Volume III of my 21st Century Translation of Marx's Capital is now available.
Volume I dealt with the basic building blocks of Marx's Capital, including the analysis of the commodity, value, exchange-value, money and capital at the level of "many capitals". Volume II examined the circulation of capital, money and commodities, initially at the level of "many capitals", and then at the level of "capital in general", as it examined the process of social reproduction. This volume starts from an analysis of "capital in general", and its division into productive-capital, merchant capital and money capital, as well as analysing the foundations of fictitious capital, i.e. of interest-bearing capital, and landed property.
In doing so, it demonstrates for the first time, the objective basis of the mass and rate of profit, and on the basis of it, again for the first time explains why an average rate of profit is established, via competition, and why the existence of this average rate of profit, and competition leads to commodities exchanging no longer at their exchange-values, but at prices of production, i.e. their cost of production plus this average profit. On this basis, it also explains the way the rate of turnover of capital creates the foundation of an annual rate of profit, which is itself the basis for the average annual rate of profit, which determines these prices of production, and explains how competition, thereby acts to allocate capital accordingly throughout the economy, moving it away from those spheres where the annual rate of profit is lower than average, and towards those spheres where it is higher than average.
By establishing this price of production, as separate from the exchange value of commodities, Marx is thereby also enabled to show why, wherever competition is unable to affect this movement, so as to eliminate surplus profits, for example where there is some form of monopoly, commodities can be sold at their exchange-value, but above their price of production, and in these cases, a rent arises, equal to this surplus profit. That is the case with landed property, where existing land owners are able to demand a rent for the use of their land, and thereby limit the migration of capital into that sphere. Capital is only then invested in these spheres where the prices it is able to obtain for its output, i.e. their exchange-value, are high enough to be able to pay this rent, and still be able to obtain the average rate of profit. This occurs in agriculture, Marx says, because the level of productivity is relatively lower than in industry, it employs relatively more labour to capital, and the consequence is that it produces more surplus value, and a higher than average rate of profit.
The identification of prices of production, enables Marx to demonstrate how, under capitalism, therefore, where this competition is able to operate, each capital obtains this average rate of profit, irrespective of how much surplus value it creates. The ability to produce profit, becomes a use value of capital. This use value of being able to produce the average rate of profit, can then be sold in the market by all those who own capital, to those who wish to apply capital productively. The price of this capital, is then the rate of interest, and is itself determined by the interaction of the suppliers of capital with those that demand it. This is at odds with those including today's central banks, who believe that the rate of interest is a price of money rather than capital.
In Capital I, Marx made the historic discovery that eluded Smith, Ricardo and others, that labour-power, as opposed to labour, was a commodity. As a commodity, its the value of labour-power, is determined as with any other commodity, by the labour-time required for its production. It is sold, by wage workers, and its market-price takes the form of wages. Marx, therefore, is able to demonstrate that not only are the values of commodities objectively determinable, on the basis of the labour-time required for their reproduction, but on the basis of the laws identified, the division of the new value created by labour into wages and profits is also objectively determinable. The mass of profit, and the rate of profit is a function of the value of commodities.
Surplus value is objectively determinable as the difference between the value of the commodity labour-power, and the new value created by the productive consumption of that labour-power, i.e. by the labour it performs. Surplus value is thereby created in production via this process, and realised in exchange, in the sale of the commodity. The rate of surplus value is the ratio of this surplus value to the value of the labour-power that created it. But, the profit of a company is the difference between its total cost of production, i.e. not just what is pays for labour-power, but what it lays out for materials, for wear and tear of fixed capital, and the price it obtains for its output. Once again, this value is objectively determinable, because not only is the labour-power a commodity, but the materials, and fixed capital are also commodities, whose value is objectively determinable. The rate of profit is then objectively determinable as the ratio between the profit, and the cost of production.
In identifying the source of profits, interest and rent, Marx has also identified the objective basis of the revenues of the different classes, and class fractions in society, and the different forms of property on which they rest. It is the basis upon which to examine the great social interactions, which take place between them. By identifying that the owners of landed property leach rent from the profits of productive capital, Marx identifies the antagonistic interests of these two classes - the bourgeoisie and landed aristocracy. Merchant capital, including money-dealing capital, does not produce surplus value, but it is an integral part of the circuit of capital, being the means by which the commodity-capital, the produced commodities are sold, and thereby the commodity-capital is metamorphosed into potential money-capital, which in turn is metamorphosed once more into productive-capital. Merchant capital and money-dealing capital are aspects of industrial capital, phases of its circuit that become independent. They do not create surplus value, but reduce the cost of realising it, and thereby act to increase the mass and rate of profit. They also act to reduce the circulation period for capital, which acts to raise the rate of turnover of capital, which raises the annual rate of profit.
But, interest-bearing capital, or fictitious capital, does not form a part of the actual circuit of capital. It stands outside it, and in the form of interest, like rent it acts to leach surplus value from industrial capital. Industrial capital, therefore, has divergent interests not just from landed property, against which it launched the bourgeois revolution, but also from interest-bearing capital. As Engels describes, it is against these interests that industrial capital, with the backing of the industrial working-class launches its later assault in the middle and later parts of the 19th century.
The natural process that Marx had outlined in Capital I, of the concentration and centralisation of capital, means that not only are the small producers expropriated by capital, but the small and medium sized private capitalists are themselves expropriated by the bigger private capitalists. But, by the middle of the 19th century, even these big private capitals were too small for the needs of capital accumulation. The monopoly of private capital they represented was a fetter on capitalist production. That fetter was burst asunder as a result of the growth of credit, and the establishment of joint stock companies and co-operatives, whose growth was facilitated after 1855, with the passing of the Limited Liabilities Act. This socialised capital, expropriates the large private capitals themselves. It is as Marx puts it, the expropriation of the expropriators.
This socialised capital represents, as Marx puts it capital as the collective property of the associated producers. In the case of the worker-owned co-operatives it is property also under the control of the workers, but in the form of the joint stock company, the capital is the collective property of the firm, i.e. the associated producers, but is under the control of the lenders of money-capital, i.e. the shareholders. It is the epitome of the conflicting interests between industrial capital, and interest-bearing capital. The socialised capital stands now, alongside the workers in opposition to the landed interests and to the monied interests, the owners of fictitious capital, but also in opposition to the remnants of private capital, which it seeks to expropriate.
This is the basis of the rise of social-democracy, as the function of capital is removed from the hands of the private capitalist, just as the function of agricultural production had been removed from the hands of the landlord by the capitalist farmer. The function of capital, of maximising the production of surplus value, and maximising the accumulation of capital, now becomes the role of professional managers, paid wages as with any other wage worker, increasingly drawn from the ranks of the working class itself, as welfare states providing free education expand, and make these necessary skills more widely available. Relieved of their social function, the private capitalists thereby increasingly become mere coupon clippers, the providers of loanable money capital in the form of shares, bonds, and mortgages.
As the divergent interests of these money-lending capitalists and of industrial capital, personified in the form of the functioning-capitalist intensify, so the money-lending capitalists seek to protect their interests just as the landed oligarchy had done before them. They use their political power to ensure that the laws of corporate governance enable them to use their shareholdings to control the productive-capital that does not belong to them. They appoint Boards of Directors, and corporate executives, whose role is to sit above the the actual functioning-capitalists, and to thereby protect the interests of fictitious capital, by increasing dividends at the expense of real capital accumulation, and so on. Most recently, it has taken the form of the use of profits to buy back shares, so as to boost share prices, and inflate the figures for earnings per share, so as to flatter performance, as well as of direct returns of money-capital to shareholders from the company balance sheet.
Marx describes this socialised capital as the transitional form of property between capitalism and socialism. It is the basis and the forum within which the struggle between these different forms of property is played out. Capital III, thereby provides the theoretical grounding for understanding this evolution of capital into socialised capital, and the consequence for the struggle of these different forms of property, and social interests, in the transition from capitalism to socialism.
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