in a process, in which while constantly assuming the form in turn of money and commodities, it at the same time changes its magnitude, differentiates itself by throwing off surplus-value from itself; the original value, in other words, expands spontaneously. (I, pp. 153-4, author’s italics)
It is of course in a crisis that the true nature of capital forcibly asserts itself. In times of prosperity the capitalist continually throws his money into circulation (M-C); money in such periods is declared to be a ‘vain imagination’. But in a crisis things turn into their opposite – now everybody moves out of commodities, demands money (C-M). As Marx puts it, ‘As the hart pants after fresh water, so pants his soul after money, the only wealth’ (I, p. 136). It is in the crisis that the contradictory nature of the circuit M-C-M' is revealed. The relative unity of the process (in prosperity) turns into an absolute contradiction. ‘In a crisis, the antithesis between commodities and their value-form, money, becomes heightened into an absolute contradiction’ (I).
It is important in this respect to stress that for Marx capital is not merely expanding value, but self-expanding value. The constant drive to expand value (‘Accumulate, accumulate! That is Moses and the prophets!) arises not from something ‘external’ to capital, such as the ‘disposition’ or motives of the capitalist. It arises from something intrinsic to the very nature of capital itself. From the point of view of the owner of capital he is driven along by competition. But this is only the appearance of things, albeit a necessary one. For in capital are revealed in outward form the immanent laws of capital (‘competition makes the immanent laws of capitalist production to be felt by each individual capitalist, as external and coercive laws’, as Marx at one point says). It is for this reason that throughout his work Marx sees the capitalist as the personification of capital. He is a capitalist, and remains so, only in so far as his behaviour is subordinated to the objective, independently existing laws of capital. And this subordination never arises from conscious plan or desire - it is a force which imposes itself upon the capitalist through laws which operate necessarily behind his back. Of course the capitalist always starts out with ‘aims’, but these aims are determined entirely by the objective nature of capital. The capitalist ‘starts’ with a sum of money, M. Naturally, as a ‘practical’ man he never examines this starting point. He never examines the historical and social conditions which alone enable him to turn this money into capital. But notwithstanding this, he remains a prisoner of these conditions. He remains a capitalist only to the extent that his aims are in accordance with the needs of definite social relations:
As the conscious representative of this movement, the possessor of money becomes a capitalist. His person, or rather his pocket, is the point from which the money starts and to which it returns. The expansion of value, which is the objective basis or main spring of the circulation M-C-M, becomes his subjective aim, and it is only in so far as the appropriation of even more and more wealth in the abstract becomes the sole motive of his operations, that he functions a capitalist, that is, as capital personified and endowed with consciousness and a will. (I, p. 152)
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