Capital III, Chapter 15 - Part 28

We know from Marx’s analysis so far, that the surplus value is a function only of the new labour expended. The means of production (constant capital) can only transfer its value to the commodities in whose production it participates. But, as a result of competition, as Marx has shown in Capital III, earlier, it does not seem that way to each individual capital. It seems instead that the profit is derived from the whole of their capital (constant and variable combined) equally. Profit appears to be the difference between the cost price and the selling price, and so whatever means can be employed to reduce the cost price, is for any individual capital, a means of increasing its profit. Moreover, as Marx set out in Capital III, Chapter 11, for the bigger capitals, the constant capital forms a much bigger component of their cost of production than their wages. If the general level of wages rise, it is the smaller capitals that get hit hardest. The general rate of profit falls, the price of production of commodities produced by the smaller capitals rises, as capital leaves this production, whilst the price of production of commodities produced by the bigger capitals falls, as capital migrates towards it, and supply rises. In fact, as part of this process, the mass of profit in those sectors dominated by the bigger capitals also rises as the increased supply overrides the lower profit margin.

Moreover, as the rate of profit, i.e. the profit margin or s/C, falls, the more these small capitals, who produce at lower levels of efficiency and even lower levels of profit margin than the average, are prone to find that the market price declines below their individual cost of production. Every capital is led to reduce its costs (both for constant and variable capital), but big capital has more incentive to reduce the former whilst small capital the latter. This is the material basis for the development later of Fordism, when big industrial capital comes to dominate. It is the material foundation of the bourgeois social-democratic regimes, established in all developed economies, by the 20th century, founded on the shared interests of big industrial capital and the working-class, that provides a modus vivendi that temporarily overrides their conflicting class interests. As Engels puts it,

“Thus the truck system was suppressed, the Ten Hours’ Bill was enacted, and a number of other secondary reforms introduced — much against the spirit of Free Trade and unbridled competition, but quite as much in favour of the giant-capitalist in his competition with his less favoured brother. Moreover, the larger the concern, and with it the number of hands, the greater the loss and inconvenience caused by every conflict between master and men; and thus a new spirit came over the masters, especially the large ones, which taught them to avoid unnecessary squabbles, to acquiesce in the existence and power of Trades’ Unions, and finally even to discover in strikes — at opportune times — a powerful means to serve their own ends. The largest manufacturers, formerly the leaders of the war against the working-class, were now the foremost to preach peace and harmony. And for a very good reason. The fact is that all these concessions to justice and philanthropy were nothing else but means to accelerate the concentration of capital in the hands of the few, for whom the niggardly extra extortions of former years had lost all importance and had become actual nuisances; and to crush all the quicker and all the safer their smaller competitors, who could not make both ends meet without such perquisites. Thus the development of production on the basis of the capitalistic system has of itself sufficed — at least in the leading industries, for in the more unimportant branches this is far from being the case — to do away with all those minor grievances which aggravated the workman’s fate during its earlier stages...

“The Reform Bill of 1831 had been the victory of the whole capitalist class over the landed aristocracy. The repeal of the Corn Laws was the victory of the manufacturing capitalist not only over the landed aristocracy, but over those sections of capitalists, too, whose interests were more or less bound up with the landed interest - bankers, stockjobbers, fundholders, etc. Free Trade meant the readjustment of the whole home and foreign, commercial and financial policy of England in accordance with the interests of the manufacturing capitalists — the class which now [These words belong apparently not to Bright but to his adherents. See The Quarterly Review, Vol. 71, No. 141, p. 273.-Ed.] represented the nation...

Both these circumstances had turned the English working class, politically, into the tail of the ‘great Liberal Party’, the party led by the manufacturers. This advantage, once gained, had to be perpetuated. And the manufacturing capitalists, from the Chartist opposition, not to Free Trade, but to the transformation of Free Trade into the one vital national question, had learnt, and were learning more and more, that the middle class can never obtain full social and political power over the nation except by the help of the working class. Thus a gradual change came over the relations between both classes.”

(Engels The Condition Of The Working Class In England) 

It was this that led to the creation of social-democratic regimes, social-democratic states, geared to the interests of big industrial capital, maintained on the back of the votes of workers, whilst at a governmental level a struggle continued between the interests of big capital, and its historical opponents within the context of such a social-democratic regime, reflected as a struggle between more openly social-democratic as opposed to conservative parties.

Back To Part 27

Forward To Part 29