Sunday, 4 October 2015

Capital III, Chapter 15 - Part 25

Of course, this description is of the kind of capitalism whose development Marx was analysing up to that point, around 1865. Even by the time the third volume of Capital was published by Engels, he was having to make comments to describe the changes in the nature of capital that had occurred in the intervening period. Even more then should we simply apply this description of early 19th century capital to the nature of capital today with caution. That does not mean that the underlying laws uncovered by Marx cannot still be applied to analysing modern capitalism.

Marx himself pointed out that when production becomes dominated by a few, very large capitals, the vital spark of capitalist production dies out. Those very large capitals, were, as Marx analysed, already developing in the form of joint stock companies, the dynamics of which are different from those of the small capitals that dominated early capitalist production.

As Engels describes, in his Critique of the Erfurt Programme, by the end of the 19th century, production was becoming dominated not just by these very large joint stock companies, but by gigantic trusts, and, at this stage, the “planlessness” that leads to this kind of unthinking continual expansion of production ends, at least in respect of these giant companies. In fact, their dominance and control of the state, ensures that this planning is increasingly applied to the national economy itself. It is only to that “plethora of small capital” that the idea of planlessness and the need for relentless expansion continues to apply.

Increasingly, the huge, socialised capitals expand their capital on the basis of long-term projections of demand for the commodities they produce, smoothing out variations via marketing and advertising. These, in turn, are based on extensive market research and a continual analysis of the actual spending patterns of consumers.  The huge evolution in ICT systems, and in the Internet means that this has moved on significantly even from when Simon Clarke wrote in 1990,

“Indeed it would be fair to say that the sphere of planning in capitalism is much more extensive than it is in the command economies of the soviet bloc. The scope and scale of planning in giant corporations like Ford, Toyota, GEC or ICI dwarfs that of most, if not all, of the Soviet Ministries. The extent of co-ordination through cartels, trade associations, national governments and international organisations makes Gosplan look like an amateur in the planning game. The scale of the information flows which underpin the stock control and ordering of a single Western retail chain are probably greater than those which support the entire Soviet planning system.”

Capital and Class, Winter 1990

Already producing on a mammoth scale, the means to reduce the value of the commodities they produce is no longer so much determined by a need to expand production further, in an unlimited sense, but only to be able to produce existing quantities by ever more efficient means, which means incessant technological development, to replace several machines by one, and to continually reduce the value of the fixed and circulating constant capital, which constitutes the major element of their production costs. With the market for the main mature commodities already divided up by a few oligopolies (around 80% of the global car market is dominated by just 5 companies), who have no desire to destroy each other by competing for market share on the basis of price, higher profits come from this continual reduction in costs, whilst competition for market share is conducted on the basis of quality and innovation – which is why these companies spend large amounts on industrial espionage, attempt to reduce development costs by sharing the costs of development by joint projects, and present consumers with a range of commodities that are essentially identical.

It is only in those new lines of production where a plethora of smaller capitals still has to go through the never ending process of competition and capital accumulation driven by concentration and centralisation, until just a few large companies again dominate, that the old conditions apply, as well as amongst all of those remaining small capitals that continue to exist on the margins of the mammoth capitals, and have become dependent upon them, or else in those activities that the big capitals simply cannot be bothered to dominate. In these latter areas, the small capitalists are reduced to being little more than workers on their own account, often with even lower wages than the better paid, or even average paid sections of the working-class.

In this sense, Marx's statement about profit as the vital spark of capitalist production for these mammoth companies is correct. The dynamic for them has changed, in the way that Engels described, and it is also another sense in which Marx’s later statement, that these companies represent a transitional form from the capitalist to the associated mode of production, is also born out.

“This is the abolition of the capitalist mode of production within the capitalist mode of production itself, and hence a self-dissolving contradiction, which prima facie represents a mere phase of transition to a new form of production. It manifests itself as such a contradiction in its effects. It establishes a monopoly in certain spheres and thereby requires state interference. It reproduces a new financial aristocracy, a new variety of parasites in the shape of promoters, speculators and simply nominal directors; a whole system of swindling and cheating by means of corporation promotion, stock issuance, and stock speculation. It is private production without the control of private property.” (Chapter 27, p 438)

It is a process of the transformation of private capital into socialised capital, and private production into socialised production, still within the context of capitalism. It is a transitional stage, as Marx says,

“The capitalist stock companies, as much as the co-operative factories, should be considered as transitional forms from the capitalist mode of production to the associated one, with the only distinction that the antagonism is resolved negatively in the one and positively in the other.” (ibid, p 440)

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