Monday, 16 December 2019

Theories of Surplus Value, Part III, Addenda - Part 6

Progressive social-democracy is a reflection of the objective interests of industrial capital as socialised capital. It reflects the requirement of such capital to maximise the profit of enterprise available for accumulation. Conservative social-democracy is a reflection of the interests of the owners of loanable money-capital, or fictitious capital, who exert control over the socialised capital, via their large-scale shareholdings, and appointment of executives to act on their behalf. But, both are social-democratic, because, ultimately, the interests of the latter are dependent on and subordinate to, the former. It appears that the magic of compound interest can cause money to create more money ad infinitum, and for asset prices to rise to the stars, but, periodically, such illusions are shattered, as economic reality imposes itself, and a financial crisis erupts, which brings the prices of financial and property assets back to Earth with a crash. 

In the end, the interest can only be paid if profits are made, which requires that real capital is invested productively, so that more labour is set in motion, and more surplus value is produced and realised. If profits are simply used for share buybacks, or inflate stock and bond prices, or to bid up the prices of existing land and property, rather than used productively, then the money-capital becomes increasingly depreciated. It buys less and less of these inflated financial and property assets. Meanwhile, without real productive investment, the mass of profit fails to expand sufficiently to finance the payment of interest/dividends and rents, so that yields progressively decline. Ultimately, it results in a financial crash such as 2008. 

“The complete objectification, inversion and derangement of capital as interest-bearing capital—in which, however, the inner nature of capitalist production, [its] derangement, merely appears in its most palpable form—is capital which yields “compound interest”. It appears as a Moloch demanding the whole world as a sacrifice belonging to it of right, whose legitimate demands, arising from its very nature, are however never met and are always frustrated by a mysterious fate.” (p 456) 

The objectification and derangement is indicated also by the fact that the movement of capital is seen as starting and ending with the capitalist as owner of money-capital, M – C...P...C` - M`. And, indeed, as Marx sets out, in Capital II, the starting point for capital is the ownership of money-capital. The capitalist has money-capital, they metamorphose it into productive-capital, production occurs, a surplus value is created, embodied in a surplus product, this commodity-capital is metamorphosed into money-capital, and the process begins again. But, as Marx sets out, in Capital II, once this capital has been set in motion, this circuit of the newly invested money-capital is not what characterises the circuit of industrial capital

The purpose of capitalist production is not an increase in the money-capital, but is an increase in the mass of productive-capital. Money-capital produces no surplus value. It is incapable of self-expansion. Only productive-capital is capable of self-expansion. The purpose of capitalist production is to increase the mass of productive-capital so that it can, in turn, produce more surplus value, and thereby accumulate more productive-capital. More surplus value is produced by either setting more labour in motion, or by raising the rate of surplus value. To set more labour in motion either more workers must be employed, or the working-day must be extended. Both imply also an increase in the mass of means of production to be used by this additional labour. To raise the rate of surplus value, either the working-day must be extended so as to increase absolute surplus value, or else there must be an increase in social productivity, so as to reduce the value of wage goods, and thereby the value of labour-power, which requires intensive accumulation of new forms of technology to raise productivity. Given any technical composition of capital, the mass of labour employed, and thereby the mass of surplus value produced, is determined by the physical mass of constant capital employed. To increase the mass of surplus value, therefore, it is first necessary to increase the physical mass of constant capital employed. It is this which drives capitalist accumulation.

Money-capital does not then form a termination point, but only a moment in this circuit of industrial capital. 

“In the reproduction process of capital, the money-form is but transient – a mere point of transit.” 

(Capital III, Chapter 24) 

The circuit of industrial capital is then, P...C` - M`, M – C … P. 

As Marx says, it is this circuit that defines the circuit of industrial capital. 

“The circuit of productive capital has the general formula P ... C' — M' — C ... P. It signifies the periodical renewal of the functioning of productive capital, hence its reproduction, or its process of production as a process of reproduction aiming at the self-expansion of value; not only production but a periodical reproduction of surplus-value; the function of industrial capital in its productive form, and this function performed not once but periodically repeated, so that the renewal is determined by the starting-point.” 

(Capital II, Chapter 2) 

And, in Capital III, he says, 

“In so far as reproduction obtains on the same scale, every consumed element of constant capital must be replaced in kind by a new specimen of the same kind, if not in quantity and form, then at least in effectiveness.” 

(Capital III, Chapter 49) 

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