Capital I, Chapter 23 - Part 3

Of course, this process of reproduction under capitalism, whereby the worker works to produce the means of production and consumption, which the capitalist then sells, and out of these proceeds buys new means of production and labour-power, must have had a beginning. In other words, at some point, prior to this capitalist production, the capitalist must have had money available to buy means of production and labour-power. Marx deals later with this process of Primary Accumulation.

“However this may be, the mere continuity of the process, the simple reproduction, brings about some other wonderful changes, which affect not only the variable, but the total capital.” (p 534)

Marx then proceeds to argue that once this process of simple reproduction under capitalism begins the nature of capital is transformed. The original capital, he says, may have been the result of abstinence by the capitalist, but the process of reproduction changes this so that eventually the whole of this capital is nothing more than accumulated surplus value. I have to say, I am not convinced by Marx’s argument in the form he presents it.

In fact, I think here, Marx makes the same mistake as that made by Senior and others previously criticised by Marx in relation to the working day. That is he tries to make the labour-time expended, and new value created by the worker, not just cover the workers' wages and the surplus value, but the replacement of the constant capital too.

Marx says, suppose a capitalist begins with a capital of £1000.  He makes £200 a year in surplus value on it. Marx says, assume he consumes all of this £200. In five years, he will have consumed £1,000 = his original capital. If he only consumes £100, then it will take 10 years to have consumed his original capital. Marx develops a law from this:

“General Rule: The value of the capital advanced divided by the surplus-value annually consumed, gives the number of years, or reproduction periods, at the expiration of which the capital originally advanced has been consumed by the capitalist and has disappeared.” (p 534)

The capitalist, Marx says, thinks he is consuming out of the surplus value created by the worker, but he isn't, he is really consuming his original capital, and although the original buildings etc. he bought with his original capital are still there, these simply reflect the other side of the debt he has built up on them by drawing down on their value in order to consume. The equivalent today is someone who continues to consume by continually re-mortgaging their house when its market price rises.

But, Marx’s argument here does not stand up. Suppose, for instance, the capitalist made no surplus value on their capital. Would that mean that the constant capital was gradually eroded? Well it would if the capitalist each year took money out of the business intended for the reproduction of the constant capital. But, if they didn't, then the constant capital would continue to be reproduced. That is because, the Constant Capital is not reproduced out of the Surplus Value produced, which is the implication of Marx’s argument here, but is reproduced in the value of the end product into whose value it has been transferred.

Suppose the capitalist was also a worker, or had an income from elsewhere to live on, and so could survive for some time, without the business producing surplus value. That frequently happens with new businesses. In fact, many of them frequently run at a loss for the first few years. We might then have:

C 1000 + V 200 + S 0 = E 1200.

When the output is sold, 1000 goes back into buying means of production i.e. reproducing the original capital, and 200 to purchasing labour-power. The original capital is not reproduced out of the surplus-value produced by the worker, as Marx oddly suggests here, but is reproduced automatically as he previously set out, as a result of its value being transferred to the end product! Even without surplus value being produced, this capital will then always generate sufficient value to buy replacement means of production, and labour-power. Consequently, any surplus value produced above that, and not used for accumulation, does indeed go to fund the capitalists' consumption, rather than that consumption coming out of drawing down the value of the original capital.

As soon as a proportion of the surplus-value is actually accumulated then Marx is correct. This new capital is no longer the capital they have accumulated by their own means, but is simply the appropriated labour of the worker. Ultimately, then, for all intents and purposes, the great mass of capital is nothing more than this appropriated surplus value.

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