What we are arguing here is that Marx’s failure to develop an adequate political theory stems from his insistence on assigning a scientific status to his critique of political economy through the quantification of the notion of “socially necessary labour time” as the centrepiece of his labour theory of value. It was the presumed quantifiability of labour values that induced Marx to believe that capitalism could operate by means of impersonal market forces entirely independent of political factors. Quite clearly, such a scientistic approach ran entirely counter to the intrinsically and incontrovertibly political character of his critique of capitalism and of the theoretical categories he developed for its analysis. Yet it is equally undeniable that in some respects his analysis, especially in Das Kapital as distinct from the Grundrisse, can lead to the conclusion that the capitalist system is inherently unstable without resorting to political antagonism. This is true particularly of the Marxian “law of the tendential fall of the rate of profit” expounded in Volume Three of Capital according to which the capitalist development of the forces of production in the systemic search for profits leads inevitably to the suppression of the necessary labour portion of the labour day until it reaches the zero bound. This gradual suppression must result in the fall of the rate of profit as the portion of constant capital (equipment and materials) overwhelms the portion of variable capital (wages). Here the eventual decline of capitalism can be attributed to purely “automatic” quantitative factors independently of more political or sociological elements. (For a superb review of these matters, see P. Sylos-Labini, “The Problem of Economic Growth in Marx and Schumpeter” where, according to the author, Schumpeter emerges as the more “political” theoretician of the two!)
Let us examine now in detail how the capitalist State-form arises from the Marxian categories of analysis of capitalism. We saw earlier that capitalism can be theorized as the coercive, violent “exchange” of living labour for dead labour or as the reduction of concrete (experiential) labour to abstract (measured) labour by capitalist employers (Arbeit-geber or labour-givers) on working employees (Arbeit-nehmer or labour-takers) who are formally legally “free” to accept the exchange. Here immediately we notice two salient matters: one is that “formally legally free” means that workers have been separated or torn apart from all social and economic bonds with one another and with the rest of society, from their means of production and from self-sustaining property, so that in the absence of the “offer of abstract labour” from the capitalist they would be “free as a bird” (Vogel-frei, was Marx’s expression). Essentially, this implies that workers have been expropriated from all social and economic bonds and sustenance so that their only source of livelihood is their living labour. And the second matter is that the living activity of workers now assumes a double character (Doppelcharakter) in the hands of capitalists: - a “use value” because the living labour of workers is what allows the capitalist to be a capitalist by accumulating social wealth in the form of exchange values produced by workers; and an “exchange value” because the capitalist can treat the living activity of workers as “abstract labour”, as “labour-power”, as a commodity or good like any other to which a market value can be assigned inferior to the value of the goods produced by the worker. Here is how Engels valiantly summarizes what was perhaps Marx’s greatest discovery, namely, that of the Doppelcharakter of living labour in capitalism:
What the economists had considered as the cost of production of "labour" was really the cost of production, not of "labour," but of the living labourer himself. And what this labourer sold to the capitalist was not his labour. "So soon. as his labour really begins," says Marx, .. it ceases to belong to him, and therefore can no longer be sold by him." At the most, he could sell his future labour, i.e., assume the obligation of executing a certain piece of work in a certain time. But in this way he does not sell labour (which would first have to be performed), but for a stipulated payment he places his labour-power at the disposal of the capitalist for a certain time (in case of time-wages), or for the performance of a certain task (in case of piece-wages). He hires out or sells his labour-power. But this labour-power has grown up with his person and is inseparable from it. Its cost of production therefore coincides with his own cost of production; what the economists called the cost of production of labour is really the cost of production of the labourer, and therewith of his labour-power. And thus we can also go back from the cost of production of labour-power to the value of labour-power, and determine the quantity of social labour [m.e.] that is required for the production of a labour-power of a given quality, as Marx has done in the chapter on the "The Buying and Selling of Labour-Power." (Introduction to K. Marx, Wage-Labour and Capital)
There is a difference in market value therefore between the “embodied labour” in goods and the “commanded labour” for which the capitalist pays the worker with wages. This “difference in market value” is where the capitalist derives a profit and is afforded to the capitalist because the use value of living labour is precisely to ensure that the embodied labour of the final product is superior to the commanded labour purchased by the capitalist. The essential point where we diverge from Marx-Engels here is that this “inferior value” of commanded labour to embodied labour cannot be measured as “the quantity of social labour” because the “difference” is not quantitative because it is not quantifiable but is instead qualitative because it is political in that it bestows upon the capitalist, the owner of embodied labour in goods, the ability to command “future living labour” by exchanging these goods with fresh living labour. If by “value” we mean a practical political power to command living labour through its “exchange” for dead labour, then the Marx-Engels definition of labour-power is correct; if instead we mean an objectively measurable quantity, then we are falling into error.
Therefore, - this is a point of cardinal importance – not only is labour-power not measurable in any other way than in a political sense, in terms of the ability of less of capitalists being able to persuade workers that the “exchange” of their living labour with dead labour is legitimate; but also, as a result and as a consequence, the products of living labour, objectified or dead labour, cannot be homologated or compared, their “values” or “embodied labour” cannot be homogenized except politically because neither the living labour nor the labour-power that went into their production are measurable or quantifiable except politically! This means that the only homologation and homogenization or “pricing” of the “value” of living labour and labour-power and products or goods that is at all possible must take place through a series of political and institutional steps and measures that ensure (a) the reproduction of the society of capital, and (b) the reproduction of capitalist social relations of production (the wage relation).
Furthermore, there is a third salient matter: in reducing the living labour of workers to abstract labour, the capitalist also reduces the sociality of their living labour – the fact that the co-operation implied by social labour is very different from the segmentation of work into individual “labours” – the capitalist arrogates for himself the sociality of living labour, its ineluctably and indispensably “co-operative” nature. This is why we should never speak of “the social division of labour”, as if social labour consisted of the sum of individual labours, but we should use instead the very different phrase “the division of social labour”, because human co-operative living activity cannot be “measured” or “quantified” in any objective manner aside from political evaluations and choices – and above all because social labour cannot be partitioned into separate individual “labours” or labour-power that belongs to isolated individuals!
Hence, it ought to be evident by now where the need for a capitalist “State-form” is utterly essential to the very existence of capitalist social relations of production right from the outset of our theoretical analysis of capitalism. The indispensable requirement of a State-form of capital or for the statality of capitalism arises from the following conceptual and historical pre-requisites for the existence and subsistence of capitalism itself:
First, the creation of a proletariat (employed workers plus reserve army of unemployed) through the expropriation of a part of the working population existing before the formation of capitalism such that this proletariat is formally legally free, free from all prior status and property bonds and from legal ownership of their means of production. This “formal freedom” ensures that the proletariat has only its living labour to survive so that the capitalist may offer them employment in the form of “labour-power”, of wage labour. Equally, the formal freedom of living labour ensures that capitalists are forced to compete with one another for the living labour of workers to be employed as labour-power (commanded living labour becomes labour-power).
Second, commanded living labour or labour-power enables capitalists to remunerate the social labour of workers as the sum of “individual labours” that can be measured or priced (but only politically in reality) individually as wages. Again, this is a form of expropriation of the proletariat for which the capitalists do not “pay” – and for which indeed they could not pay. The incommensurability of social labour and individual labours – the impossibility to parcelize social labour so as to value it as individual labours – is the conclusive argument against all attempts to determine value in any objective or scientific manner.
Third, a political and institutional pricing system or “markets” must be put in place whereby individual capitalists are able to produce goods that allow them to employ more workers at the end of production, either from new “markets” or else from the reserve army of the unemployed so that capitalist accumulation takes effect (“capital is valorized through the productive labour process and is realized through consumption”) as real political power by the owners of dead labour over living labour.
Each of these conditions for the formation and reproduction of the wage relation in capitalism require the existence of a “State-form” compatible with and adequate to their reproduction. Perhaps the most important conclusion to be drawn from these political pre-conditions for the establishment of a society of capital, one in which the wage relation ifis the comprehensively dominant social relation of production, is that the political nature of these pre-conditions – the requirement that the State-form is the determinant force requirement that the State-form be the determinant force behind the formation and reproduction of capitalist social relations – is prima facie the most powerful reason why the Marxian notion of “socially necessary labour time” does not and cannot have any objective scientific status and be treated as a measurable quantity. It ought to be clear from the outset that once it is conceded that these pre-conditions for the formation of a capitalist mode of production, and once their inalterably political nature is acknowledged, it must then follow that the reproduction of capitalist social relations of production is dependent not on objective measurable quantities but rather on specific relations of power that are founded on the wage relation and originate in it and then expand systematically to the rest of social relations which they permeate throughout.
So much for the prima facie or superficial case. In order for us to establish the conceptual and historical link between these pre-requisites of capitalist social relations and the pre-sence, the prior existence, of a State-form for their sustainability, we must then consider in greater detail the “requirements of the requirements”, if you like – that is to say, the political implications of what we have listed as the pre-requisites of the society of capital. In substance, what we propose to do is to identify the precise institutional foundations for the existence of a society of capital that superficially appears to function on the basis of “natural” human behaviour and therefore on the basis of a “self-regulating market”, that is, an automatic mechanism that functions according to natural or scientific “laws” – “the laws of the market”. To repeat, the political nature of the basic components of capitalism listed above is sufficient to establish the conclusion that capitalism does not and indeed cannot operate according to natural or objective or scientific “laws” – the laws of the market or any laws other than political coercion. But our purpose here is, as it were, to add flesh to the bones of this fundamental analysis by looking at the socio-historical and politico-institutional steps and developments that have allowed the fiction of “economic science”, of economic analysis as the equivalent of a physical science, to take place precisely on the presumed “spontaneous order” (the phrase belongs to Hayek) of capitalist industry or, what amounts to the same, “economic equilibrium” or else “the self-regulating market mechanism”.
In large part, our historical study will appear to resemble the work of the New Institutional Economics and indeed the institutional aspects of various economic theories from neo-Ricardian, Keynesian to post-Keynesian, and neo-Austrian. What distinguishes our analysis, however, are the evident historico-materialist Marxian, if not necessarily Marxist, foundations of its categories. The problem with existing theories of capitalism is that that they fail to achieve the fusion – or “chemical bonding”, as Schumpeter described it – between economic analysis and history. Of course, no such fusion or bonding is possible unless and until we are able to redefine what are thought to be “economic” categories in political terms – unless and until we can theorize economics as “a concentrate of politics”.
The difficulty that even the sharpest minds in the Marxist camp have found in the redefinition of these complex categories of analysis is illustrated most instructively in the early studies conducted by my Cambridge supervisor, Bob Rowthorn.
Thus, vulgar economy or neoclassical economics is characterised by subjective individualism, naturalism and the primacy it awards to exchange. The effects of vulgar economy have been twofold: at a scientific level [m.e.] it has inhibited, if not entirely prevented, serious study of the capitalist mode of production and the 'economic law of motion [m.e.] of modern society'; and at an ideological level it has provided a moral justification of the existing social order. …The individual practitioner of neoclassical economics may be motivated by the purest spirit of scientific curiosity or may even be a socialist who finds the present social order morally repugnant. This fact does not, however, alter the objective effects of neoclassical economics as a system of thought. No matter what the aspirations of its more progressive practitioners, the conceptual framework and starting point of neoclassical economics render virtually impossible a scientific analysis of the capitalist or any other mode of production [m.e.]. Once these concepts and starting points are accepted the main lines of analytical development are predetermined, and attempts to modify this development in the name of 'greater realism' take on an inevitably eclectic character. Genuine scientific advance [m.e.] becomes possible only to the extent that the original system of thought is, implicitly, or explicitly, abandoned. (Rowthorn, CC&I, p.16)
The work of Sraffa has not proved that the distribution of income is independent of supply and demand. By their nature, supply and demand can only take effect in a situation where there exists the possibility of variation in either production, consumption, or the supply of labour. In Sraffa's system such variations are explicitly excluded, as the author's stated objective is to study properties of the economy which do not depend on variations other than those of prices, wages and the rate of profit. As a result, supply and demand play no role in Sraffa's system. To conclude from this, however, that supply and demand play no role in the real world is to make the most elementary error. It is to confuse the world, as we think about it, with the world as it really is, or, if you like, to confuse the object of knowledge with the real object. The fact that Sraffa, with good reason, chose to hold production, consumption, and the supply of labour constant in his analysis, says nothing whatsoever about how these elements behave in reality. If, in reality, production, consumption or the supply of labour alter in response to changes in the wage rate or rate of profit, then it is conceivable that supply and demand may determine the level at which the actual wage or profit rate settles. Under these circumstances, the correct scientific procedure is not to deny that supply and demand may exert such an influence, but to seek for the fundamental laws of which supply and demand are merely a manifestation [m.e.]. Marx, a bitter opponent of vulgar economy, admitted that supply and demand had a proximate effect on wages when he said:
As to the limits of the value of labour, its actual settlement always depends upon supply and demand, I mean the demand for labour on the part of capital, and the supply of labour by the working men.9
Naturally Marx did not leave the question here. Much of his work was devoted to revealing the objective determinants [m.e.] of capital's demand for labour [m.e., this ought to be “labour-power”, the commodified form of living labour] and its supply by the working men. (op.cit., pp.26-7).
It is evident from the above quotations that even the sharpest Marxist minds could never relinquish the stubborn idea that Marx’s critique of capitalism was somehow “an objective science”. The question with which we have to deal, however, is “how is it possible for a set of political relations to assume such crystallized or reified forms as to appear to be scientifically objective realitites?”.