Tuesday, March 27, 2012

Lesson 25: Communist Economics 5: Capital

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Communist Economics

Part 5

Marx’s Wage-Labour and Capital:

The Nature and Growth of Capital

Many scholars think Marxian economics difficult to understand. Not true. One must only be able to discern between factual reasoning and communist dialectic. This skill (or art, if you like) is vital when engaging any communist.


“Capital consists of raw materials, instruments of labour, and means of subsistence of all kinds, which are employed in producing new raw materials, new instruments, and new means of subsistence. All these components of capital are created by labour, products of labour, accumulated labour. Accumulated labour that serves as a means to new production is capital.”

In the nature of things, this is correct. Capital is in fact a reservoir of asset, many times built from a period of labor. For the new entrepreneur, that labor had likely been in service to another until a point of separation into some independent venture. For the established businessman, that labor was provided to him by others, nevertheless at some risk to and personal time commitment from the capitalist. Yet, labor is not the only means of capitalization, for there is also credit, that bankroll which comes not necessarily from collateral, but, depending on the economic and financial framework extant at the time, from some measure of fractional banking, that is, of imaginary money. Capitalism may therefore be of pure labor and asset (in whichever proprietorship, partnership, or corporation suits the venture), or it may be intermingled with interactions amongst government-sponsored financiers (for fractional banking is not possible without state sanction).

“So say the economists.”

Marx does not actually believe in the aforementioned principles of capitalism, or rather, in its moral fiber. Thus begins the dialectic.

“What is a Negro slave? A man of the black race. The one explanation is worthy of the other. A Negro is a Negro. Only under certain conditions does he become a slave. A cotton-spinning machine is a machine for spinning cotton. Only under certain conditions does it become capital. Torn away from these conditions, it is as little capital as gold is itself money, or sugar is the price of sugar.”

This opens a philosophical and philological argument, which is whether things are what they, or whether they are defined by their employment. The point, however, is moot. When things are utilized for purposes, they retain their original essence but also transcend to another state. A cow is not food until processed for meat, which is bovine in any case. A very simple point, unarguable.

“In the process of production, human beings work not only upon nature, but also upon one another. They produce only by working together in a specified manner and reciprocally exchanging their activities. In order to produce, they enter into definite connections and relations to one another, and only within these social connections and relations does their influence upon nature operate – i.e., does production take place.”

Production is dependent upon human relationships. Vague, therefore without controversy.

“These social relations between the producers, and the conditions under which they exchange their activities and share in the total act of production, will naturally vary according to the character of the means of production. With the discovery of a new instrument of warfare, the firearm, the whole internal organization of the army was necessarily altered, the relations within which individuals compose an army and can work as an army were transformed, and the relation of different armies to another was likewise changed.”

Human (social) relationships change according to the tools which are available. True historicity claimed as Marxian dialectic, but nevertheless general enough to avoid perversion.

“We thus see that the social relations within which individuals produce, the social relations of production, are altered, transformed, with the change and development of the material means of production, of the forces of production. The relations of production in their totality constitute what is called the social relations, society, and, moreover, a society at a definite stage of historical development, a society with peculiar, distinctive characteristics. Ancient society, feudal society, bourgeois (or capitalist) society, are such totalities of relations of production, each of which denotes a particular stage of development in the history of mankind.”

A summation of true things, hardly revelatory, and not in the least subversive, but it is a setup.

“Capital also is a social relation of production. It is a bourgeois relation of production, a relation of production of bourgeois society. The means of subsistence, the instruments of labour, the raw materials, of which capital consists – have they not been produced and accumulated under given social conditions, within definite special relations? Are they not employed for new production, under given special conditions, within definite social relations? And does not just the definite social character stamp the products which serve for new production as capital?”

Having adopted a few truisms, with some sly winks askance, Marx now opens the book of doctrine, and there are consequently a few errors. First, the “social relation” under which Marx applies capital is overly limiting, likely deliberately so. Under Keynesian (our current) capitalism, the system is extended past a “bourgeois” social relation (connected to, for example, generational landholding), permitting the working class to own quality property (without even the collateral of hard assets!) and to enjoy a standard of living which is the envy of the world (but whether or not a system of Keynesian capitalism is able to stand forever is another discussion). One might argue that this social relation of capital, though changed from Marx’s original vision, is still necessarily limited, but this argument takes a static view of human economics, conveniently ignoring the possibility of further developments, and is therefore pointless.

Second, Marx holds a bias against the capitalist superstructure, this causing him to insist readers redefine reality for the sake of his ideology/philosophy. For whether or not the means of production should be labeled “capital” is besides the point, in fact, outside the scope of systemic ken. It is what it is. Marx’s negative proposition is thus only a flirtation with subversion.

But to his question, “And does not just the definite social character stamp the products which serve for new production as capital?,” the answer is No. What must also deserve consideration is the quantification of what is, and what is not. For outside of capitalist structure, the means of production are still the means of production. Have not Marx and Engels already acknowledged that the tools and factories of capitalism shall be seized by and thereafter utilized for the purposes of communism? Of course! Communism shall operate in the same manner as capitalism, only with central governance rather than under individualistic authority and entity. It is thus that the means of production have intrinsic value not defined or settled by capitalism alone, but rather by the whole of humanity, and this intrinsic value is diluted only through individual taste (as for or against, e.g., a toy factory). Capital is therefore of universal appeal and utility, even to the communist. It is only a matter of acquiring it!

“Capital consists not only of means of subsistence, instruments of labour, and raw materials, not only as material products; it consists just as much of exchange values. All products of which it consists are commodities. Capital, consequently, is not only a sum of material products, it is a sum of commodities, of exchange values, of social magnitudes. Capital remains the same whether we put cotton in the place of wool, rice in the place of wheat, steamships in the place of railroads, provided only that the cotton, the rice, the steamships – the body of capital – have the same exchange value, the same price, as the wool, the wheat, the railroads, in which it was previously embodied. The bodily form of capital may transform itself continually, while capital does not suffer the least alteration.”

While capital itself is interchangeable among the many commodities, those commodities are not equal. Some are perishable (foodstuffs), some not (gold). Some are portable (currency), some not (skyscrapers). Some have universal appeal (cotton), some not (collectibles). Thereby, we find that capital may become eroded or multiplied during the investment period, that is, while it has embodiment. This is the nature of a market, a concept which either eludes or irritates Marx.

But though every capital is a sum of commodities – i.e., of exchange values – it does not follow that every sum of commodities, of exchange values, is capital.

Every sum of exchange values is an exchange value. Each particular exchange value is a sum of exchange values. For example: a house worth 1,000 pounds is an exchange value of 1,000 pounds: a piece of paper worth one penny is a sum of exchange values of 100 1/100ths of a penny. Products which are exchangeable for others are commodities. The definite proportion in which they are exchangeable forms their exchange value, or, expressed in money, their price. The quantity of these products can have no effect on their character as commodities, as representing an exchange value , as having a certain price. Whether a tree be large or small, it remains a tree. Whether we exchange iron in pennyweights or in hundredweights, for other products, does this alter its character: its being a commodity, or exchange value? According to the quantity, it is a commodity of greater or of lesser value, of higher or of lower price.”

Rubbish! A tree is not a tree, but there is oak, maple, larch, walnut, apple, and so forth, all with different qualities and perceived values. Further, an oak tree is not an oak tree, but has differing quality and value from example to example, one bringing a higher or lower price. This applies not only to the animal and vegetable but also to the mineral, the brilliance and clarity of diamonds, or the firepower of bituminous, being two such examples..

But if Marx is saying that value ought not be applied based on personal preferences but instead on utilitarianism, this is the difference between capitalism and communism. For the communist is not (in practice) concerned with whether one person desires a different quality of oak than another, but that it should be enough the oak is supplied at all! Under communism, the market is not considered, except as a mass of units to be serviced adequately. Thus, the mediocrity of communist economics, and of its products and services.

“How then does a sum of commodities, of exchange values, become capital? Thereby, that as an independent social power – i.e., as the power of a part of society – it preserves itself and multiplies by exchange with direct, living labour-power.

The existence of a class which possesses nothing but the ability to work is a necessary presupposition of capital.”

This is a great leap, predicated mostly on faith. First, this notion that commodities are useful as capital only to motivate labor is quite arrogant. If the agriculturalist utilizes his commodity not in exchange but to self-sustain, not only is Marxism pierced economically but also ideologically, for the farmer who keeps the majority of his harvest for himself is an individualist, not interested in the collective good. This obvious example may be applied to other and different economic sectors. What then? Marx has traded his integrity in pure economics for envy over particular financial mechanisms.

Second, his arrogance leads to an awkward propaganda. “The existence of a class which possesses nothing but the ability to work” is sheer liability. But even should we accord Marx the ignorance of his time, he has dehumanized the very class which he claims is dehumanized! One might suppose that a class so demeaned would fight against this categorization and further denigration, but Marx’s proletariat often has found comfort with this type of savior, who accurately articulates their frustration but also with vapidity causes them to become a pitiable caricature.

Third, the representation of capital as being almost completely reliant upon the existence of a marginalized working class has basis in reality only where such conditions exist. It is cherry-picking at excess to prove the unworthiness of capitalism in entirety. Worse, Marx indulges again in hypocrisy. For as we have examined in previous installments, communism not only requires the same work ethic as capitalism, but concerning participation and mindlessness, its stricture is more zealous and cruel.

“It is only the dominion of past, accumulated, materialized labour over immediate living labour that stamps the accumulated labour with the character of capital.”

Marx concludes his case that accumulated wealth is a master over slaves. This theme ignores many influences which have shaped the world since Marx, including the ability of men to excel past their stations, the mobility of the working class, and the elevation of living standards through technology.

“Capital does not consist in the fact that accumulated labour serves living labour as a means for new production. It consists in the fact that living labour serves accumulated labour as the means of preserving and multiplying its exchange value.”

According to Marx, capitalism does not serve its servants, that is, the working class, but rather breeds, exploits, and finally tosses away these slaves. This is accomplished for the sake, and by means, of expanding power and greed.

The boundary is settled, and one must choose between the bourgeois and the proletariat, between capitalism and communism. No middle ground is given, and this deliberately so (and we agree this is necessary and proper). Yet, due to those glaring errors and omissions already noted, even a passing adherence to Marxism is fraught with danger. Caution is, however, overthrown by those who await a salvation from their dehumanization, ready to embrace folly and death.

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