Capital 1, Chapter 24 - Part 3

3) SEPARATION OF SURPLUS-VALUE INTO CAPITAL AND REVENUE. THE ABSTINENCE THEORY

In reality, surplus value acts neither as solely a fund for accumulation nor solely for the enjoyment of the capitalist. It is a fund for both together. Given a certain amount of surplus value, the more the capitalist devotes to his own consumption, the less he has for accumulation and vice versa.

“But it is by the owner of the surplus-value, by the capitalist alone, that the division is made. It is his deliberate act. That part of the tribute exacted by him which he accumulates, is said to be saved by him, because he does not eat it, i.e., because he performs the function of a capitalist, and enriches himself.” (p 555)

From the perspective of capitalism, the private consumption of the capitalist represents waste, precisely because it means that a portion of surplus value has not gone to increase capital.

“Except as personified capital, the capitalist has no historical value, and no right to that historical existence, which, to use an expression of the witty Lichnowsky, “hasn’t got no date.” And so far only is the necessity for his own transitory existence implied in the transitory necessity for the capitalist mode of production. But, so far as he is personified capital, it is not values in use and the enjoyment of them. but exchange-value and its augmentation, that spur him into action. Fanatically bent on making value expand itself, he ruthlessly forces the human race to produce for production’s sake; he thus forces the development of the productive powers of society, and creates those material conditions, which alone can form the real basis of a higher form of society, a society in which the full and free development of every individual forms the ruling principle.” (p 555)

The function of private capitalists disappeared long ago.
It has been replaced by professional managers, by collective
provision of Capital by Stock Markets, Banks and Pension Funds,
 and the the State.

In fact, as Marx describes later, the very operation of capitalism itself, let alone of socialism, makes the historical and social function of the capitalist redundant. His position in the factory is replaced by the professional manager; his function even of providing private capital is replaced by the collectivisation of that function through the joint stock company, the public limited company, (and today the financing of these via workers' pension funds etc.) and by the capitalist state. In all these forms the capitalist, as an individual need not exist, and yet the laws of capital accumulation continue to operate, and thereby perpetrate the exploitation of workers.

But, it is these objective laws of capital accumulation which also constrain the choices made by the capitalist, and which dictate that his own pleasures are subordinate to the need of his capital to expand.

“Moreover, the development of capitalist production makes it constantly necessary to keep increasing the amount of the capital laid out in a given industrial undertaking, and competition makes the immanent laws of capitalist production to be felt by each individual capitalist, as external coercive laws. It compels him to keep constantly extending his capital, in order to preserve it, but extend it he cannot, except by means of progressive accumulation.” (p 555)

In other words, his capital must expand or die.

The key to Ford's success was to increase productivity,
 thereby increasing surplus value to invest and expand, which
 in turn brought further increases in productivity.

“So far, therefore, as his actions are a mere function of capital — endowed as capital is, in his person, with consciousness and a will — his own private consumption is a robbery perpetrated on accumulation, just as in book-keeping by double entry, the private expenditure of the capitalist is placed on the debtor side of his account against his capital. To accumulate, is to conquer the world of social wealth, to increase the mass of human beings exploited by him, and thus to extend both the direct and the indirect sway of the capitalist.” (p 555)

Marx quotes from Martin Luther a passage that is long, but worth quoting in full, given the return today in Britain of the usurer, in the form of the Pay Day Loan companies.

“Taking the usurer, that old-fashioned but ever renewed specimen of the capitalist for his text, Luther shows very aptly that the love of power is an element in the desire to get rich. “The heathen were able, by the light of reason, to conclude that a usurer is a double-dyed thief and murderer. We Christians, however, hold them in such honour, that we fairly worship them for the sake of their money.... Whoever eats up, robs, and steals the nourishment of another, that man commits as great a murder (so far as in him lies) as he who starves a man or utterly undoes him. Such does a usurer, and sits the while safe on his stool, when he ought rather to be hanging on the gallows, and be eaten by as many ravens as he has stolen guilders, if only there were so much flesh on him, that so many ravens could stick their beaks in and share it. Meanwhile, we hang the small thieves.... Little thieves are put in the stocks, great thieves go flaunting in gold and silk.... Therefore is there, on this earth, no greater enemy of man (after the devil) than a gripe-money, and usurer, for he wants to be God over all men. Turks, soldiers, and tyrants are also bad men, yet must they let the people live, and Confess that they are bad, and enemies, and do, nay, must, now and then show pity to some. But a usurer and money-glutton, such a one would have the whole world perish of hunger and thirst, misery and want, so far as in him lies, so that he may have all to himself, and every one may receive from him as from a God, and be his serf for ever. To wear fine cloaks, golden chains, rings, to wipe his mouth, to be deemed and taken for a worthy, pious man .... Usury is a great huge monster, like a werewolf, who lays waste all, more than any Cacus, Gerion or Antus. And yet decks himself out, and would be thought pious, so that people may not see where the oxen have gone, that he drags backwards into his den. But Hercules shall hear the cry of the oxen and of his prisoners, and shall seek Cacus even in cliffs and among rocks, and shall set the oxen loose again from the villain. For Cacus means the villain that is a pious usurer, and steals, robs, eats everything. And will not own that he has done it, and thinks no one will find him out, because the oxen, drawn backwards into his den, make it seem, from their foot-prints, that they have been let out. So the usurer would deceive the world, as though he were of use and gave the world oxen, which he, however, rends, and eats all alone... And since we break on the wheel, and behead highwaymen, murderers and housebreakers, how much more ought we to break on the wheel and kill.... hunt down, curse and behead all usurers.” (Martin Luther, l. c.)” (Note 1, p 555)

Modern Capitalism is really a form of State Capitalism.  A very tiny
 number of very rich and powerful capitalists allocate Capital via
 international Stock Markets, and via their control over the Big Banks
 and the State, which control the huge amounts of Capital built up in
 workers pension funds,and National Insurance Funds.  The Rate of
 Profit is nowadays essentially equalised, instantaneously with
 adjustment for risk, on the basis of billions of adjustments to share
 prices.  The Capitalists have become mere coupon clippers and
gamblers.

In fact, as we will see later, as part of the process of capitalist accumulation, the state placed limits on the interest rates that could be charged, precisely because this kind of usury drained resources that would otherwise have been used for productive investment.

The more capitalism develops, and the social function of the capitalist diminishes, the more the individual capitalist is separated from the actual process of production, and of accumulation. Their role becomes increasingly merely that of the “coupon clipper”, who invests money capital in bonds, shares and other assets, simply seeking the highest return.

But, on this basis, they are no longer, as an individual, constrained to accumulate or die, because that is only a law which applies to the individual capital, not the individual capitalist.

Although each capital continues to be constrained by the need to
accumulate or die, the individual capitalist, whose capital
 is footloose - free to be invested one minute in Microsoft, the next
 in Apple, today in Shanghai tomorrow in Birmingham - is not.
  Their activity is designed only to maximise their total returns
 (dividends, yield, interest, and capital gain) in order to maximise
 their potential to consume.  Subjective analyses of the motives
 and actions of individual capitalists, are therefore no basis for
understanding the underlying dynamic of Capital.

“As capitalist production, accumulation, and wealth, become developed, the capitalist ceases to be the mere incarnation of capital. He has a fellow-feeling for his own Adam, and his education gradually enables him to smile at the rage for asceticism, as a mere prejudice of the old-fashioned miser. While the capitalist of the classical type brands individual consumption as a sin against his function, and as “abstinence” from accumulating, the modernised capitalist is capable of looking upon accumulation as “abstinence” from pleasure.

“Two souls, alas, do dwell with in his breast;

The one is ever parting from the other.”

At the historical dawn of capitalist production, — and every capitalist upstart has personally to go through this historical stage — avarice, and desire to get rich, are the ruling passions. But the progress of capitalist production not only creates a world of delights; it lays open, in speculation and the credit system, a thousand sources of sudden enrichment. When a certain stage of development has been reached, a conventional degree of prodigality, which is also an exhibition of wealth, and consequently a source of credit, becomes a business necessity to the “unfortunate” capitalist. Luxury enters into capital’s expenses of representation. Moreover, the capitalist gets rich, not like the miser, in proportion to his personal labour and restricted consumption, but at the same rate as he squeezes out the labour-power of others, and enforces on the labourer abstinence from all life’s enjoyments. Although, therefore, the prodigality of the capitalist never possesses the bona fide character of the open-handed feudal lord’s prodigality, but, on the contrary, has always lurking behind it the most sordid avarice and the most anxious calculation, yet his expenditure grows with his accumulation, without the one necessarily restricting the other. But along with this growth, there is at the same time developed in his breast, a Faustian conflict between the passion for accumulation, and the desire for enjoyment.” (p 556-7)

Malthus, the representative of the landlord class, had his own solution to this problem. He proposed that the capitalists should content themselves with the business of accumulating and working in their factories, whilst all those classes that shared in their surplus value should content themselves as they always had with consumption! Not surprisingly, the capitalists, themselves becoming used to much greater consumption, thought little of the suggestion.

But, at least during this period, the bourgeois economists searched after and spoke openly about the extraction of this surplus value, the better to dispute its division with the landlords. That ended when the whiff of proletarian revolution in Europe began to enter the nostrils of the bourgeoisie, particularly in England, encouraging them to hush their dispute with their fellow exploiters.

“The learned disputation, how the booty pumped out of the labourer may be divided, with most advantage to accumulation, between the industrial capitalist and the rich idler, was hushed in face of the revolution of July. Shortly afterwards, the town proletariat at Lyons sounded the tocsin of revolution, and the country proletariat in England began to set fire to farm-yards and corn-stacks. On this side of the Channel Owenism began to spread; on the other side, St. Simonism and Fourierism. The hour of vulgar economy had struck.” (p 559)

So began the whole industry of orthodox bourgeois economic theory, of explaining the existence of profit as arising from anything other than its actual source – the exploitation of workers. Nassau Senior, proposed to replace the term “Capital” with the term “Abstinence”, and to explain the existence and justification of profit on the grounds that it was the reward to the capitalist for abstaining from consumption, and thereby allowing their capital to be used for production.

The debunking of these theories of vulgar economy, still trotted out today, by the apologists of capital, was done in discussing the working day. So there is no point repeating it here. But, what can simply be said is that in all societies including those that do not have capitalists practising abstinence, a social surplus of production is created, and this surplus product allows the members of society to continue to consume at the same level, whilst adding to its stock of means of production. This in turn enables it to expand its production further, thereby facilitating both an increase in consumption and accumulation.

“Richard Jones, who died a few years ago, and was the successor of Malthus in the chair of Political Economy at Haileybury College, discusses this point well in the light of two important facts. Since the great mass of the Hindu population are peasants cultivating their land themselves, their products, their instruments of labour and means of subsistence never take “the shape of a fund saved from revenue, which fund has, therefore, gone through a previous process of accumulation.” On the other hand, the non-agricultural labourers in those provinces where the English rule has least disturbed the old system, are directly employed by the magnates, to whom a portion of the agricultural surplus-product is rendered in the shape of tribute or rent. One portion of this product is consumed by the magnates in kind, another is converted, for their use, by the labourers, into articles of luxury and such like things, while the rest forms the wages of the labourers, who own their implements of labour. Here, production and reproduction on a progressively increasing scale, go on their way without any intervention from that queer saint, that knight of the woeful countenance, the capitalist “abstainer.”” (p 561)

Back To Part 2

Forward To Part 4