Lewis Corey

The Decline of American Capitalism


PART THREE
Contradictions of Accumulation


Introductory


PROFITS and wages clash, and profits beat down wages, because the accumulation of capital is the primary aim and driving force of capitalist production. In its origins, development, and decline, capitalism is inseparably identified with accumulation.

The accumulation of capital means the conversion of profits into capital. Profits are realized surplus value, the surplus product of the workers which the capitalists appropriate through ownership of the means of production. As surplus value and profit are unpaid labor, wages and profits move in inverse ratio: the lower the one, the higher the other. The capitalists consume only a part of the surplus product they appropriate; if they consumed it all, there would be no accumulation and no expansion of industry, and, consequently, no new profits yielded by new capital. A part of the surplus product must be transformed into capital, which takes the form of capital goods to produce more profits. Thus accumulation depends upon the capacity of industry to make profits and to transform them into capital by means of an increasing output and absorption of capital goods. Capital goods, the growth of capital plant, multiply and secure capitalist wealth and its claims upon labor, production, and income.

Accumulation is accompanied by the expansion of production and an increase in its scale of operation. Where the handicraft worker dominated his tools and simple machines, working up limited amounts of raw material, the worker in capitalist industry is dominated by the massed mechanical equipment of production, working up almost unlimited amounts of raw material. The increase in the scale of production means larger and more efficient equipment in giant plants, lower labor costs, greater output, lower prices, and higher profits. Large-scale production augments the accumulation of capital, which in turn reacts upon and augments the scale of production, capital investment, and accumulation.

One result of accumulation and its transformation of industry is the relative decline of older agricultural products as industrial raw materials in favor of newer products, particularly minerals. The change involves, in its economic and political implications, the subjugation of agriculture by capitalist industry, and the exploitation of agrarian classes and regions by capital.

Another result of accumulation and its transformation of industry is the shift from muscular to mechanical power and a constantly greater dependence upon machines and apparatus. Modern industry is highly mechanized, requiring tremendous masses of equipment and materials. This involves a change in the composition of capital, that is, in the proportional amounts of labor, equipment, and materials used in industry. Small-scale industry was characterized by a low composition of capital, the preponderance of variable capital (wages, labor) over constant capital (equipment, materials). Large scale industry is characterized by a higher composition of capital, the preponderance of constant over variable capital. The use of increasingly larger masses of equipment and materials multiplies the productivity of labor and the output of industry. The higher the composition of capital, the more labor is displaced relatively to the other factors of production. Wages fall and profits rise. But both cause and effect assume antagonistic forms and provoke disturbances of the most serious nature. For the change in the composition of capital underlies all the contradictions of accumulation, and these contradictions create the inescapable instability and limited character of capitalist production and prosperity.


Last updated on 30.8.2007