Capital, Volume 3
Part
Five
The
central thing I want to emphasize is the role that interest-bearing capital and
credit play in the transitions from one mode of production to another. In Chapter 36, "Pre-Capitalist
Relations," Marx explains how usury in Europe paved the way for the
transition to the capitalist mode of production and in Chapter 27, "The
Role of Credit in Capitalist Production," he argues that the credit system
is an important lever in the transition from capitalist production to the
subsequent social mode, communism.
Usury
I
want to start with usury (even though it comes later in the text) because it
comes first historically. We should by
now be used to Marx’s rhetorical strategy whereby he gives the logical or
conceptual development of present phenomena and then in the final chapter gives
the historical development of that same phenomena. The function of usury in feudal Europe, and Marx argues its
function in any pre-capitalist society, is to impoverish the mode of production
and destroy the productive forces. In
medieval Europe, the usurer lent money to both the large-scale landed
proprietor and the small producers who possessed their own conditions of labor,
such as peasants and artisans. What
usury does is simply deprive those producers of a portion of their profits and
thus erode the viability of that mode of production. "It does not change the mode of production, but clings on to
it like a parasite and impoverishes it.
It sucks it dry, emasculates it and forces reproduction to proceed under
ever more pitiable conditions" (731).
Usury thus impoverished the independent feudal peasant and the landed
proprietor. The usurer does not really
want to destroy the mode of production.
It wants that mode of production to continue living so it can continue
to suck its profits.
·Usury's
effects, however, are really contrary to its interests. Its interests are conservative but its
effects are revolutionary. Usury
contributes to primitive accumulation and prepares for the construction of the
capitalist mode of production.
Specifically, by impoverishing the small, independent producers, usury
has the effect of separating the producers from the means of production and
thus on one hand creating a class of free potential proletarians and on the
other forming a concentration of wealth in the hands of the few. "Usury has a revolutionary effect on
pre-capitalist modes of production only in so far as it destroys and dissolves
the forms of ownership which provide a firm basis for the articulation of
political life and whose constant reproduction in the same form is a necessity
for that life" (732). Usury thus
had a revolutionary effect in medieval Europe to the extent that it destroyed
the feudal forms of ownership, and Marx claims that it plays or can play a
similar role in other non-capitalist societies.
·Even when we
are talking about usury's revolutionary effects, we should be clear that the
effects of usury are purely negative.
It only destroys the old mode of production and has no power to
contribute to the construction of the new.
It's relation to capitalist production, then, is a purely negative
one. "Usurer's capital has
capital's mode of exploitation without its mode of production" (732). Usury can destroy precapitalist forms and it
can exploit from an external position but it has nothing to say about
capitalist production itself.
·The question
then is how is this usury that functions are part of the process of primitive
accumulation different from the interest-bearing capital in capitalist
production? "What distinguishes
interest- bearing capital in so far as it forms an essential element of the
capitalist mode of production, from usurer's capital is in no way the nature or
character of this capital itself.
[Money is lent and paid back with interest.] It is simply the changed conditions under which it functions, and
hence also the totally transformed figure of the borrower who confronts the
money-lender" (735 mid). The
changed conditions and the transformed borrower can be explained in large part,
it seems to me, by the fact that within the capitalist mode of production
interest-bearing capital is subordinated to or dependent upon industrial
capital. "This violent struggle
against usury, the demand for the subjection of interest-bearing capital to
industrial capital, is simply the prelude to the organic creations that these
conditions of capitalist production produce in the form of the modern banking
system" (738). In effect, the
subordination of all forms of capital to industrial capital, which is
characteristic of the capitalist mode of production, is what determines the
passage from usury to interest-bearing capital and the entire modern banking
and credit system.
What
I see as important in Marx's discussion of interest-bearing capital is that he
defines interest as a portion of the profit on productive capital that is
shared out in much the same way that the profit is shared out to commercial
capital, rent, and so forth. In other
words, capitalist money lending and the profits of interest-bearing capital has
to be considered not separately but within the entire cycle of capitalist
production. This is I think a
conceptual consequence of saying that money-lending capital is subordinated to
industrial capital.
It’s interesting here that Marx
poses an analogy here between the lender of money and the worker (a lender of
labor-power): “Money or a commodity is already potential capital in itself,
just as labour-power is potential capital” (477 top). So, the industrial capitalist pays the exchange value of this
commodity money (interest) and gets from it its use-value. "It is this use-value that money has as
capital -- the capacity to produce the average profit -- that the money
capitalist alienates to the industrial capitalist for the period during which
he gives him control of the capital loaned" (473). One of the things this analogy accomplishes
is emphasize the fact that capitalist money-lending and interest are entirely
dependent on industrial production.
That is the use-value of the money as capital, its engaging in the
productive process. Without that
production and its average rate of profit as foundation, interest would have no
basis.
This leads to the notion of interest
as a share of the rate of profit. Let’s
say the general rate of profit is 20%.
How is this general rate of profit determined? Review.
Read
p. 489 bottom: “The general rater of profit is determined . . . their relative
size.”
Now,
the rate of interest must be a portion of the rate of profit, so in this case
its minimum limit is 0% and its maximum 20%.
Within these limits, however, we can no way of determined any necessary
or natural rate of interest. As Marx says,
“there is no natural rate of interest” (478).
Within these limits, the rate of interest is simply determined by
competition among the different capitals, really between money-bearing capital
and industrial capital. (Say, for
instance, the 20% rate of profit is divided up as 5% interest and 15% profit to
industrial capital.) One thing I find
interesting about the contrast between these two rates, rate of profit and
interest, is that the first is a fuzzy quantity based on a necessary, real
foundation, whereas the latter is a clear quantity based on an accidental,
contingent foundation. Read p. 491 mid:
“the general rate of profit presents a blurred and hazy picture compared with
the sharply defined rate of interest.”
The fact that interest is merely a
part of the general rate of profit helps us understand why Marx thinks Proudhon
is so naïve when he rails against interest and money-lending. “Lending appears to Proudhon as evil because
it is not selling” (p. 466). Or really,
Proudhon seems to think that interest is entirely responsible for surplus
value: “it is impossible for the worker to buy back the product of his own
labor” (p. 468). Marx’s response to
Proudhon is that interest and money-bearing capital can only be considered
within the context of capitalist production.
Destroying interest while leaving capitalist production intact will
solve nothing. Proudhon falls victim to
a common misconception: “In the popular mind, therefore, money capital or
interest-bearing capital is still seen as capital as such, capital par
excellence” (499).
Capital
fetish: “Interest-bearing capital . . . displays the conception of the capital
fetish in its consummate form, the idea that . . . pure automaton” (523
bottom).
Another interesting effect of this
division of profit into interest and profit of enterprise is the other half of
the equation. Marx explains that there
is a qualitative distinction between these two parts of profit.
Read
498 top: “One part of the profit . . . active capitalist exercises.” The first is capital outside the production
process, which yields an interest, and the second capital within the production
process, which yields profit of enterprise.
What
does it mean to say that interest expresses capital as property? Read pp. 502-503. Or rather, “Interest represents mere ownership of capital as a
means of appropriating the product of other people’s labor” (p. 506 top).
Now, consolidating in this one pole,
money-bearing capital, the role of capital as property, as a kind of
parasitical exploitation, frees up the other pole, enterprise, capital as
function. In other words, the
money-bearing capitalist clearly does no work and therefore let’s say has no
just claim on interest, but the industrial capitalist (borrowing from the
money-bearing capitalist and putting that money to work) does work for the
profit of enterprise.
Read
p. 503 bottom: “The exploitation of productive labor takes effort . . . as a
worker.”
The
work of the capitalist goes under the name of “wages of superintendence of
labor.” This gives rise to the idea
that the profit of enterprise is a wage for supervising labor. “The labor of exploiting and the labor
exploited are identical, both being labor” (506 bottom).
Marx gives three responses to this
in rather compact form.
1) all
forms of domination (including slavery) take work and that work of dominating
is often presented as a justification of the system itself. Read p. 509 bottom: “this function arising
from the servitude . . . owner of capital.”
2) The
profits of enterprise are not “wages of superintendence” and they are not wages
at all because they derive from surplus labor not from any calculation of the
value of the labor-power involved. The
negative proof of this is the social demand.
Read p. 513 mid: “The socialists then raised the demand . . . wages of
supervision.”
3) The
functional role of capitalist supervision in the cooperation of labor is
decreasing so that industrial capital too is becoming increasingly parasitic or
superfluous. Read p. 512 mid: “But
since on the one hand . . . someone superfluous.” In other words, the industrial capitalist comes to be just as
parasitical as the money-bearing capitalist.
Credit
The
credit system is the vehicle for the transition beyond the capitalist mode of
production just like usury was the vehicle for the transition beyond feudalism,
but credit's relation to capitalist production is exactly opposite to usury's
relation to feudal production. Usury
destroyed feudal productive forces but the credit system generates a huge
expansion of capitalist productive forces, and in particular the credit system
brings about the conditions of cooperation and the development of social
labor. Or really, the credit system
plays a double role, both productive and destructive.
Marx sees the productive face of the
credit system at work in the formation of joint-stock companies. "Capital, which is inherently based on
a social mode of production and presupposes a social concentration of means of
production and labour-power, now receives the form of social capital (capital
of directly associated individuals) in contrast to private capital, and its
enterprises appear as social enterprises as opposed to private ones. This is the abolition of capital as private
property within the confines of the capitalist mode of production itself"
(567). "This result of capitalist
production in its highest development is a necessary point of transition
towards the transformation of capital back into the property of the producers,
though no longer as the private property of individual producers, but rather as
their property as associated producers, as directly social property"
(568).
·At the same
time that the credit system operates a socialization of production it also
extends the command of individual capitalists over huge quantities of social
capital. Credit is extended to individual
capitalists, "or to the person who can pass as a capitalist" (570),
in such a way that the individual capitalist can widely extend its command over
social labor beyond the power of its own capital. "The actual capital that someone possesses ... now becomes
simply the basis for a superstructure of credit" (570). [NB: how the luxury or representation as
capitalist is here the means of credit necessary for the individual capitalist
(570). Capitalist representation is
basis of the confidence of the creditor.]
The negative face of the credit
system is also how it can lead to larger and larger crises of overproduction
while at the same time it develops the productive forces. Read p. 572 bottom: “The credit system . . .
old mode of production.”
·The formation
of joint-stock companies on one hand and the growth of private wealth on the
other, both accomplished through the credit system, deepens one of the
contradictions of the capitalist mode of production. "In the joint-stock system, there is already a conflict with
the old form, in which the means of social production appear as individual
property. But the transformation into
the form of shares still remains trapped within the capitalist barriers;
instead of overcoming the opposition between the character of wealth as
something social, and private wealth, this transformation only develops this
opposition in a new form" (571).
Lenin:
"Capitalism in its imperialist stage arrives at the threshold of the most
complete socialisation of production.
In spite of themselves, the capitalists are dragged, as it were, into a
new social order, a transitional social order from complete free competition to
complete socialisation. Production
becomes social, but appropriation remains private" (Imperialism
25).