Ernest Mandel

Late Capitalism


ABSOLUTE LAND RENT: specific form of surplus-profit originating from a monopoly of landownership by a special class of agrarian proprietors, who prevent the sum-total of surplus-value produced in agriculture from being redistributed among all capitalists, by appropriating part of that surplus-value as a prior condition of access to the land which they own.

ACCUMULATION OF CAPITAL: increase in the value of capital by the transformation of part of surplus-value into additional capital. That part of surplus-value which is not accumulated will be unproductively consumed by capitalists or their dependents.

AVERAGE SOCIAL PRODUCTIVITY OF LABOUR: the level of productivity of labour at which the average commodity is produced in each important branch of production. A minority of goods will be produced below this average in ‘backward’ firms, and another minority at a higher level of productivity in ‘advanced’ firms.

CAPITAL: exchange-value which seeks a further accretion of value. Capital first appears in a society of petty commodity producers in the form of owners of money (merchants or usurers) who intervene in the market with the aim of buying goods in order to resell them at a profit.

CAPITALIST MODE OF PRODUCTION: generalized commodity production, in which the direct producers have been dispossessed of their means of production, and therefore have to sell their labour power (the only commodity which they still possess) to those who own the means of production. Labour-power and means of production alike have become commodities. Means of production in turn become capital – accruing further exchange value by the surplus-value created by the direct producers and appropriated by the owners of capital. A society dominated by the capitalist mode of production is basically divided into two classes: the capitalist class which monopolizes the means of production, and the proletariat which is economically compelled to sell its labour-power.

CENTRALIZATION OF CAPITAL: the fusion of different capitals under a single common command.

CIRCULATING CAPITAL: that part of constant capital used to purchase raw materials, energy and auxiliary products; plus variable capital needed to purchase labour-power.

COLLECTIVE LABOUR CAPACITY: the sum total of all manual and intellectual labour indispensable in a modern capitalist factory for the process of physical production to occur. By extension: social collective labour capacity is the sum total of manual and intellectual labour at the disposal of society as a whole for organizing its economic life. Commodity production and operation of the law of value arise out of the fragmentation of this social collective capacity into private labours, expended independently of each other. Under a system of use-value production (for example, primitive communism, or future communism), the associated producers consciously divide this social collective labour capacity between different spheres of production and communal activities.

COMPRADOR BOURGEOISIE: that section of the ruling-class in colonial and semi-colonial countries which, although owning and accumulating capital, is closely tied to foreign imperialism, especially via the intermediary functions of merchant capital (import-export businesses), and normally does not engage in industrial investment.

CONCENTRATION OF CAPITAL: the growth in the value of capital in each major capitalist firm as a result of accumulation and competition (elimination of smaller and weaker firms).

CONSTANT CAPITAL: that part of capital which is used to purchase buildings, machinery, raw materials or energy, and whose value remains constant because it is incorporated into the value of final commodities and conserved by the activity of labour-power.

CRISES OF OVER-PRODUCTION: periodic interruptions in the process of expanded reproduction, classically occurring every seven or ten years, induced by a fall in the rate of profit, determining a decline in investment and employment: during such a crisis, the capital engaged in the production of commodities cannot be wholly recuperated, because some of these commodities can no longer be sold, or can only be sold at a loss. Crises of over-production are a necessary phase in the normal pattern of capitalist production, which successively passes through industrial upswing, boom, overheating, crisis and depression.

DEPARTMENT I: branches of capitalist production producing means of production (raw materials, energy, machinery and tools, buildings).

DEPARTMENT II: branches of capitalist production producing means of consumption (consumer goods), which reconstitute the labour force of the direct producers and contribute to the livelihood of the capitalists and their dependents.

DEPARTMENT III: branches of capitalist production which do not enter the process of reproduction – i.e., which renew neither constant nor variable capital: for example, production of luxury goods exclusively consumed by capitalists, or production of weapons.

DEVALORIZATION (ENTWERTUNG): the process whereby capital loses part of its value, which takes two main forms during a capitalist crisis. Firstly, as a result of the decline in value (price of production) of commodities, especially means of production, the capital invested in these commodities is devalorized. Secondly, as a result of commercial bankruptcies and firms going out of business, much of the value of their capital is destroyed. This capital was part of total social capital, which thereby loses part of its aggregate value.

DIFFERENTIAL LAND RENT: specific form of surplus-profit originating from the differential productivity of specific agricultural or mining land (or successive investments in these lands), so long as the value and market price of the agricultural or mining products in question are regulated by less productive land.

EXCHANGE-VALUE: value for which a commodity is exchanged on the market. According to Marx’s (perfected) labour theory of value, the exchange-value of a commodity is determined by the socially necessary quantity of unskilled labour needed for its reproduction at a given social average productivity of labour, and measured by the length of labour-time (hours or days) needed to produce it.

FIXED CAPITAL: that part of constant capital used to purchase buildings and machinery.

INCREASE OF ABSOLUTE SURPLUS-VALUE: obtained by a lengthening of the working day (or week) without any commensurate increase in wages for the direct producers.

INCREASE IN RELATIVE SURPLUS-VALUE: obtained by a shortening of that part of working-day (or week) during which the worker reproduces the equivalent of his wage, without any overall reduction of the working-day (or week), via an increase in the productivity of labour in agriculture and those branches of industry which produce consumer goods for the working-class.

INTERNATIONAL INTERPENETRATION OF CAPITAL: centralization of capital on an international scale.

LAW OF VALUE: the economic mechanism in a society of private producers which distributes the/total labour-power at the disposal of society (and thereby all material resources necessary for production) between its various branches of production, via the mediation of the exchange of all commodities at their values (in the capitalist mode of production: at their prices of production). Under capitalism, this law determines the pattern of investment – i.e., the inflow and out flow of capital in different branches of production, according to the deviation of their specific rate of profit from the average rate of profit.

MONEY: the specific commodity in whose exchange-value the exchange-value of all other commodities is expressed. Money is the general equivalent for the value of all commodities.

MONOPOLY CAPITALISM (IMPERIALISM): that phase in the development of the capitalist mode of production in which a qualitative increase in the concentration and centralization of capital leads to the elimination of price competition from a series of key branches of industry, monopolistic agreements are formed, a few firms completely dominate successive markets, banking-capital increasingly merges with industrial capital into finance capital, a few very large financial groups dominate the economy of each capitalist country, these giant monopolies divide the world markets of key commodities between themselves, and the imperialist powers divide the globe into colonial empires or semi-colonial spheres of influence. A trend to ‘regulate’ (i.e., limit) investment and production in monopolized sectors hence forward prevails, in spite of the emergence of monopolistic surplus-profits, so that over-accumulation leads to a frantic search for new fields of capital investment and hence to a growth of capital exports.

MONOPOLY SURPLUS-PROFITS: specific forms of surplus-profit originating from obstacles to entry into special branches of production.

OBJECTIVE SOCIALIZATION OF PRODUCTION: the growth of technical coordination, interdependence and integration in production, by which capitalism increasingly generates the negation of the private labour and private production from which it is born – first inside single factories, then within a number of production units and branches of industry, and finally between countries.

ORGANIC COMPOSITION OF CAPITAL: the technical or physical relation ship between the mass of machinery, raw materials and labour necessary to produce commodities at a given level of productivity, and the value relationship between constant and variable capital determined by these physical proportions.

OVER-ACCUMULATION: a state in which there is a significant mass of excess capital in the economy, which cannot be invested at the average rate of profit normally expected by owners of capital.

PRICE (MARKET PRICE): the monetary expression of the exchange-value of a commodity, which oscillates about this value according to the laws of supply and demand.

PRICES OF PRODUCTION: transformation of values of commodities by means of competition between capitals, which tends to equalize the rate of profit for each capital. The result of this process of equalization is that each capital does not appropriate the sum-total of the surplus-value produced by ‘its own’ workers, but a part of total social surplus-value proportionate to the fraction of total social capital which it represents. The sum total of prices of production is equal to the sum total of values, because in the process of competition and equalization of the rate of profit, no additional surplus-value can be created nor any portion of socially produced surplus-value be destroyed.

PRODUCTIVE CAPITAL: that part of social capital invested in sectors where surplus-value is directly produced. Unproductive capital, like commercial capital or banking capital, can acquire part of total social surplus-value because it helps to reduce the turnover-time of capital, or to enlarge the scope of production by credit beyond the operative limits of productive capital itself, and thereby indirectly contributes to an expansion of surplus-value.

PRODUCTIVE LABOUR: in a capitalist society, only that labour which directly produces surplus-value. This notion has nothing to do with that of socially useful labour, in a socialist society.

PROFIT: that part of social surplus-value which is appropriated by each particular capital (each capitalist firm).

RATE OF ACCUMULATION: the relationship between the accumulated portion of surplus-value and the value of the capital which this surplus-value increases.

RATE OF INTEREST: interest is in the first instance that portion of surplus-value which productive capitalists pay to owners of money capital, in order to increase the scope of their productive operations beyond the limits of the capital which they themselves possess. The rate of interest therefore normally and in the long-run remains lower than the average rate of profit. In a capitalist society, any sum of money can obtain the average rate of interest by being deposited in the banking system, which centralizes available savings and transforms them into money capital.

RATE OF PROFIT: the relationship between surplus-value and the sum-total of constant and variable capital engaged in the production of this surplus-value.

RATE OF SURPLUS-VALUE: the relationship between the surplus-value produced by variable capital, and the variable capital that has produced it: also called, rate of exploitation of wage-labour.

REALIZATION OF SURPLUS-VALUE: surplus-value, produced by workers in the process of production, and therefore contained in the commodities as soon as this production is completed, can only be appropriated by capitalists in money-form – in other words, after the commodities in question have been sold. Realization of surplus-value thus involves sale of commodities at such a market price that part or whole of the surplus-value which they contain can be appropriated by their owners.

RECESSION: a crisis of over-production abbreviated and mitigated by deliberate State intervention in the form of credit expansion, inflation, public works and so on.

REPRODUCTION: the process by which, after production and sale of commodities, a new cycle of production is undertaken by a given capital. Simple reproduction means that capital starts a new cycle with the same value as at the outset of the previous cycle (accumulation is zero: total surplus-value has been unproductively consumed). Expanded reproduction means that capital starts a new cycle with an increase of value over the previous cycle (accumulation is positive: part of surplus-value has been productively invested). Contracted reproduction means that capital starts a new cycle with a lower value than in the previous cycle (not only has all surplus-value been unproductively consumed, but the sale of commodities has not reconstituted the total value of the capital initially engaged in their production).

SEMI-COLONIAL COUNTRIES: those capitalist nations which are politically (formally) independent, but whose economies continue to be dominated by international imperialist capital.

SIMPLE COMMODITY PRODUCTION: economic system in which producers sell the products of their labour on the market, but remain proprietors of, or have direct access to, their own means of production and livelihood (essentially: small farmers and independent artisans). The general purpose of such commodity-owners is to sell their own products in order to buy goods necessary for their livelihood which they do not produce themselves, because of the social division of labour.

SOCIAL SURPLUS PRODUCT: that part of the annual product of any society which is neither consumed by the direct producers nor used for the reproduction of the stock of means of production available at the start of the year. In a class-divided society, the social surplus product is always appropriated by the ruling class.

SOCIALLY AVERAGE RATE OF PROFIT: the relationship between the sum-total of surplus-value produced in a given capitalist society, and the sum-total of capital.

SURPLUS-PROFITS: all profits over and above the socially average rate of profit.

SURPLUS-VALUE: the monetary form assumed by the social surplus product in a commodity-producing society. In a capitalist society, surplus-value is produced by wage-labourers and appropriated by capitalists: in other words, it is the difference between the new value produced by labour in the process of production and the cost of reproducing labour-power (or the value of labour-power). In the final analysis, it represents unpaid labour appropriated by the capitalist class.

TECHNOLOGICAL RENTS: those monopoly surplus-profits originating from technical advances protected by monopolistic practices.

TURNOVER-TIME OF CAPITAL: the time during which the value of a capital is reconstituted. Normally, one cycle of production and circulation (sale of commodities) reconstitutes circulating capital, whereas fixed capital is only reconstituted after several cycles of production and circulation of commodities.

UNPRODUCTIVE LABOUR: all those forms of wage-labour which do not increase the social mass of surplus-value, but which help, specific groups of capitalists to appropriate parts of this surplus-value, or indirectly increase surplus-value – for example, wage-labour in commerce, banking or administration.

USE-VALUE: utility of a commodity for the fulfilment of a specific need of its purchaser. Goods without use-value for anyone cannot be exchanged or sold. By extension, production of use-values pure and simple, as opposed to production of commodities, is production of goods for the consumption of their direct producers, or collective units of such producers.

VALORIZATION (VERWERTUNG): the process whereby capital increases its own value by the production of surplus-value. Marx presents the process of commodity production as a unity of two distinct processes – the labour process through which labour-power produces use-values, and the valorization process through which labour-power produces additional value over and above its own value. This surplus-value, although created during the process of production, has first to be realized through the sale of commodities before capital can appropriate it and therewith actually increase its own value. The traditional translation of this notion (Verwertung) in Capital as the ‘self-expansion’ of capital is misleading, because’ it abstracts from the labour-process which materially creates value and from the process of realization which is necessary for capital to achieve its ‘expansion’: it is therefore not used in Late Capitalism.

VALUE OF LABOUR-POWER: the sum total of the exchange-values of all those commodities necessary to reproduce the labour-power of the direct producer and his family. This contains a purely physiological element, and a moral-historical element. The latter is a function of those workers’ needs that are formed by a specific level of civilization and a given relationship of forces between social classes, which have become acknowledged as integral to a normal standard of living.

VALUE OF SKILLED LABOUR-POWER: a multiple of the value of simple labour-power, incorporating into it the costs of producing the skills in question.

VARIABLE CAPITAL: that part of capital which is used to purchase labour-power (to hire workers) and whose value accrues with the surplus-value extracted from this labour-power by the owners of capital.

WAGE: price of the commodity of labour-power, or monetary expression of its exchange value, which oscillates about the value of labour-power via the operation of the law of supply and demand, and especially via the regulation of the reserve army of labour, or volume of unemployment.

Last updated on 4 June 2014