Karl Marx’s `Capital’


“Capital – a critical analysis of capitalist production” by Karl Marx was the product of half a lifetime’s ongoing research on the nature of 19th century European economies. It is not, nor was it ever intended to be, a programme for socialist advance. Neither is it by any means the sole product of Marx’s intellectual life. He and his collaborator, Frederick Engels, produced a vast body of writings, many only published after their deaths. Whilst `Capital’ is the most significant and well known of these works, it is by no means an easy read. Famously, the 20th century Labour Prime Minister, Harold Wilson, complained that he, a clever economics graduate, could not get past the first page!
Much of the early pages are about understanding value. Obviously most things can be said to have `use value’. When things are swapped, we can be said to have created `exchange value’. The swaps probably have only one thing in common, that they are products of someone’s work. That might have been long in the past and some work may be particularly special. But all things store up labour value and express this in terms of exchange value.
Really, the only consistent way to measure value is in the time taken to make things. But what time? It’s not a question of how much better one way of making things is compared to another. The average “socially necessary labour time” that adds value to something is the key. Things that we buy and sell have use value but only when they pass by way of exchange, after having labour expended upon them do they become commodities.
A commodity is pretty odd, because it captures human labour within itself. The relationships between people get caught up in the relationship between things.   Humans begin to see society in terms of these relationships, they `fetishise’ commodities and thus the true nature of human relationships (e.g. between worker and boss) is disguised. 
Money is another strange thing. It’s both a measure of value (labour time) and the price of something (exchange value). These should be the same, broadly but they vary, since prices are largely imaginary anyway. `What?’, I hear you cry! Just like that bloke in the pub who asked me about this. Listen…
In selling something, we exchange a commodity (C) for money (M) and can buy something else (C) with that.
So: let’s call this C>M>C 
Right. Is this algebra?
No! It’s just a way of thinking about it.
I see. You’ve got something I want, say a pile of coconuts and I pay you for them and you buy … champagne – something like that? 
No, forget that for now. Really this transaction is just: C>C. It just looks like the money is doing something but really it might as well not be there. We could use empty mussel shells as money for all the difference it makes.
OK… so, why doesn’t money, sorry shells, make profit?
Well, the second C is rarely that much bigger than the first and if it is I haven’t created anything new, it’s an illusion that ends up being sorted out across all transactions. Really, this is just you and me buying and selling to each other. We swap coconuts for champagne.
OK…what about you; suppose you sell on to someone else for more mon…mussels shells?
Ah, in profitable buying, my money (M) has grown and I can think of it as my capital. Thus: M>C>M2
M2? What’s that? It’s not something to do with the square of the hypotens… hyp… Look, what is it?
Well, the aim of C>M>C is to `consume’ something.
What, like a hotdog?   
OK, if you like. Or coconuts.
Couldn’t eat more than one of them. Anyway, all this talk about food is making me a bit peckish.
Back to our game.
Do we have to?
But, unlike C>M>C, when I buy something from you, I have the money, you have the thing and we swap. That’s: M>C>M. That’s exchange value.
But what’s with this M2 thingy?
Well, the difference between M and M2 is extra value and that’s made by labour being applied to the commodity. It’s real value though, not made up.
Oh! You got some chaps to grow and pick up a lot of coconuts and that way they made them worth something. Is that it?
Bloody hell. You’ve got it! Well, the first few chapters anyway…
Er… can’t stop. I’m going to the chip shop.
Wait! There’s accumulated capital to worry about yet…
Something like that anyway. Perhaps if Marx had been able to have a chat with Wilson over a pint, he might even have got him to go past page 32! If dear old Harold had persevered he might have found out that the capitalist, unlike the slave owner or feudal lord, buys labour power, not the labour itself which remains free and that is all the worker really has to sell. We’re no longer owned directly as slaves but, because we have no choice in the matter, wages actually enslave us. As William Shakespeare pithily put it: “You take my life, when you take the means whereby I live.” It is perhaps a dangerous thing to try but the core of what Marx has to say can be summarised thus:
The exchange value of labour power is fixed by the time necessary for its production (or reproduction!), even if a historical and moral element also touches this. Unlike all other commodities, labour power’s use value is that it creates value. Suppose a worker takes 4 hours to produce commodities `worth’ this on that invisible market we hear about so much. This is actually the time needed to keep the worker and his family alive, more or less. Well, the boss will require another 4 hours work, making 8 in all, to cream off his `share’. (This ratio can actually be demonstrated today much as Marx did.) Marx called this lost extra element `surplus value’. After the boss has paid all other expenses what remains is usually called `profit’ in our society but this is not seen by Marxists as quite the same thing as surplus value. The boss redeems this value in money form by selling the combined use value and exchange value of the commodity, having only paid for the exchange value of the labour power.
It is not generally realised that this massive work actually runs to three volumes and it may be said that each is successively less well read! `Capital’ is a gigantic exercise in economic analysis, thankfully, interspersed throughout with the most sardonic historical commentary you will ever come across. If you can penetrate past the first few chapters you will be rewarded with enormous chunks of this stuff.   
By the end of the third volume, Marx is preoccupied with his realisation that there is a seemingly permanent economic law of capitalism – the historical rate of profit tends to decline, not the level but the percentage. The amount of capital is broadly fixed at the outset, as is the rate of surplus value. But the level of exploitation can be varied by repressive methods, such as banning or weakening unions, or investors can seek a higher rate in a different country where this is already the case, or capitalists can initiating new technology. If all or some of these routes are closed, due to the strength of the international workers’ movement, then problems ensue.
The very mechanism of a system relying on the application of capital (which is incidentally actually `dead’ labour) to production turns in on itself. Capitalists can find ways to protect their capital but it’s a constant fight. As surplus value constantly expands capital, the rate of profit diminishes relatively and undermines the base of individual capital. So powerful is the effect that, unless all these routes to boosting the rate are constantly employed, over a long and sustained period, the rate will fall. If this is not `corrected’, the relative power of the individual capitalist and their whole class will be undermined, especially as the population expands. Their ability to operate the system is compromised and this is not merely a matter of wealth for them but power – politics if you like. If unchallenged, owners of capital will act so that the trend is always for the relative balance of wealth to swing away from working people. This isn’t because they are personally nasty and greedy, the system and their interests force them to act like that.
These cycles of competition between capital and labour appear to us as individual periods of greater or lesser class warfare. In Britain today, most people do not command the value they create by work. Few can live without working for money and at least as much value is spirited away as is given back to them. Those who own capital (technology, stock, shares and money) will fight hard to keep it like that. The challenge for working people and their families is to revolutionise this situation by acting politically and through trade unions to control the full value of all that they create, whether their job is in the service or manufacturing sectors, whether they are `manual’ or `white-collar’ workers. Ultimately, ending the wages system should actually be the aim of working people and the understanding that this is so is at the heart of what makes Communists a very distinctive and dangerous kind of socialist.