Wednesday, 27 January 2016

Capital III, Chapter 24 - Part 4

The only sense in which the idea of compound interest could be seen to apply, is in the sense that Marx described in Capital I. That is that surplus value, when accumulated as additional productive-capital, then produces additional surplus value and so on.


“1) Aside from all incidental interference, a large part of available capital is constantly more or less depreciated in the course of the reproduction process, because the value of commodities is not determined by the labour-time originally expended in their production, but by the labour-time expended in their reproduction, and this decreases continually owing to the development of the social productivity of labour. On a higher level of social productivity, all available capital appears, for this reason, to be the result of a relatively short period of reproduction, instead of a long process of accumulation of capital.” (p 398)

In addition, Marx refers to the tendency for the rate of profit to fall, but this does not seem to be a real objection, because as he sets out, in discussing it, that same process leads to a continuing rise in the mass of profit. Moreover, for the reason set out in his Point 1 above, this continually rising mass of profit, will accumulate a continually rising mass of this cheaper capital. Moreover, the accumulation of capital is a function of the advanced capital, and therefore, the general annual rate of profit, not the rate of profit. As the growth of social productivity rises, the rate of turnover of capital rises, and with it the general annual rate of profit. That provides the basis of increased accumulation. But, the same process also releases capital for additional accumulation.

There are objective limits on the expansion of surplus value and consequently accumulation.

“This consists of the total working-day, and the prevailing development of the productive forces and of the population, which limits the number of simultaneously exploitable working-days.” (p 398)

But, if interest is seen as simply an automatic product of capital, resulting simply from its nature, then there is no bounds to it. An amount of accumulated money-capital then simply expands each year, by the amount of the average rate of interest, regardless.

“We know, however, that in reality the preservation, and to that extent also the reproduction of the value of products of past labour is only the result of their contact with living labour; and secondly, that the domination of the products of past labour over living surplus-labour lasts only as long as the relations of capital, which rest on those particular social relations in which past labour independently and overwhelmingly dominates over living labour.” (p 399)

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