Commentary on Political Economy

Friday 21 October 2011

The Profit Motive and the Entrepreneurial Spirit - Sketch of A Theory of Capitalism

In the final instalment, for now, of our discussion of the profit motive and the concept of entrepreneurial innovation, we set forth a sketch (only notes, really) for a novel theory of capitalist profits that will form one of the chapters of the work called Krisis: Exegesis and Critique of Capitalism. The previous pieces on Weber and Schumpeter will form a separate, later chapter to follow the work on Nietzsche (which is very close to completion and that has grown into a separate book to be published very soon).

The capitalist is a “capitalist” because he invests “capital” in the form of means of production and a “money wage” that is a legal claim corresponding to a portion of the dead labour “objectified”in the products pro-duced (brought forth) by living labour as goods and services that are then “sold” by the capitalist to living labour, with the consequent "surplus production" of goods and services utilised in part for the capitalist’s own consumption, in part to replace the means of production and in part for the expanded reproduction of living labour (in the form of both living labour and social resources "purchased" from non-capitalist areas). The capitalist has to ensure therefore that the “profit” that he realises at the end of the process of “valourisation” of capital in the production process and the “realisation” of this “value” through the sale of products back to living labour – the capitalist has to ensure that this “profit” can be put “politically” to use to command even more living labour than when the investment cycle started.

The money wage and the money form, then, do not and cannot represent a “quantifiable measure” of “objective products or labour or resources” that are used in the process of production or sold in the market or consumed by workers and capitalists. The entire process of “circulation, valorisation and realisation” of capital has to be guided, mediated and regulated politically. It is certainly true to say that capitalist production serves some human needs – largely these are the “reproductive needs” of workers – and that it largely regulates itself. But this “self-regulation” is not and cannot be the result of the “objectively defined” value of capital, expressed in monetary form, objectively and quantitatively measured as an “input” of production to which there corresponds an equally measurable and quantifiable “output” of the production process. No such transubstantiation of living labour into dead objectified labour is possible! The capitalist mode of production is about “value” as a form of material socio-political command over living labour: it has absolutely nothing to do with mere “quantities” – however “measured” – because it is entirely a set of “social relations of production”.

It follows from this that when the capitalist sets out to invest, that is to say, “to utilise social resources under his command” for the sake of “producing dead objectified labour” in the form of “goods and services” that will “realise a profit” once they are “sold” to workers (living labour) in exchange for the money wages they were paid so as to agree to “the exchange of their living labour with dead labour as the product of capitalist production” – it follows that the meaning of “profit” can be only that the capitalist obtains “a monetary symbol” of greater political power “to purchase” more social resources (means of production and living labour) for future investment to realise a fresh profit!

It can be easily inferred from this exposition and explanation of the capitalist process and cycle of production that its “essence” is to produce “for profit” and therefore to produce so as to expand production, and thus so as to expand political control over the known “social resources” that may command living labour at a future date. This is the meaning of capitalist investment and accumulation.

At any given stage of capitalist production and development, the command of the capitalist over social resources can be called “value” whereas the difference between the aggregate “prices” of goods and services sold to workers and the aggregate “price” of all social resources employed in the process of production is called “profit” in monetary terms. For capitalist social relations of production to reproduce themselves on an expanded scale, the capitalist must deliver a “profit” in monetary terms that allows him to command greater and larger quantities of social resources with the ultimate aim to coerce a greater number of workers to sell their living labour for a money wage that does not exceed the entitlement to objectified labour that the money wage paid to the original workers gave them. 

The obvious “limits or barriers” to this process of “accumulation” or “expanded reproduction” are as follows: the first is the political willingness of living labour “to sell” itself in “exchange” for dead labour ( an “exchange” that can take place only through the political command of capital over the means of production that “employ” workers to produce their own reproduction); the other limit to capitalist accumulation is posed by the natural environmental finiteness of the social resources (machinery, raw materials and living labour) available at any one time for the process of production; and the third limit is (an internal one) the “stability” of the price system that can accurately reflect the respective legal claims of various capitalists in different branches of production to their aliquot share of “profit” and therefore of the expanded reproduction of social resources at the end of the productive and investment cycle.

So in other words the capitalist knows very well at the “beginning” of the process of production and of the investment cycle that he must engage a “process of production” – that is, a “technology” – and that he must produce certain kinds of “products” that, together, will not only ensure the reproduction on an expanded scale of living labour, but that will also ensure the reproduction on an expanded scale of his “political command” over living labour “against” the obvious antagonism of living labour that can never be too “willing” to accept the fictitious and exploitative “exchange” with dead objectified labour through the money wage!!

What this boils down to is the basic realization that the capitalist process of production simply “cannot stand still” because it is founded on totally antagonistic bases! The capitalist must trans-form constantly and ceaselessly both the means of production (the technologies and materials) as well as the products produced by living labour in order to be able to secure and ensure “his own reproduction as command on an expanded scale over living labour”!!

And this means that – contrary to what Schumpeter theorised – the real capitalist cannot be the “financier” who simply sits in a bank and lends money for “interest”!! The real “capitalist” is precisely the “entrepreneur” who must go to hell and back to realize a “profit” for the capital invested – and to do so must also “trans-form” the method of production and the products as well!! It is not the “entrepreneurial spirit” that defines capitalism, but it is the intrinsic antagonism of the wage relation that compels the “capitalist” to be “entrepreneurial”!!!

[Small wonder, then, that all the bourgeois papers celebrate the “genius” of Steve Jobs! They do so because they know very well that the “genius” of Jobs was such only to the extent that it turned in vast “profits”! And Jobs and Apple Co. not only turned in massive profits, but they were absolutely RUTHLESS and culpably criminal in their exploitation of hundreds of thousands of Chinese workers, for starters, and in the enforcement of their “legal rights” to ensure that those profits were the maximum possible they could squeeze out of “consumers” – and that means almost exclusively “workers”. Not only! But Jobs and Apple Co. have been among the most virulent and tenacious asserters of their “right” to limit access to “their technology” and to extract as high a price and as “addictive” a custom as was virtually humanly possible! But let not the crimes of Jobs and his Apple Co. gang distract us from our purpose – to analyse the mechanism of the capitalist crime-machine.]

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