Capital

This article is about the economic concept. For the book, see Capital, vol. 1 (1867).

Introduction

Capital is used in two very distinct ways by Marxists. Fundamentally, it is a relation between people. On the one hand it is the motion of any wealth, usually in the form of money, used for the purpose of producing more wealth. The major difference between capital and money is the form of circulation. While money is commonly used for buying commodities for personal consumption (C-M-C or commodity-money-commodity), capital is money used to generate more money (M-C-M' or money-commodity-more money). Most humans on earth sell their labor-power, or their capacity to work, to a capitalist in exchange for money. This money is then used to buy food, water, electricity and so on. This is the C-M-C cycle.

Capitalists do not do this. They use their vast stockpiles of money to buy labor-power or some other commodity that might be, due to supply and demand, resold later for more money. Once the value of the purchased commodity can be sold off for more money that the capitalist started with, they do so. Labor power has some unique properties that separate it from other commodities. It is the only commodity that generates more Value. See the labor power page for more details.

On the other hand, capital is to a capitalist society, what lords are to feudal society. "Feudal lords were the masters of feudalism. Capitalists, however, aren’t the masters of capitalism. They are merely the high priests of capitalism. The master of capitalism is Capital itself."

Capital is the boss, the king, the slave master. CEOs, boards of directors and other members of the capitalist class are required by law in most countries to engage in profit-seeking. This combination of social and economic pressure is what makes the wealth production cycle that is capital the end all be all of capitalist societies. Just like how slavery developed the tools and technology that created feudal society; now, capital reproduction is in the midst of creating socialist societies.

Social relations

As stated above, Capital is the dominant means of production at this moment in human history. This is conditional. A social relation, in particular, a bourgeois relation of production. Without those conditions and social relations, it is no longer Capital whatever it may be. Humans, as any and all animals do, perform work on their environments in the process of production. They also perform work on each-other, however. Human individuals, interacting with each other, are in reality performing work on each-other. We are, as individuals, a part of the environment of every other individual. The individual human being and society are one in the same. This is our basic dialectical character. Consider an isolated hunter-gatherer during the paleolithic. It is extremely difficult for them to survive alone, and impossible for them to thrive. One hundred percent of the individual's time is taken so that they can sustain themself with food, find fresh and potable water, and live in shelter so they are not exposed to the ambient temperatures and conditions of their environment. They must make sure they do not expend more energy than they obtain from food. They must make sure the water they drink is not poisonous. They must, if they can not find any suitable shelter, fashion it from raw resources strictly by hand. Their life is wretched and short.

Yet no human was ever alone.

Humans, capable of performing work together, are then capable of leading evermore fulfilling and comfortable lives. Now, whatever energy a person would have expended sustaining themselves with food is instead expended among however many people exist in the community. Now, everyone can make sure that potable water is available, and they can help provide shelter too. This is, of course, only possible because each persons has entered into a social relationship with these people.

A social relation of production. A collective of individual forms, and it is within the comprising relationships that production in this advanced form may occur; permeable, however, as all things are the social relations of production, are altered, transformed, with the change and development of the material means of production. These relations of production have another name, moreover, and it is, to be as concise as possible: Society. A society at a definitive stage of development in the history of mankind. Most relevant, contemporarily, is the advance from Feudal Society, to Capitalist or Bourgeois society.

It is from this society that we derive Capital. We have come full-circle.

There is one more thing we need to explain when analyzing Capital. Exchange values. Capital invariably consists of commodities. You can not unsubjugate Capital from this condition, yet, commodities themselves are not invariably Capital. Why? Consider what makes a commodity Capital. Yet, first, a presupposition is needed. Capital is a social relation of production, and a Capitalist one, so we necessarily require a class which possesses nothing but the ability to work. We will call this the working class. We will also necessarily require a class which possesses everything, which they may lend to the working class to perform work with. We will call this the Capitalist class. We readily realize that this leads to a very special social relation of production - that of Capital, of its dominion and dominating presence over labor. Labor]] becomes subordinate to Capital, which accumulated through past labor, and exists now as a monolith that we have stamped with the character of Capital.

How then does a sum of commodities, of exchange values, become capital? If it preserves itself and multiplies by exchange with direct, living labor-power. Capital is defined by the need for living labor, subordinated to it, to be the means by which it can preserve and multiply the exchange values which comprise the commodities consisting of Capital. It is not, ultimately, concerned with accumulated labor serving living labor as a means for new production.

Lastly, we realize the form of capital may transform, while capital itself does not cease to exist. It does not become something else - it is always capital. Similarly, a commodity will always be a commodity, and only under certain conditions, certain social relations of production aforementioned does it become capital. Whether or not we exchange bread among ourselves in pennies or dimes, quarters or dollars, its status as a commodity is unaltered. The quantity of which only informs us of its price, and not its character. Slice it so that it may be sliced bread, it will be bread, albeit sliced, and it will still be a commodity that exists as an exchange value.

Organization of capital

Much the same as how the proletariat is a unity of various worker subclasses: gender, ethnicity and nationality and so on; so too is capital. Each of the different portions of capital use labor-power and nature to create all value. Each form of capital is as inseparable as the 4 chambers of the human heart. Each is a form of constant capital.

Note that on Forbes 400 list of richest Americans the three richest are #1 Jeff Bezos, #2 Bill Gates and #3 Mark Zuckerburg.

Industrial capital

The most popularly known of form of capital. Factories, industrial parks, manufacturing plants, and so on. Industrial capital rose to prominence due to the industrial revolution in England which itself came about as result of the political changes from the Cromwell revolution and the economic bootstrap of British colonialism. Specifically the British looting of Indian textile industry.

Merchant capital

Merchant capital is the oldest form of capital and predates capitalism. In feudalism, this group was know as the mercantile class. In contrast with the goods focus of industrial capital production, merchant capital primarily produces services such as the physical transportation of commodities.

This itself is a commodity. The only difference is a service is a commodity that is consumed as it it produced. Whereas a good can be thrown on a shelf to sit for a time.

Financial capital

Financial capital is "a weapon by which the claims of wealth holders are asserted against the rest of society." It is a major tool by which the capitalist class maintains and develops imperialism as highlighted by Lenin, Cheng Enfu and others

Beyond Capital

The core of capitalist society is, in one-half, the myriad of competing private firms working to produce commodities as cheaply as is possible and sell these commodities in as large a quantity as is possible. The other half is the wage-labor system which generates surplus value to the maximum extent possible, keeps workers working and so on. Each of these elements is abolished and replaced in communism. In socialism these are unevenly or partially replaced.

How are each of these elements to be replaced? We shall see this thru Nia Frome's work, How Is It To Be Done? a basic sketch of how each element is moved beyond, in part, using both Marx's theories and the real experience of Actually Existing Socialist societies.

Wage labor

The opposite of wage labor is non-wage labor. A volunteer is doing non-wage labor, but so is a slave. What distinguishes the former from the latter is the volunteer’s right to walk away. What wage labor offers is a positive incentive to keep workers from walking away, so as to keep the surplus value flowing. Even if production is no longer organized around maximizing surplus value, though, there are still jobs that more or less objectively need doing. If those jobs don’t get done under socialism, then capitalist relations of production will enjoy greater prestige, and socialism can’t win. Reaching communism therefore means displacing the wage form of motivation with other forms. One labor system that would no longer count as wage labor would be conscription into armies of labor, but this is not very appealing, and makes sense only as an emergency measure, not the norm. That leaves volunteer labor. For work to be done increasingly on a volunteer basis, social validation needs to be made much more widely available and refocused around those jobs that are most necessary. Life’s necessities need to be increasingly guaranteed, reducing one’s dependence on any given employer.

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Generalized commodity exchange

Full decommodification consists in the total extension of these guarantees, the rights-ification of consumption. It is unthinkable, however, that such guarantees could be made without massive improvements in productivity. This is what it means to say “Right can never be higher than the economic structure of society and its cultural development conditioned thereby.” The material basis of generalized commodity exchange is the privacy and independence of production, the results of which are socialized only after the fact. Eroding and ending commodity exchange thus requires socializing production before the fact, bringing about transparency and interdependence that transgresses the boundaries of firms. These ties cannot be mediated by commodities but must instead be interpersonal, and they must transmit a logic distinct from that which governs capitalist firms. That logic can only be the logic of use-value, i.e. the rigorously enforced authority of a democratic deliberation about society’s many needs. The privacy and independence of firms, however, plays an important role at a determinate stage of development of the productive forces insofar as it distributes risk — only a supremely rich and powerful state could afford to assume all the losses in an economy, and no socialist state starts out in such an enviable position. Generalized commodity production should be seen, then, as a form of delegation that is historically specific to conditions of underdevelopment.

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Competitive markets

In a pure market economy, firms’ only incentive is profit. Competition between them creates a race to the bottom in terms of wages, working conditions, and all kinds of negative externalities. A reduction in competition is necessary if we are going to see firms make decisions in a more pro-social way. That, or competition according to different metrics than sheer value extraction. Limiting competition is known in other contexts as nationalization, cartelization, monopoly, or favoritism. Interference with the market has a bad reputation for reducing efficiency. But this commonplace, like most others, grossly oversimplifies a hotly debated issue. Some authors question the priority of efficiency as a value (as compared to, e.g., redundancy or resilience), others counterpose productive to allocative efficiency (where gains in the latter under socialism may outweigh losses in the former), and others argue that planned economies do just fine even in terms of productive efficiency. What is uncontroversial is that, insofar as the position of a firm in the economy is secured, it can afford to pursue objectives that are not merely cutting costs. Which firms deserve this “securing” and which firms need to focus on improving efficiency are political matters, to be negotiated democratically rather than unaccountably and spontaneously through market-mediation. In capitalist economies, “winners” earn the right to dabble in non-profit activities only insofar as they have previously demonstrated their ability to ruthlessly serve the bottom line. In a socialist economy, political incentives reward and cultivate other virtues, even in institutions.

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Surplus value

Some people believe that socialism means the abolition of surplus value. The simplest way to do this would be to divide all of a firm’s profits among the workers. This would not, however, do away with generalized commodity exchange or the resulting competition. Co-ops by themselves don’t do away with commodity exchange, and competition follows from commodity exchange — if you’re imagining co-ops you’re imagining commodities. Workers would still find themselves competing against other workers, obliged to work longer hours, push themselves harder, and cut costs at any cost, or else be punished by the market. Empirically, worker-owned and -managed co-ops in capitalist economies often fall behind for precisely this reason, since they tend to reinvest a smaller part of their revenues than capitalist firms do. This is because it’s easier for a capitalist to bilk workers than it is for workers to bilk themselves. In the aggregate, such chronic underinvestment is acceptable only if other countries aren’t hell-bent on outcompeting one’s own, i.e. if the whole world is socialist.

Another approach to the abolition of surplus value would focus on the distinction between surplus value and surplus labor or surplus product. The fact that people work more than is strictly necessary to keep themselves alive — i.e. perform surplus labor — is not specific to capitalism. Any society must perform surplus labor and produce a surplus product to provide for those of its members who can’t work. In class society of any kind, work far exceeding these requirements is done to enrich and empower the ruling class. What is specific to capitalism is surplus labor’s appearance as value, as money, a quantity that is freed from all quality because it can stand in for any of them, indifferently. Surplus value extraction is the primary motor of capitalism. A one-dimensional magnitude lends itself to single-minded maximization. “Value’s self-valorization” is an introverted, narcissistic, solipsistic obsession. Money’s indifference, the abstractness of abstract labor, infects production and dehumanizes it. Socialism, rather than abolishing surplus labor, seeks to democratize the ends to which it is put, demoting the question of its magnitude to one consideration out of many, along with e.g. the length of the working day, what products get made, how they’re made, and who gets them. Socialism rehabilitates firms, making their revealed priorities match our own. The means of production must cease to be ends in themselves through better (more participatory, holistic, long-term, etc.) accounting and management. “Externalities” must cease to be external.

This does not mean that economic growth in the traditional sense becomes irrelevant. Any single country where socialism takes root faces a scenario analogous to that faced by a single worker-owned firm competing against capitalist ones. In this situation, no one — especially not the poor — can afford to disdain economic growth, which is a matter of survival. Socialism cannot beat capitalism except through protracted economic war.

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Real life

The first prerequisite for carrying out such a strategy is to establish a people’s democratic dictatorship, because a bourgeois dictatorship will never allow the needed steps to be taken. Substantive, rather than merely formal, democracy requires that the government track the interests of its citizens closely. These interests are both short-term and long-term, but the government’s job is to specialize in defending shared and general interests, those that are collective and lasting rather than mutually exclusive and passing. Substantive democracy therefore requires hierarchical elections in which money plays as small a role as possible and several levels of selectivity insulate the highest bodies, filtering out short-term particular interests. Political freedom for the capitalist opposition cannot be guaranteed, since this may very well contravene the interests of the majority — consider any number of imperialist coups, color revolutions, and lawfare carried out against socialist governments.

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Further reading and listening

For a more humorous explanation see this YouTube video, courtesy of Luna Oi and her husband.

References