Commentary on Political Economy

Monday 10 August 2020


In “The Beirut Syndrome” we explained how capitalism, in its very essence, is financially unstable in that it expands the credit pyramid to the point where investment is no longer profitable. By seeking to stabilize this inherent instability, monetary authorities facilitate financial bubbles that eventually burst out catastrophically. But the question arises, at what point does the capitalist inverted credit pyramid implode? The answer is: at the point where the real political ability to command living labour is no longer guaranteed. In this contribution, we examine the details of this proposition.

Part One


We start from the universally accepted notion that the very essence of capitalism is to generate profits for capitalists. Profit is the monetary difference between total revenue and total investment. For a capitalist enterprise to be profitable, the products it sells must amount to more than the cost of producing them with the cost of capital added (interest at the prevailing rate over the period of production and sale). This means that in the process of production the inputs have been “valorised” - their value has grown - and this is then reflected in the “realisation” of the value through the sale process. But how can the components of production acquire value? After all, objects (means of production - raw materials and machinery) are only inert objects and they cannot possibly possess or acquire “value”. It is obvious that value, and the value added in the process of production, can only be derived from living labour.


We have therefore a “double character” (Doppelcharakter) of human living labour: - on one side, as living activity, it is the only possible source of value in the form of dead labour, as “produced goods”: in this consists the use value of living labour to the capitalist. Yet, on the other side, the living labour of workers can be “purchased” as labour-power through the violence of the wage relation “on the market” like any other commodity through its exchange with the commodities or “goods” produced earlier by the workers themselves, in other words, with “dead labour”! Thus, the capitalist “purchases” the living labour of workers as if it were a commodity that can be exchanged like and with any other commodity or exchange value. It follows that value-as-capital can never be a “fixed” quantity – a “thing” - but must be instead a social relation in constant circulation from production in the workplace to sale in the market!

Two things follow from this conclusion: the first is that the value of a particular commodity cannot be determined until after it is actually sold on the market - until its potential value is realised. And the second is that this value, once it is realized as money capital, is determined ultimately by the ability “to purchase” labour-power on the market as if it were a commodity or exchange value like any other. But this means that the supreme task of the capitalist, which is to maximize profit and therefore to optimize the accumulation of capital, must be, first, to reduce the labor time that workers need to reproduce themselves (necessary labour), and second, to expand thereby the labor time that workers take to produce the surplus value that will ultimately be realized in the market as profit by the capitalist. It follows that as the capitalist successfully reduces the necessary labour time for the workers to reproduce themselves, then, given that a worker can only work so many hours in a day, the capitalist must increase the number of workers employed in order to increase the amount of potential surplus value and profit realizable in the market.


Profit in capitalist enterprise, and therefore surplus value, makes absolutely no sense at all unless it is seen as value that can be (a) increased through the process of production or “valorisation”, and (b) “realised” through the process of market sale. But once this profit or surplus value is “realised” through the sale of produced commodities, this profit realised by capitalists in its monetary form can have absolutely no meaning unless it can be expressed as purchasing power over fresh living labour! This means that the process of realisation of profit can have meaning only through the exertion of capitalist command over fresh living labour, over an ever-expanding population of workers.


This conclusion is certainly devastatingly simple – but its implications for our ecosphere are much more devastating, as we are about to see! What it entails is not only that, to maximise profit and its accumulation, capital must seek to exploit its existing workers to the very utmost, but also that it must increase the number of workers it can exploit to the limit of available social resources! And that is far from all. Capitalists also need the presence of a reserve army of the unemployed workers that (a) provides competitive tension on employed workers to drive down wages, and (b) provides a repository of further investment for capitalists to expand their command over society so that there may be what is called “capitalist accumulation”. In other words, capitalist accumulation through surplus value and its monetary equivalent, profit, is nothing other than the expansion of political claims over excess labour-power through overpopulation.


On the assumption of “universally free competition” (Knut Wicksell, Lectures), the only ways in which one individual, the capitalist or “employer”, is able “to purchase” or “exchange” existing products or “goods” for the living activity of another individual, the worker or “employee”, are two: - either the capitalist already owns the means of production and is therefore able to force the worker to sell his living activity; or else the capitalist renounces his present consumption and exchanges it for the living labour of workers who wish to consume his goods immediately – and thereby obtains a legal credit over the future living labour of workers. Of course, in neither case is the capitalist system of production justified, because in the first case, where capitalists already own the means of production, their prior ownership is not explained or justified, and in the other case, where they purchase the living activity of workers by “delaying” or “sacrificing” their present consumption, that may justify the current “exchange” by workers to capitalists, but it certainly does not justify the enslavement of all future generations of workers to capital!

But in this second instance, the rationale for capitalism is that the capitalist is the stronger person, the ascetic who is willing to wait, to deprive himself, to sacrifice present consumption in exchange for the living labour of those who cannot wait – and who therefore become “employees” or workers. (No less a thinker than Joseph Schumpeter espoused this patently flawed rationale.) This capitalist claim to “property” is called “time preference” in bourgeois economics. Thus, bourgeois economists are able to mix the subjective (time preference) with the objective (the contribution of the means of production to the product): there is almost a Freudian “transference” of capability from the clearly political ownership of the means of production to the “metaphysical” or “physiological” contribution of the means of production to the creation of the product itself!

Bourgeois economists are quite aware of the fact that “value” is not a “physical property” of the means of production – of what they mistakenly call “capital” and thus, by so doing, they invite the confusion between the social relation “capital” and the physical, objective means of production. But then, once they have acknowledged that economic value – and therefore profit and therefore interest, which is the average rate of profit – is not a physical property, bourgeois economists find themselves at a serious loss: because if one acknowledges that value is not a physical property, then it must follow that it is a political category based on power relations in a society. “Capital” therefore can no longer refer to the physical means of production but rather to the “legal claim over production” that comes from the capitalist’s “ownership” of the means of production.

The insurmountable difficulty for bourgeois economics with this realization is that capitalism loses its “natural” status and becomes merely a political reality – a social institution that is either entered into freely by the members of a society or else is enforced violently by some (the capitalists) over others (the workers). It is at this juncture that bourgeois economists balk – because to acknowledge that capitalism is a political rather than a “natural” reality is immediately to call its existence into question and its rationale into doubt. That is why bourgeois economists must perennially oscillate between the notion of “capital” as physical means of production and “capital” as exchange value!

Here is Marx on this precise point and this precious equivocation on the part of bourgeois economists to justify the violence of the wage relation well before the Marginal Revolution came to pass in economic theory:

Others say, even economists, e.g. Ricardo, Sismondi etc., that only labour is productive, not capital. [17] But then they do not conceive capital [18] in its specific character as form, as a relation of production reflected into itself, but think only about its material substance, raw material etc. But these material elements do not make capital into capital. Then, however, they recall that capital is also in another respect a value, that is, something immaterial, something indifferent to its material consistency. Thus, Say: 'Capital is always an immaterial essence, because it is not material which makes capital, but the value of this material, a value which has nothing corporeal about it.' (Say, 21.) [19] Or: Sismondi: 'Capital is a commercial idea.' (Sismondi, LX.) [20] But then they recall that capital is a different economic quality as well, other than value, since otherwise it would not be possible to speak of capital as distinct from value at all, and, if all capitals were value, all values as such would still not be capital. Then they take refuge again in its material form within the production process, e.g. when Ricardo explains that capital is 'accumulated labour employed in the production of new labour', [21] i.e. merely as instrument of labour or material for labour. In this sense Say even speaks of the 'productive service of capital', [22] on which remuneration is supposed to be based, as if the instrument of labour as such were entitled to thanks from the worker, and as if it were not precisely because of him that it is posited as instrument of labour, as productive. This presupposes the autonomy of the instrument of labour, i.e. of its social character, i.e. its character as capital, in order to derive the privileges of capital from it. (Grundrisse, 3.2.12)

The point here is that bourgeois economists must present capital as the most “natural” of values. And to do so they have to try and fuse two aspects of capital – that of being a social relation whereby the capitalist is able “to purchase” human living activity as “labour power”, and that of being “embodied” in physical commodities or “goods” – means of production and products that can be “exchanged” with human living labour as if the latter itself were a “good” or commodity exchangeable like an object. Thus, capital becomes “objectified or dead labour”.

If indeed profit can exist only by means of the capitalist “saving” or “renouncing” present consumption for the sake of “future” consumption – and if this “renunciation” is then indefinite because the capitalist never ends up consuming the “saved” product – then in that case it is clear that the entire aim of “saving” is for the sake of accumulating social power over the living activity of more and more workers. Here, workers stand for the people who do not save and therefore are forced to sell their living activity to pay for their immediate consumption.

Extrapolating from this schematic social relation of production, we can then conclude that the effect of capitalism is to increase the “excess” population on the planet ad infinitum – and therefore to destroy the environment in order to keep alive this “excess” population. This population is in “excess” because it exists not in order “to produce” – because its production would not be “profitable” – but rather in order to suppress the part of the population that is actually employed by capitalists – so as to force these workers “to sell” their living labour “in exchange” for part of the product they produce!

As Thomas Friedman once said, “the Earth cannot afford 8 billion Americans” because, if the living standards of Americans are what is needed to maintain capitalism as a system of production, then the “excess” population needed is such that the environmental demands to keep it alive are simply impossible to meet! When economists beginning with Larry Summers and Paul Krugman among a myriad others complain that capitalism has entered a phase of “secular stagnation” because of “the ageing of the population”, what they really mean is that the “excess” population needed for workers to be employed profitably is no longer environmentally and politically “sustainable” – and therefore neither is capitalist industry and society!

Part Two

One important consequence arises from this: for if indeed surplus value - all value - can arise only from living labour, then it is equally obvious that value - and therefore profit - can only have any meaning at all if and only if it is applied to the command of human living labour. Of course, the monetary equivalent of surplus value, profit, can be applied to the purchase of goods other than labour-power (the commodified form of living labour). But such a purchase can be applied capitalistically (for the purpose of making a further profit, that is, for the purpose of capitalist accumulation) if and only if it goes toward the production of goods that, in turn, yield more profit - and therefore ultimately only if they yield more command over living labour.



Value is nothing but objectified labour, and surplus value (realization of capital) is only the excess above that part of objectified labour which is necessary for the reproduction of labouring capacity. But labour as such is and remains the presupposition, and surplus labour exists only in relation with the necessary, hence only in so far as the latter exists. Capital must therefore constantly posit necessary labour in order to posit surplus labour; it has to multiply it (namely the simultaneous working days) in order to multiply the surplus; but at the same time it must suspend them as necessary, in order to posit them as surplus labour. As regards the single working day, the process is of course simple: (1) to lengthen it up to the limits of natural possibility; (2) to shorten the necessary part of it more and more (i.e. to increase the productive forces without limit). But the working day, regarded spatially—time itself regarded as space—is many working days alongside one another. The more working days capital can enter into exchange with at once, during which it exchanges objectified for living labour, the greater its realization at once. It can leap over the natural limit formed by one individual's living, working day, at a given stage in the development of the forces of production (and it does not in itself change anything that this stage is changing) only by positing another working day alongside the first at the same time - by the spatial addition of more simultaneous working days.

The result is that whilst capitalist accumulation - profitability - depends on the reduction of the proportion of production that goes to workers in wages (necessary labour), for the capitalist to be able to reinvest the profit or surplus value there needs to be a corresponding increase in the population of workers! But because human beings work for the capitalist - that is, sell their living labour as labour-power to him - if and only if they are forced to do so - in other words, if they are still subject to necessary labour -, then it is obvious that an increase in the population is also an increase in necessary labour. On one hand, workers seek to increase their wages and reduce their working hours, and so lower the surplus value available to the capitalist by making more of their labour “necessary”; on the other hand, the capitalist seeks to reduce the wages of his own workers, and so the necessary labour, and increase the surplus value or profit available to him.

This is why capital solicits the increase of population; and the very process by means of which necessary labour is reduced makes it possible to put new necessary labour (and hence surplus labour) to work. (I.e. the production of workers becomes cheaper, more workers can be produced in the same time, in proportion as necessary labour time becomes smaller or the time required for the production of living labour capacity becomes relatively smaller. These are identical statements.) (This still without regard to the fact that the increase in population increases the productive force of labour, since it makes possible a greater division and combination of labour etc. The increase of population is a natural force of labour, for which nothing is paid. From this standpoint, we use the term natural force to refer to the social force. All natural forces of social labour are themselves historical products.) It is, on the other side, a tendency of capital—just as in the case of the single working day—to reduce the many simultaneous necessary working days (which, as regards their value, can be taken as one working day) to the minimum, i.e. to posit as many as possible of them as not necessary. Just as in the previous case of the single working day it was a tendency of capital to reduce the necessary working hours, so now the necessary working days are reduced in relation to the total amount of objectified labour time.

Surplus time is the excess of the working day above that part of it which we call necessary labour time; it exists secondly as the multiplication of simultaneous working days, i.e. of the labouring population. (It can also be created - but this is mentioned here only in passing, belongs in the chapter on wage labour - by means of forcible prolongation of the working day beyond its natural limits; by the addition of women and children to the labouring population.) The first relation, that of the surplus time and the necessary time in the day, can be and is modified by the development of the productive forces, so that necessary labour is restricted to a constantly smaller fractional part. The same thing then holds relatively for the population. A labouring population of, say, 6 million can be regarded as one working day of 6×12, i.e. 72 million hours: so that the same laws applicable here. (K. Marx, Grundrisse)

The result is that capitalist profitability or accumulation is essentially the increase of “simultaneous working days” by a growing working population - whether that population is located in the nation where the capitalist invests or in a foreign nation. The ultimate purpose of the capitalist is to maximise surplus value (profit); the ultimate aim of the worker is to maximise wages by working less and increasing leisure time. But the aim of the capitalist in maximising surplus value is not and cannot ever be to increase the leisure time of workers! Emphatically no! The aim of the capitalist is to increase the number of individual workers that his accumulated capital can command! The purpose of capitalism is to increase the command of dead labour (goods) over living labour (the population of workers). And the more the capitalist increases profit by reducing the length of the working day through productivity growth - and therefore paying less wages for the same amount of product -, the more the same capitalist will need an ever greater number of workers to exploit for his capital to be reinvested profitably! The net effect, paradoxically, is that while the capitalist seeks to reduce the amount of necessary labour for the reproduction of his own workers, at one and the same time either the single capitalist or the class of capitalists as a whole will need to expand the workers that they employ by a proportionately higher number so as to be able to accumulate more profit.


The devastating conclusion is that capitalists need to perpetuate necessary labour by constantly growing the excess working population - the army of the unemployed - so as to be able to command more workers at lower wage costs.

Thus, the greater surplus value or profit can be reinvested by the capitalist only by employing more workers with less of the goods they produce - with lower real wages -, or else by distorting the needs of workers so that their real wages are directed toward consumption that enslaves them to capital! Both these processes combined lead to overpopulation (underemployment) and to overconsumption.

This is the complex process whereby capitalism expands the global population to ecologically unsustainable levels! Capitalists can increase their exploitation of workers either “absolutely” by forcing the same number or a greater number of workers longer with the same machinery (technology). Or else, capitalists can increase the productivity of workers “relatively” through more advanced machinery if the antagonism of workers over wages is especially high. In this second case, the antagonism of workers (a) forces capitalists to replace machinery and, (b), forces capitalists to increase the population of workers to a higher degree proportionate to the bargaining power of workers in raising the “necessary” part of the working day.

The outcome, of course, is unemployment or underemployment of the available global workforce – working population plus the reserve army of unemployed. We call this “overpopulation” – resulting in waste. And, simultaneously, capital will be most eager to ensure that the “necessary” part of the working day is least devoted to the emancipation of workers from wage labour! We call this “overconsumption”, also resulting in waste. 

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