Let us draw together the complex threads of our analysis of “the natural rate of interest” and “relative overpopulation”. It is not the ageing of the working population that is the real cause of the falling “natural rate of interest” or “secular stagnation” – as Lawrence Summers and Paul Krugman and many other bourgeois economists have wrongly opined. (How untenable this thesis is can be desumed quite simply by considering that the global labour force has doubled[!] in the last thirty years.) Nor is it the “immiseration thesis” that Thomas Piketty has incorrectly attributed to Karl Marx. Nor is it Piketty’s own thesis of “income inequality” – a hackneyed Keynesian leftover relic at best [the allusion os to Keynes calling gold “that barbarous relic”] -, none of these catch the true essence of the problem of capitalist society. Here we will deal with the first leg of our thesis: the second leg will come in our next post.
The maximization of profit on the part of capital implies the relative suppression of wages or “necessary labour time”. But then, the excess of production over what can be sold on the market for surplus value to be “realized” – this excess means that the capitalist bourgeoisie needs an “excess population” that can be “purchased” with the excess production from the previous cycle of production. But this “excess population” of workers needs to be paid – and so its “wages” correspond to an absolute expansion in “socially necessary labour time”.
It is this contradictory tendency of capitalism – on one hand, to create unemployment so as to suppress wages, and on the other to expand the absolute size of the exploitable labour force -, it is this contradictory tendency or dynamic that is leading us toward the apocalypse – the destruction of the biosphere.
“Universally free competition” means that the participants to a market are “freely” entitled to exchange their possessions for whatever other possessions available from other participants. The problem with this conception of competition is that on this basis, and on the assumption of “universal freedom” excepting coercion, and the further assumption of universal knowledge (or “common knowledge” in game theory), it is absolutely impossible for a capitalist to make a “profit” from exchange – and therefore there can be no “rate of interest”, natural or otherwise. The only way in which a market participant can become a “capitalist”, and therefore make a “profit” from exchange, is if he can “exchange” his possessions or goods for the “labour” or living activity of other market participants. In that case, the capitalist will be able to buy the living labour of workers and exchange it with less of their product than the workers actually produce. The difference between the value of the products produced by the workers and what the capitalist pays to them in wages is called “profit”.
But the question now arises: what can the capitalist do with this “profit”? He can sell the excess production: but obviously there will be no new buyers because the only market participants who can buy these excess goods are workers who are already so “poor” that the only exchange good they can sell is their own living activity, their “labour”. What this means, quite obviously, is that for the capitalist to be able to sell his “profit”, he must be able either to expand the size of the market with new exchange values from belonging to populations not yet within the capitalist market sphere, or else he has to use it as a hypothecation, as a “mortgage”, on any “future labour” that may be available on the market.
Marx rightly stresses the difference between value and capital – because although all capital is “exchange value”, in the sense that it is capable of being exchanged, not all exchange values are capital: because capital, unlike other “exchange values”, is “value” capable of “valourising” itself. Thus, as we are about to see, capital is a historically specific form of exchange value: its peculiarity is that for capital to exist it must be “exchanged” with a unique “good” – human living labour – that is capable of “valourising” capital by expanding existing production. In other words, the existence of capital implies not only the existence of human living labour available “for exchange”, as if human living activity were yet another “good” or “consumable output”, as if it were a mere material “product”; but also, it implies the constant expansion of the pool of available living labour!
Money, to the extent that it exists already as capital, is therefore simply a policy [a legal claim] on future (new) labour. Objectively it exists only as money. Surplus value, the added objectified labour, in itself is money; but money now exists as capital, and as such it is a policy on future labour. Here capital enters a relationship no longer with existing labour, but also with future labour. It also presents itself no longer as consisting merely of its simple elements in the process of production, but also as money; but no longer as money that is simply the abstract form of social wealth, but again as a policy [as a claim] on the real possibility of general wealth – on the labour-force, or better on the labour-force in actu. In this form as a policy or claim on potential labour-force, its material existence as money is irrelevant and may be substituted by any other claim on the labour-force. Just as with public credit, each capitalist possesses, in the value already appropriated [as product or objectified labour], a claim on the future labour-force; by appropriating living labour in its present form as objectified labour, the capitalist has already appropriated a claim on future labour-power…. Here is already revealed the ability of capital to exist as a social power separate from its objective material existence. Here is already implicit the existence of capital as credit. Its accumulation in the form of money therefore is not at all an accumulation of the material conditions of labour [of the means of production], but rather of the legal claim to living labour [on workers]. This means posing future labour as wage labour, as use value for capital. For tĵhe new [objectified] labour created [the product] there exists no equivalent [that is, no existing exchange value]; its possibility [to be valourised] exists only in a new labour force. (K. Marx, Grundrisse, 3.2.21)
The capitalist must expand the available pool of living labour for capital, the labour force, to keep yielding profits and therefore for capital to be valourised. In other words, the existence and meaning of “interest” or “average profit” requires that the pool of living labour available to capitalists must constantly expand! This is the clear link between “the natural rate of interest” and “relative overpopulation”. Whenever capital is unable to expand the reserve army of workers the natural rate of interest or profit must decline. In other words, the rate of profit is dependent on the existence of “relative overpopulation” because surplus value in the form of objectified labour can be realized as profit only when exchanged with money, and in the form of money or credit it can only be valourised if and when it can be exchanged with fresh labour-power.