Commodity production then leads to competition, which means that certain individuals are privileged in this competition, and prosper, whilst others are ruined. Those that prosper accumulate money, those that are ruined are reduced to having to sell their labour-power (initially their labour-service) to those that have accumulated money, and in the process the latter thereby appropriate surplus value (even when they provide labour-service, the buyer appropriates surplus value, because the individual value of the output is lower than its market value), which is converted into capital. Commodity production and competition creates capital, and capital thereby creates capitalists, who collectively form a capitalist class. This capitalist class develops bourgeois ideas and culture, and as the bourgeoisie itself becomes dominant, so its ideas become dominant, and the state itself becomes a capitalist state defending and promoting capitalism as the mode of production. This is a process of social evolution according to the unfolding of natural laws.
But, these same natural laws lead to capital destroying itself as private property, and becoming socialised capital. That is a consequence of the continued process of capital accumulation, concentration and centralisation. But, similarly, this also has social consequences. The private capitalist now disappears from the scene, their social function in production disappears, just as, previously, the social function of the landlord, in production, disappeared, when the capitalist farmer undertook that role. The social function of the private capitalist is now fulfilled by the “functioning capitalist”, a professional manager, technician or administrator, now drawn from the ranks of the working-class itself. This means that social development brings forth a new type of privileged individual whose characteristics are best adapted to the new productive and social relations.
Social-democracy is a transitional form of society resting upon this socialised capital, as a transitional form of property between capitalism and socialism. For so long as the working-class itself does not rise to the level of consciousness that it recognises that it is the collective owner of this socialised capital, a condition that only exists where the workers have created worker owned cooperatives, it is subject to its control over that capital being exercised by other forces. At an immediate level that control is exercised by these “functioning capitalists”, who, separated from any control over them, by the working-class itself, forms a petty-bourgeois, bureaucratic layer, whose behaviour is itself determined by its relation to the means of production. Its social function is to organise production efficiently so as to maximise profits, and it acts in accord with that goal. But, as an intermediate social grouping, coming itself from the working-class, it also views society from its own perspective, its role being to arbitrate and conciliate antagonisms between capital and labour, rather than to assert the dominance of labour over capital. And, because it cannot get beyond this mindset, which is itself limited within the bounds of bourgeois production, it always, therefore, must ultimately end up subordinating labour to capital, because it cannot see any means of furthering the interests of labour without first furthering the interests of capital accumulation.
As the productive forces continue to develop on an ever larger scale, so this socialised capital is forced to borrow more and more the techniques of the encroaching Socialist society. Not only does each enterprise engage in increased planning of production, as opposed to the unplanned chaotic speculative production of capitalism in its early stages, but businesses themselves come together in cartels to share research and development costs, and plan production, the capitalist state itself intervenes in the economy to plan and regulate production. As Engels puts it,
“In the trusts, free competition changes into monopoly and the planless production of capitalist society capitulates before the planned production of the invading socialist society. Of course, this is initially still to the benefit of the Capitalists.
But, the exploitation becomes so palpable here that it must break down. No nation would put up with production directed by trusts, with such a barefaced exploitation of the community by a small band of coupon-clippers.”
(Anti-Duhring p 358)
At the same time, in these giant socialised capitals, apart from the worker-owned cooperatives, it is not just the functioning-capitalists that exercise control. The money-lending capitalists, the shareholders, having removed themselves from an active role, ensure, instead, that they exercise control via the appointment of executives to protect their interests as against the interests of the company. The functioning capitalists occupy an intermediate position between the interests of the producers (workers and managers) and the productive-capital on the one side, and the owners of fictitious capital (shareholders), and their representatives amongst the executives on the other. On the one hand, juridically, because company law has been framed to give control to shareholders, the latter have ultimate control, but that does not change the laws of capital, and, ultimately, unless real capital accumulates, profits fall, and so the ability to pay dividends/interest to shareholders is undermined, and consequently, ultimately, the value of their shares is undermined. QE by central banks to inflate asset prices can only hide that truth for so long.
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