The General Law of Capitalist Accumulation
1) The Increased Demand for labour power that Accompanies Accumulation, the Composition of Capital Remaining the Same
Marx here develops his analysis, from earlier, of the organic composition of capital i.e. the proportion between constant capital and variable capital. This proportion can be viewed from two angles. Firstly, from the perspective of the values of constant and variable capital, and secondly from the perspective of the physical amounts of constant and variable capital. For example, two identical capitals can represent significantly different relations. Suppose,
C 10,000 + V 2,000 + S 2,000 = E 14,000.
On the one hand, this capital could represent a jewellery business, which buys a small number of very expensive materials, which are worked up by a small number of highly skilled and paid workers. On the other, it could be a pottery firm that buys a large amount of cheap materials, processed by a large amount of low skilled, low paid workers.
To make the distinction, Marx calls the merely value relation, between constant and variable capital, the “Value Composition of Capital”, and calls the physical relation between them the “Technical Composition of Capital”. However, its clear that although these are two different things, there is a close correlation between the two. The technical composition is itself a determining factor in the value composition.
“To express this, I call the value composition of capital, in so far as it is determined by its technical composition and mirrors the changes of the latter, the organic composition of capital. Wherever I refer to the composition of capital, without further qualification, its organic composition is always understood.” (p 574)
In any branch of production, there are many individual capitals (more so when Marx was writing). Each of these “many capitals” will vary one from another, in their organic composition, as a result of the fact that some will be larger or smaller (thereby enjoying, or not, economies of scale), will be more or less established, and may, therefore, have more skilled workers. Some will have other natural benefits from their location. Some may be new entrants that were able to start production with the latest machines and techniques, and so on.
But, if we total up the constant capital and variable capital across the entire branch, we can calculate the average composition of capital for an industry. Some individual capitals will operate above, and some below the average. Likewise, if we totalled up for all industries across the economy, we could calculate the average composition for the economy. Not only would some firms operate above or below the average, but entire industries would also operate above or below the average.
Again, contradicting the view of some proponents of the Temporal Single System Interpretation (TSSI), who emphasise the Value Composition of Capital as against the Technical Composition of Capital, Marx writes,
“Growth of capital involves growth of its variable constituent or of the part invested in labour power.” (p 575)
And, since, as Marx has pointed out, the quantity of labour-power employed is a function of the technical composition, not the value composition of capital, i.e. the quantity of labour-power to be employed is determined by the quantity of means of production it has to set in motion, it is clear that for Marx, it is this physical expansion of capital, and not merely the increase in its value that truly constitutes the expansion of capital. That is so for two other fundamental and related reasons. Firstly, Marx can never divorce from his analysis of capital, the effect it has on the working class, the force in history he recognises as the agent of change. It is only a physical increase in the amount of constant capital employed that can bring about an increase in the number of workers employed. That is important not just for the actual size of the working class as a social force, but is also important for its relative strength, and ability to defend its living standards i.e. a higher demand for labour-power creates the conditions for higher wages.
But, there is a further point. Marx is concerned with the expansion of capital, which can only arise through greater masses of surplus value. But, as he showed earlier, the value of constant capital is irrelevant in that respect. In fact, its effect is if anything an inverse. A single worker, working with £1 million of constant capital creates no more surplus value than the same worker working with £100 of constant capital. The constant capital only transfers its value to the final product.
This is an important factor for economies in determining their growth strategies, and paths for economic development. Marx details this, and comments,
|For Marx, "Accumulation of capital is...|
increase of the proletariat." Expansion
of capital is expansion in physical not value
“The reproduction of a mass of labour power, which must incessantly re-incorporate itself with capital for that capital’s self-expansion; which cannot get free from capital, and whose enslavement to capital is only concealed by the variety of individual capitalists to whom it sells itself, this reproduction of labour power forms, in fact, an essential of the reproduction of capital itself. Accumulation of capital is, therefore, increase of the proletariat.” (p 575-6)
The point had been so well grasped by Political Economy, Marx says, that Smith and Ricardo had made the mistake of seeing accumulation only in terms of the addition to variable capital. Marx quotes from John Bellers and Bernard de Mandeville, who wrote explaining in different ways the fact that the wealth of the rich was dependent on having a sufficient number of poor to do the work. For this reason, Mandeville wrote,
“It would be easier, where property is well secured, to live without money than without poor; for who would do the work? ... As they [the poor] ought to be kept from starving, so they should receive nothing worth saving. If here and there one of the lowest class by uncommon industry, and pinching his belly, lifts himself above the condition he was brought up in, nobody ought to hinder him; nay, it is undeniably the wisest course for every person in the society, and for every private family to be frugal; but it is the interest of all rich nations, that the greatest part of the poor-should almost never be idle, and yet continually spend what they get.... Those that get their living by their daily labour ... have nothing to stir them up to be serviceable but their wants which it is prudence to relieve, but folly to cure.” (p 576)
If the technical composition of capital remains the same, then accumulation simply means that more labour-power is employed. The natural increase in population, therefore, means that, alongside the expansion of constant capital, goes an equivalent increase in variable capital. The expansion of the working class is simply an aspect of the expansion of capital. If the population does not increase fast enough to keep pace with the accumulation of capital, then the increased demand brings about a rise in wages.
But, capitalists do not buy labour-power for its ability to create commodities. They do so for its ability to produce surplus value. If wages rise to a level where that is not possible, then capital will not demand labour-power. As demand falls, so will wages.
“Altogether, irrespective of the case of a rise of wages with a falling price of labour, &c., such an increase only means at best a quantitative diminution of the unpaid labour that the worker has to supply. This diminution can never reach the point at which it would threaten the system itself. Apart from violent conflicts as to the rate of wages (and Adam Smith has already shown that in such a conflict, taken on the whole, the master is always master), a rise in the price of labour resulting from accumulation of capital implies the following alternative:
It is the movement of capital that determines here.
In other words, as in so many other cases, appearance is in fact the mirror image of reality.
“Thus, when the industrial cycle is in the phase of crisis, a general fall in the price of commodities is expressed as a rise in the value of money, and, in the phase of prosperity, a general rise in the price of commodities, as a fall in the value of money. The so-called currency school concludes from this that with high prices too much, with low prices too little money is in circulation. Their ignorance and complete misunderstanding of facts are worthily paralleled by the economists, who interpret the above phenomena of accumulation by saying that there are now too few, now too many wage labourers.” (p 581)
In the end, it comes down to the relation between paid and unpaid labour, provided by the worker, the relation between necessary labour and surplus labour, between the value of labour-power and surplus value. The workers do unpaid labour that creates surplus value, which is accumulated as capital, and thereby employs additional labour-power. Wages move according to whether this causes an excess of demand over supply of labour-power.
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