Spring 1996

Part Three

Quotes that should be used:

pp. 435-436: system of thought

p. 564: crétinisme bourgeois

In general the previous discussions of the production and circulation of value have been conducted in individual terms where the conditions of the environment were taken for granted. The value of the commodity produced has to be realized as money and then that money has to be capitalized as new productive capital. For realization we have up to now assumed there exists a market to sell the commodity; for capitalization, we have assumed there exists means of production and labor-power to be bought with the realized money. From the perspective of an individual capital we could not but assume that. Now, however, we have to consider the totality and take all this into account.

· In the reproduction of total capital we are considering the replacement of all materials, seeing how all the necessary productive forces are provided, and also considering how all the products get sold and all the money gets spent. You might think of this like an ecological analysis: the nitrogen cycle, the water cycle. Or maybe better like an exercise in thermodynamics: conservation of energy, all energy that goes in must come out. Or the metaphor Marx prefers here is reflux: all the money that is cast out (in the form of ...) must flow back (perhaps in another form). Whatever the metaphor, what we want is a model of equilibrium or balance. Everything necessary for production must be produced; everything produced must be consumed.

·We are accounting for the circulation of forces and elements within the totality. "The society's total product, and thus its total production ..." (471). What is meant by "the society" here? What delimits the totality being considered?

1) Breadth of totality: It seems at times that Marx considers this to be the nation, but is that any more than a unit of convenience -- just as he assumes the unit of time for turnover to be a year? In fact, whenever the nation is too restrictive (considering the production of gold, for example) Marx quickly brushes it aside and assumes free exchange on the world market. What might be another, better delimitation for the total sphere being considered here? The total realm of capitalist production? (Luxumberg later.)

2) Nature of totality. Read p. 509: “In speaking of the social point of view . . . of all individual capitalists together. Perhaps the question should not be what is capitalist society, but what is social capital? What is the process of the socialization of capital?

Once we start thinking in terms of total social capital, the commodity or surplus value can no longer be seen as the goal or endpoint of the process. The production of the commodity and surplus value is only a means to the primary end. What then is the real goal? What is the real object of capitalist production?

1) p. 487: “Simple reproduction is oriented by nature to consumption as its aim.” That is, to commodity production and consumption.

2) Accumulation. The production of surplus value is oriented toward the expanding reproduction of production.

3) The production of production. The circularity emphasizes that the process is its own end. Capitalist production is oriented toward the continuation of capitalist production. (Commodity and surplus value are means to that end.)

4) The production of subjectivity. In addition to commodities (objects), the process also produces subjectivities – worker and capitalist, or rather, obedient worker, morally-upright worker, rebellious worker, ascetic capitalist, abstentious capitalist, etc. The essential products are the subjectivities themselves. A coordinated array of subjectivities.

5) The production of society. The final object of production is society, and society is the totality. (All else – commodities, subjectivities, etc – are merely means to this end.) What is a society? The entire economic apparatus is at the service of the social regime.

Two Departments:

·Department I is defined as the production of commodities destined for productive consumption; Dept II, the production of commodities destined for individual consumption. In other words, the products of Dept I are means of production (such as coal, iron, machinery) and the products of Dept II are means of consumption (such as food and clothing).

·Then Dept II is divided into two types of means of consumption: "necessary means of consumption" and "luxury means of consumption" (479). The notion of "necessary" here does not depend only on physiological needs but is rather defined by custom. Therefore, tobacco is defined as a "necessary means of consumption." The real distinction here is that necessities are the commodities that both workers and capitalists consume, whereas luxuries are those that only capitalists consume. (Marx doesn't make a great deal out of this division. It only serves to explain better where the money for consumption goes within and between the two departments.)

Simple Reproduction

Primary mandate is that all commodities produced must be consumed (sold). Now let's look at the schema of simple reproduction. The central assumption here is that the capitalist consumes individually (non- productively) all of the surplus value. (p. 473)

Dept I: 4,000c + 1,000v + 1,000s = 6,000 product (means of production)

Dept II: 2,000c + 500v + 500v = 3,000 product (means of consumption)

Marx's analysis works through the various laws of equivalence among these figures. I only see two primary ones.

One:

Ic (4,000) + IIc (2,000) must equal means of production produced (6,000).

·That implies that Iv+s = IIc (because Iv+s = product - Ic)

Two:

Iv+s (1,000 + 1,000) + IIv+s (500 + 500) must equal means of consumption produced (3,000).

Here we can see that the two departments schema allows us to see more clearly the conditions for full realization of surplus value or overproduction. In the unitary schema we could just assume that any lowering of consumption (due to reinvestment of s.v.) could just result in increasing capital for the next cycle. Now, however, all of IIc must be consumed. And thus we can locate more clearly the point of overproduction. (But to what extent can we discover fixed ratios between Dept I and Dept II?)

· Necessity and Luxury: If we extend this by dividing necessity and luxury production we get for Dept II: a(400v+400s) + b(100v+100s)

Skip: [The interesting thing for Marx in this is that IIbv has to come out of IIas.]

Skip: (Three: Ic + IIc equals two years of previous production, that is, 2x (Iv+s + Iv+s), twice the annual product)

One thing that seems important in all this is to demonstrate how there are necessary exchanges among the different capitalists and workers to make everything even out. There can be unmediated exchanges between the workers and capitalists in Dept IIa, but in Dept IIb and more importantly in Dept I all the exchanges are mediated by other capitalists and workers. Capital is cast out and must flow back. "This much is evident, that simple reproduction -- in which each element of productive capital in both department I and department II has to be replaced -- remains possible only if the 500 golden birds return to department I, which first sent them flying" (495). Crisis would result if they didn't fly back. In other words, the cause of crises (at least primarily) is that the value of the products consumed cannot be realized, that is, they cannot be sold. "It is pure tautology to say that crises are provoked by a lack of effective demand or effective consumption" (486).

Accumulation

When we move then to reproduction on an expanded scale the potential imbalances and hence crises become all the greater. The definitional difference of expanded reproduction is that the capitalist does not spend all the surplus value on individual consumption but rather consumes some of it productively, that is, reinvests it and thus expands production. Marx assumes arbitrarily that the accumulating capitalist consumes half the s.v. individually and reinvests the other half.

·The first avenue toward crises that Marx points out is with respect to the money hoard required for certain types of expansion. Two forms of expansion of production: "the expansion of the functioning capital and ... the installation of new industrial businesses" (568). The first might be able to absorb invested s.v. immediately but the second requires a hoard. The hoard already implies one-sided exchanges and imbalances. Underconsumption and overproduction: "a formation of virtual extra money ... reproduction in department II" (578-79).

· Obstacles can arise at a series of other points. For example, available labor-power. Read p. 577: “We do not have to go . . . to be transformed.”

Skip: [First example: 6 years of expanded reproduction (586-89).

Second example: change in composition of capital. Labor is made more productive (relative s.v.) and hence there is more constant capital per variable capital. Rather than 1:4 it is now 1:5.]

Luxemburg, The Accumulation of Capital (1913)

Marx more or less completed the section on simple reproduction but barely began the analysis of expanded reproduction. She works to complete it. Here are some points that seem relevant for us.

1. Why does capital have to expand? Read Marx, p. 470: "Simple reproduction on the same scale . . . foreign to the capitalist basis". But why is it foreign, why can't capital just keep things as they are? (Marx gave cultural explanation in Vol. 1 section on accumulation: abstinence.) Luxemburg points rather to competition among capitalists (a point equally present in Marx).

Read Luxemburg, p. 40: "Capitalist methods of production . . . expansion of production".

pp. 40-41: "Thus, as soon as ... larger surfaces of reproduction." Furthermore, one should also note that "Investment can take place in an ever- accumulating stock of capital only if the capitalists are assured of an ever-expanding market for the goods which the capital will produce." (21, Robinson intro). So far, though, this is only why expansion must happen, not what it's conditions and effects are.

2. Luxemburg's initial question is: if the capitalists are not consuming commodities individually with all their surplus value (as in simple reproduction) then who is buying all the commodities? Where does the demand come from that keeps accumulation going? In a purely formal way, the numbers don't add up in the schema. There aren't enough consumers. Read p. 143: “The difficulty had been that for the purpose of accumulation . . . accumulated surplus value?” Is she right? Underconsumption. Damned figures.

3. But more importantly she considers expanded reproduction "in its social setting." Here you can't assume that infinite supplies necessarily exists. You have to ask with each cycle of the expansion of production: Where do the extra raw materials come from? Where does the extra labor-power come from? Where do the extra consumers come from? Her answer is that they have to come from the outside: "outside consumers qua other-than-capitalist are really essential" (365-66)

4. Saying the outside forces us to question what the social totality we have been considering in these schema is. For Luxemburg it is the entire realm of capitalist production. (In her time more or less Europe?)

5. This brings us to Luxemburg's fundamental thesis: that capitalist accumulation can only survive by constantly invading noncapitalist economies. Or really, capital has a dual relation with its outside. On one hand it must draw extra raw materials from the noncapitalist economies and use as them an extra market -- in these respects they can and in fact must remain noncapitalist. But, on the other hand, accumulation also needs more labor-power.

Read 362: "Capital needs other races to exploit territories where the white man cannot work. It . . . historical bases of capitalism". In this second respect capital must continually internalize the outside, expanding the realm of capitalist production and thereby destroying its noncapitalist environment.

·This dual relation leads toward a contradiction that Luxemburg sees as potentially fatal for capitalism. Read 366: "Whatever the theoretical aspects . . . social organisation". That is the problem. "The solution envisaged . . . its own existence" (366). In other words, [explain].

Imperialism

This question about capital's need for expansion was central to the Marxist analyses of imperialism: Luxemburg, Lenin, Hilferding. Capitalism is necessarily imperialist, and if you want to fight against the evils of imperialism you must destroy capitalism itself. Those in the socialist camp who opposed them argued that capital did not need to expand and was thus not necessarily linked to imperialism: a reformed capitalism could be nonimperialist.