Capital III, Chapter 36 - Part 11

As Marx described earlier, the joint stock companies and co-operatives are the form of socialised capital that is the means by which capitalist property is transformed into socialist property. They are, as he puts it, the transitional forms by which this development is brought about. But, as he also stated, credit plays a central role in enabling this development to occur, by allowing workers, via credit, to obtain the capital required to extend their co-operatives on a national scale, as well as to buy up the share capital of the joint stock companies.

He repeats the same point here.

“Finally, there is no doubt that the credit system will serve as a powerful lever during the transition from the capitalist mode of production to the mode of production of associated labour; but only as one element in connection with other great organic revolutions of the mode of production itself.” (p 607)

But, Marx warns against the socialist illusions in credit created by Proudhon, which Marx deals with in “The Poverty of Philosophy”. Once the actual transition from capitalist property to socialist property has been completed, and so means of production are no longer transformed into capital, credit no longer has any meaning, because credit can only exist so long as interest bearing capital exists.

On the other hand, so long as capitalism exists, and commodity production continues, money-capital exists, and money-capital exists only so long as it bears interest. So, Proudhon's notion of continued commodity-production but with interest free credit, makes no sense. Capital can only be created by the production of surplus value, and if the money form of that surplus value, money-capital, is not used by the capital that produced it, there is no reason its owners will allow some other capital to use it and obtain profits from it, without requiring a share of those profits in the form of interest. That is true whether the capital that provides this money-capital is a multi-national corporation, or a workers co-operative.

The state cannot simply provide this capital in the form of credit, because, in reality, all it is providing is money tokens, not money-capital. It is simply printing additional money tokens, and thereby devaluing the currency, rather than creating capital. This is why John Law's scheme, and the Credit Mobilier failed so ignominiously, and why QE will suffer the same fate.

In Chapter 4 of "The Revolution Betrayed", Trotsky writes about the way Stalin and his followers thought that they could administratively abolish the market and laws of economics, and produce capital simply by printing money.  He says,

“ In answer to the boast that they would send the market “to the devil”, the Opposition recommended that the State Planning Commission hang up the motto: “Inflation is the syphilis of a planned economy.”

Some of the followers of Saint-Simon actually argued for this as a means of controlling production.

“In the same way, Charles Pecqueur demands that the banks (which the followers of Saint-Simon call a Système general des banques) "should rule production." Pecqueur is essentially a follower of Saint-Simon, but much more radical. He wants 

"the credit institution ... to control the entire movement of national production." — "Try to create a national credit institution, which shall advance the wherewithal to needy people of talent and merit, without, however, forcibly tying these borrowers together through close solidarity in production and consumption, but on the contrary enabling them to determine their own exchange and production. In this way, you will only accomplish what the private banks already accomplish now, that is, anarchy, disproportion between production and consumption, the sudden ruin of one person, and the sudden enrichment of another; so that your institution will never get any farther than producing a certain amount of benefits for one person, corresponding to an equivalent amount of misfortune to be endured by another ... and you will have only provided the wage-labourers assisted by you with the means to compete with one another just as their capitalist masters now do." (Ch. Pecqueur, Thèorie Nouvelle èconomie sociale et Politique, Paris, 1842, p. 434.)” (p 608)

This is why Marx and the First International insisted that the worker co-operatives must be forged together in one single federation.

Both merchant and interest bearing capital are its oldest form. But, the fact that interest bearing capital seems to expand magically gives it this appearance that this is the natural form of capital, that the ability to expand was somehow a natural attribute of this form. As a result, this conception obscures the understanding of the real nature of capital and source of surplus value.

Interest and rent are effectively equated because both are seen as deriving from lending. The loan of money-capital or the loan of land. But, this overlooks the fact that land like capital is loaned only to capitalists.

As discussed earlier, machines and equipment can also be loaned, but this comes down really to a loan of money-capital, equal to the value of that equipment. The fact that property in the form of houses is loaned to workers, as accommodation, in return for rent, also does not change anything. If workers are exploited by being overcharged rent, it is no different to being overcharged by some retailers for the purchase of commodities. These are simply forms of exploitation that have nothing to do with the primary means by which capital extracts surplus value from the labour of workers.

Back To Part 10

Forward To Part 12