[Book] Understanding Marx’s Capital: A reader’s guide

8) Chapters 23-25: Accumulation

Capitalism is a dynamic system: “Money never sleeps,” says Marx. For capital to act as capital, it must continuously be in motion – continually seeking to create value from value. It is to this overall dynamic of capital which Marx now turns his attention.

The capitalist system is built upon the basis of private ownership and production for profit. In the preceding chapters, Marx outlines the source of profit within the capitalist system: the unpaid labour of the working class. It is not enough, however, for the capitalists simply to make a profit; they must at the same time reproduce the conditions that give rise to this profit, forming a constant process of money-making and exploitation.

“Whatever the social form of the production process, it has to be continuous, it must periodically repeat the same phases. A society can no more cease to produce than it can cease to consume. When viewed, therefore, as a connected whole, and in the constant flux of its incessant renewal, every social process of production is at the same time a process of reproduction.”1

Wage labour and capital

What are the conditions that lead to the creation of profit and how can they be reproduced? At root, as Marx notes, it is capital itself that must be produced and reproduced – that is, the capital-labour relation itself:

“The capitalist process of production, therefore, seen as a total, connected process, i.e. a process of reproduction, produces not only commodities, not only surplus-value, but it also produces and reproduces the capital-relation itself; on the one hand the capitalist, on the other the wage-labourer.”2

Capitalism, then, must maintain the capitalist as a capitalist and the worker always as a worker. In a dialectical manner, once started, this capital-labour relationship develops a logic of its own. What starts off as an apparent historical accident becomes a self-reinforcing tendency. Alienating the workers from the product of their labour, the capital-labour relation at the same time creates and reinforces the dominance of the capitalist class over the working class. The wealth that the workers produce, appropriated and invested as capital by the capitalists, becomes the instrument of the workers’ own oppression.

“…what at first was merely a starting-point becomes, by means of nothing but the continuity of the process, by simple reproduction, the characteristic result of capitalist production, a result which is constantly renewed and perpetuated. On the one hand, the production process incessantly converts material wealth into capital, into the capitalist’s means of enjoyment and his means of valorisation. On the other hand, the worker always leaves the process in the same state as he entered it – a personal source of wealth, but deprived of any means of making that wealth a reality for himself.

“…Therefore the worker himself constantly produces objective wealth, in the form of capital, an alien power that dominates and exploits him; and the capitalist just as constantly produces labour-power…in short, the capitalist produces the workers as a wage-labourer. This incessant reproduction, this perpetuation of the worker, is the absolutely necessary condition for capitalist production.”3

“That process, however, takes good care to prevent the workers, those instruments of production who are possessed of consciousness, from running away, by constantly removing their product from one pole to the other, to the opposite pole of capital…The Roman slave was held by chains; the wage-labourer is bound to his owner by invisible threads.”4

We see, therefore, that all the talk by the liberal apologists of capitalism about the ‘freedom of the individual’ is a mere illusion. For all the ‘choice’ and ‘liberty’ that capitalism supposedly offers, in the final analysis a worker must sell their labour-power to the capitalist and work for a wage. Meanwhile, any democratic rights the worker may possess are cast aside as soon as they enter the workplace, where the boss’ word is final. Any veneer of freedom, as Marx notes, “is maintained by a constant change in the person of the individual employer, and by the legal fiction of a contract.”5

“Capitalist production therefore reproduces in the course of its own process the separation between labour-power and the conditions of labour. It thereby reproduces and perpetuates the conditions under which the worker is exploited. It incessantly forces him to sell his labour-power in order to live, and enables the capitalist to purchase labour-power in order that he may enrich himself. It is no longer a mere accident that capitalist and worker confront each other in the market as buyer and seller. It is the alternating rhythm of the process itself which throws the worker back onto the market again and again as a seller of his labour-power and continually transforms his own product into a means by which another man can purchase him.”6

Reproduction and accumulation

Capital is ‘self-valorising value’. In other words, it is wealth which is capable of replicating and enhancing itself through the application of value-forming labour in production. But for capital to continue to generate new value and surplus-value, this surplus-value must itself be reinvested back into production – that is, surplus-value must be reconverted into capital. In other words, the capitalist must reinvest the profits of production back into new means of production. As Marx explains, this “employment of surplus-value as capital, or its reconversion into capital, is called accumulation of capital.”7

As explained previously, and re-emphasised by Marx, no new value be created through the act of exchange itself. Exchange does not create value, but merely realises it. “All the transactions in the market can accomplish is the interchange of the individual components of this annual product, their transfer from one hand to another. They cannot increase the total annual production, nor can they alter the nature of the objects produced.”8

But once surplus-value is realised, it can be immediately converted into new capital – that is, by reinvesting profits into new means of production – and capital moves from merely reproducing itself, to expanding and growing. Investment for the sake of profit, then, is the motor force behind growth under capitalism.

Such a fact is often glossed over by politicians who talk about ‘growth’ as though it were a tap that could be turned on and off at will. In reality, growth within the confines of capitalist production will always be limited by the needs of capital: to make and realise a profit. Where profits cannot be made, investment will stop; and when investment stops, growth ceases. At such points, the driving force of profit turns into its opposite and becomes an enormous barrier to development; the economy, and society with it, is plunged into crisis, and millions suddenly find themselves surplus to the requirements of capital, thrown onto the scrapheap of unemployment.

As long as investment continues, a virtuous circle develops, with capital begetting yet more capital and accumulation paving the way to further accumulation.

“The ownership of past unpaid labour is thenceforth the sole condition for the appropriation of living unpaid labour on a constantly increasing scale. The more the capitalist has accumulated, the more is he able to accumulate.”9

The accumulation of wealth by the capitalists, therefore, is not the result of cheating, corruption, or force, but arises precisely due to the dynamics, laws and logic of capitalism itself. As Marx comments, “the laws of appropriation or of private property…become changed into their direct opposite through their own internal and inexorable dialectic.”10 What begins as a fair exchange between the capitalist and the worker, ‘the exchange of equivalents’ in which the capitalist buys the labour-power of the worker in return for a wage, now turns into a means by which the capitalist clearly appropriates a surplus – that is, obtains more than they have paid for.

“…property turns out to be the right, on the part of the capitalist, to appropriate the unpaid labour of others or its product, and the impossibility, on the part of the worker, of appropriating his own product. The separation of property from labour thus becomes the necessary consequence of a law that apparently originated in their identity.

“Therefore, however much the capitalist mode of appropriation may seem to fly in the face of the original laws of commodity production, it nevertheless arises, not from a violation of these laws, but, on the contrary, from their application.”11

The capital-labour relation, then, does not stand in contradiction to the laws of private property, but rather, arises out of them – that is, from the laws of commodity production and exchange. But these same laws of production and exchange, as Marx explains, are themselves the result of the capital-labour relation:

“As long as the laws of exchange are observed in every single act of exchange – taken in isolation – the mode of appropriation can be completely revolutionised without in any way affecting the property rights which correspond to commodity production…

“This result becomes inevitable from the moment there is a free sale, by the worker himself, of labour-power as a commodity. But it is also only from then onwards that commodity production is generalised and becomes the typical form of production; it is only from then onwards that every product is produced for sale from the outset and all wealth produced goes through the sphere of circulation. Only where wage-labour is its basis does commodity production impose itself upon society as a whole; but it is also true that only there does it unfold all its hidden potentialities…To the extent that commodity production, in accordance with its own immanent laws, undergoes a further development into capitalist production, the property laws of commodity production must undergo a dialectical inversion so that they become laws of capitalist appropriation.”12

The question of accumulation under capitalism, therefore, is inextricably linked to the question of private ownership and commodity production. The concentration of wealth in the hands of a few is not a cancerous growth on the body of capitalism that can be painlessly cut away, but is an organic part of the capitalist system itself. Inequality is merely the symptom; capitalism the real disease.

Productive and unproductive consumption

In addition to Marx’s comments above, one might add that this process of production and reproduction is, at the same time, a process of consumption; for to maintain the system of profit, capitalism must, vitally, be able to maintain the working class itself, the goose that lays the golden egg. Such maintenance requires, in turn, the working class to consume.

Marx notes that the worker consumes in two senses:

“While producing he consumes the means of production with his labour, and converts them into products with a higher value than that of the capital advanced. This is his productive consumption…On the other hand, the worker uses the money paid to him for his labour-power to buy the means of subsistence; this is his individual consumption.”13

For the capitalist, this latter consumption – the individual consumption of the worker – appears as a necessary expenditure or cost in the process of production, “just as coal and water are supplied to the steam-engine, and oil to the wheel.”14 Therefore, the capitalist tries to reduce the outlay of this expenditure, in the same way as they would try to increase the efficiency of any machine by reducing the energy required for its running. But this consumption is vital and cannot be avoided. “His means of consumption are then merely the means of consumption of a means of production; his individual consumption is directly productive consumption.”15

In contrast to this productive consumption, both of the means of production and the workers’ means of subsistence, there also exists ‘unproductive consumption’. What is meant by this is the consumption of commodities for the capitalist’s own use and enjoyment, which therefore does not feed back into the productive process in order to create new value.

“The commodities the capitalist buys with a part of the surplus-value for his own consumption do not serve as means of production or means of valorisation…Instead of transforming surplus-value into capital, he rather consumes or expends it as revenue when he purchases those commodities…”16

This is wasteful expenditure rather than productive investment from the point of view of capitalist accumulation. Acting as “capital personified”, the capitalist’s “motivating force is not the acquisition and enjoyment of use-values, but the acquisition and augmentation of exchange-values…Only as a personification of capital is the capitalist respectable,”17 because it is only in this form that he develops the productive forces.

“Accumulate, accumulate! That is Moses and the prophets!…Therefore save, save, i.e. reconvert the greatest possible portion of surplus-value or surplus product into capital! Accumulation for the sake of accumulation, production for the sake of production: this was the formula in which classical economics expressed the historical mission of the bourgeoisie in the period of its domination…If, in the eyes of classical economics, the proletarian is merely a machine for the production of surplus-value, the capitalist too is merely a machine for the transformation of this surplus-value into surplus capital.”18

Those who do not invest and reinvest in order to keep up with the latest technologies and techniques, therefore, will be left behind. It is precisely this, the reinvestment and development of the means of production as a result of competition, that gives capitalism – and the capitalist as “capital personified” – any historical justification.

“…competition subordinates every individual capitalist to the immanent laws of capitalist production, as external and coercive laws. It compels him to keep extending his capital, so as to preserve it, and he can only extend it by means of progressive accumulation.”19

“He is fanatically intent on the valorisation of value; consequently he ruthlessly forces the human race to product for production’s sake. In this way he spurs on the development of society’s productive forces, and the creation of those material conditions of production which alone can form the real basis of a higher form of society, a society in which the full and free development of every individual forms the ruling principle.”20

Today, however, investment everywhere has dried up, with the capitalists instead hoarding cash as a result of the enormous excess capacity that exists on a world scale – a reflection of the contradiction of overproduction. Hoarding, as Marx comments, is not the aim of the capitalists, but precisely an indication that their system has ground to a halt.

“The exclusion of money from circulation would constitute precisely the opposite of its valorisation as capital, and the accumulation of commodities in the sense of hoarding them would be sheer foolishness. In fact the accumulation of commodities in great masses is the result either of a bottleneck in circulation or of overproduction.”21

Despite a whole host of new technologies that have the potential to transform society, as The Economist notes in a special report22, “the digital revolution has yet to fulfil its promise of higher productivity and better jobs…the digital economy, far from pushing up wages across the board in response to higher productivity, is keeping them flat for the mass of workers while extravagantly rewarding the most talented ones.”

Capitalism, then, has ceased long ago to play any progressive role and has outlived its historical task – to develop the forces of production and take society forward. In short, the capitalist system no longer has any justification and should be swept away in favour of “a society in which the full and free development of every individual forms the ruling principle,” as Marx would say.

Investment, productivity, and wages

Whilst the capitalist, by force of competition, is driven to forgo extravagance in favour of reinvestment, the desire for personal enrichment nevertheless remains. As Marx notes, “there develops in the breast of the capitalist a Faustian conflict between the passion for accumulation and the desire for enjoyment.”23

This reinvestment, however, with money ploughed back into new technologies and techniques, is at the same time the key to resolving this conflict within the heart of the capitalist. The role of such investment is to develop science; to refine the machinery and methods employed in industry; ultimately to increase the productivity of labour, such that “the value and mass of the means of production set in motion by a given quantity of labour increase as the labour becomes more productive.”24

In this way, the stock of capital grows and accumulation increases, and “the consumption of the capitalist may accordingly increase without any decrease in the fund for accumulation.”25 In other words, with investment and increasing productivity, the size of the economic pie grows, and with it, the mass of profits increases also. As a result, the capitalists can continue to make their lifestyles ever more luxurious whilst consuming only a small overall proportion of the wealth generated.

“Thus the more that capital increases by means of successive accumulations, the more does the sum of value increase that is divided into a fund for consumption and a fund for accumulation. The capitalist can therefore live a more pleasant life, and at the same time ‘renounce’ more.”26

The same logic – of a growing pie meaning more to share amongst everyone – is frequently cited by the capitalists as the way to increase real wages: the so-called ‘trickle-down’ theory of economics. If productivity is increasing and the economy is growing, then wages can be increased without it ‘affecting investment’ (i.e. threatening their profits). Or so the argument goes.

But such an argument is flawed in two respects. On the one hand, whilst real wages may increase in an absolute sense as a result of a general increase in the stock of society’s wealth, relative wages – that is, the share of the total wealth in society going to labour – nevertheless decrease. Such a tendency is being observed today where – due to globalisation and the intensification of world competition between workers, the role of automation and labour-saving machinery, and the political onslaught against workers’ organisations and trade union rights – the dominance of capital over labour has increased across the board. As the Economist comments in its special report27:

“Over the past 30 years or so…the share of income going to labour has fallen steadily the world over.

“Recent work…puts the global decline in labour’s share since the early 1980s at roughly five percentage points, to just over half of national income. This seems to hold good within sectors and across many countries, including fast-growing developing countries like China…”

On the other hand, the fact is that real wages have seen little rise, despite economic growth and productivity increases, and in many countries haven’t even increased at all, as The Economist explains:

“Between 1991 and 2012 the average annual increase in real wages in Britain was 1.5% and in America 1%…That was less than the rate of economic growth over the period and far less than earlier decades. Other countries fared even worse. Real wage growth in Germany from 1992 to 2012 was just 0.6%; Italy and Japan saw hardly any increase at all. And, critically, those averages conceal plenty of variation. Real pay for most workers remained flat or even fell, whereas for the highest earners it soared.”

“…despite a slowdown in productivity growth, pay has lagged badly behind productivity growth. From 2000 to 2011, according to America’s Bureau of Labour Statistics, real output per person rose by nearly 2.5% a year, whereas real pay increased by less than 1% per year.”

Over the last decade, real wages in Britain have actually fallen. In fact, according to the Resolution Foundation, it has been the biggest fall for any comparable decade in more than 200 years. You would have to go back to the era of the Napoleonic Wars and the Peterloo Massacre, a time when trade unions were illegal, to find such a dire situation for workers’ pay.

Despite the best arguments and claims of the bourgeois commentators and defenders of capitalism, therefore, their system is failing to deliver for the vast majority even on their own terms. Of course, at the same time, profits have never been higher; the dominance of capital over labour continues.

Inequality and accumulation

The very dynamic and motion of capital, therefore, is one of growth and expansion.

“As simple reproduction constantly reproduces the capital-relation itself, i.e. the presence of capitalists on the one side, and wage-labourers on the other side, so reproduction on an expanded scale, i.e. accumulation, reproduces the capital-relation on an expanded scale, with more capitalists, or bigger capitalists, at one pole, and more wage-labourers at the other pole.”28

If this motion of capital stops, the system goes into reverse, throwing society backwards with it. At the other end of the scale though, there are situations where capital runs ahead of itself – where “the requirements of accumulating capital may exceed the growth in labour-power or in the number of workers.”29 At such times, market forces step in and act to push wages up, as was the case in the immediate post-war period.

This dynamic, however, contains a countervailing tendency – a self-correcting feedback within itself. In the case that wages might rise as a result of a rapid expansion of capital, the effect will be a cut in the rate of profit, leading to a slowdown in investment and consequently a fall in the demand for labour. In the words of Marx, “accumulation slackens as a result of the rise in the price of labour, because the stimulus of gain is blunted.”30

In the final analysis, as Marx emphasises, the wealth generated in society must go either to labour or to capital – to wages or to profits. Any increase in the share going to labour means a decrease in the share going to capital; this depends upon the class struggle, hence the bitter struggles over unionisation and wage rises seen all over the world.

The capitalist system, therefore, cannot – and will not – simply self-destruct or peacefully grow over into a new, more egalitarian form. Wages can only rise so far – and no further – simply through the power of market forces. Any rise in wages due to the supply of labour and capital’s demand for it will never be so extreme as to eliminate profits altogether:

“A rise in the price of labour, as a consequence of the accumulation of capital, only means in fact that the length and weight of the golden chain the wage-labourer has already forged for himself allow it to be loosened somewhat…

“…The production of surplus-value, or the making of profits, is the absolute law of this mode of production. Labour-power can be sold only to the extent that it preserves and maintains the means of production as capital, reproduces its own value as capital, and provides a source of additional capital in the shape of unpaid labour…

“…it is clear that at the best of times an increase in wages means only a quantitative reduction in the amount of unpaid labour the worker has to supply.”31

While we would fight for every increase in wages, it is a continuous struggle against the pressures of the capitalists to force down wage rates. Calls to increase wages are resisted tooth-and-nail by the capitalists, who point out that rising wages will dent investment – i.e. their profits. This is the basis of the class struggle. However, reform of the wages system can only go so far; ultimately it must be abolished.

“The law of capitalist production which really lies at the basis of the supposed ‘natural law of population’ can be reduced simply to this: the relation between capital, accumulation and the rate of wages is nothing other than the relation between the unpaid labour which has been transformed into capital and the additional paid labour necessary to set in motion this additional capital…it is rather, at bottom, only the relation between the unpaid and the paid labour of the same working population…

“…The rise of wages is therefore confined within limits that not only leave intact the foundations of the capitalist system, but also secure its reproduction on an increasing scale…It cannot be otherwise in a mode of production in which the worker exists to satisfy the need of the existing values for valorisation, as opposed to the inverse situation, in which objective wealth is there to satisfy the worker’s own need for development. Just as man is governed in religion by the products of his own brain, so, in capitalist production, he is governed by the products of his own hand.”32

Concentration, centralisation, and competition

Once begun, the process of accumulation is self-reinforcing. “Every accumulation becomes the means of new accumulation.”33

“With accumulation of capital…the specifically capitalist mode of production develops, and, with the capitalist mode of production, the accumulation of capital.”34

Within this process of accumulation, however, there are also the dual dynamics of concentration, on the one hand, and competition on the other; concentration of wealth in the hands of capital rather than labour, and at the same time competition between different capitalists.

“Accumulation…presents itself on the one hand as increasing concentration of the means of production, and of the command over labour; and on the other hand as repulsion of many individual capitals from one another.”35

The historic role of capitalism was to concentrate the means of production; to abolish the old feudal ways of scattered, petty production and create large-scale industries – economies of scale in which efficiency and productivity increases as a result of bringing different elements of production under a common direction.

“It is concentration of capitals already formed, destruction of their individual independence, expropriation of capitalist by capitalist, transformation of many small into few large capitals.”36

This centralisation of the means of production is at the same time the necessary result of competition. Competition forces the capitalists to achieve economies of scale, in order to increase productivity, drive down costs and provide a competitive advantage. This necessarily requires “an increase in the minimum amount of individual capital necessary to carry on a business under its normal conditions”37, and so the larger capitals gradually drive the smaller from the field and eventually swallow them up.

This includes mergers and acquisitions, through which big businesses subsume their competitors in a given industry, expand into new sectors, or takeover their suppliers below and distributors above in the chain of production; such processes are known respectively as horizontal and vertical integration in the language of bourgeois economics. Such centralisation, in turn, creates “new and powerful levers of social accumulation.”38

“Capital grows to a huge mass in a single hand in one place, because it has been lost by many in another place. This is centralisation proper, as distinct from accumulation and concentration…

“…The battle of competition is fought by the cheapening of commodities. The cheapness of commodities depends, all other circumstances remaining the same, on the productivity of labour, and this depends in turn on the scale of production. Therefore the larger capitals beat the smaller.”39

Alongside this process of centralisation, the credit system also becomes increasingly dominant, eventually becoming “a new and terrible weapon in the battle of competition and is finally transformed into an enormous social mechanism for the centralisation of capitals.”40

The free market of competition, by its very nature, therefore, turns into its opposite – that is, into the dominance of monopolies in every sector and across sectors. The antagonism between centralisation and competition remains at the heart of the capitalism system, reflected in the contradiction between the immense levels of organisation and planning within a given business, and the anarchy of the market, which operates without any co-ordination or plan, but only on the basis of the blind forces of competition.

The task of socialist revolution is to resolve this contradiction: not by turning back the wheel of history and trying to artificially create smaller businesses and corporations – as is suggested, for example, by those politicians who advocate breaking up the banks; but by taking these major monopolies that capitalism has created into public ownership, under democratic workers’ control and management, and integrating them into a general, rational, socialist plan of production.

The reserve army of labour

Whilst there may be exceptional periods, as in the immediate post-war period, when rapid growth allows for the needs of capital to exceed the available supply of labour, this is not the norm. Mass unemployment is the real normality in capitalist society, whether in booms or slumps.

As accumulation increases, there is a tendency for the ‘organic composition’ of capital to grow, where the accumulated labour of the past – crystallised in constant capital – increases in proportion to the investment in living labour. In other words, as production develops and profits are ploughed back into investment, we see an ever increasing amount of machinery and raw materials in comparison to the workers employed. Although the overall population – and thus the total number of workers – increases with the growth of production, the dominance of machines over human beings increases also.

The result, Marx notes, is that society consistently finds itself in a position where there are men and women who are surplus to the needs of capital – a surplus population:

“…it is capitalist accumulation itself that constantly produces, and produces indeed in direct relation with its own energy and extent, a relatively redundant working population, i.e. a population which is superfluous to capital’s average requirements for its own valorisation, and is therefore a surplus population.”41

This “surplus population” of unemployed, Marx comments, acts as an “industrial reserve army”, expanding and contracting with the ever-changing pace and rhythm of capitalist production itself, reducing in periods of boom and a growing in times of slump. Capitalism knows of no dynamic other than that of chaotic motion: of booms and slumps; “expansion by fits and starts of the scale of production”, followed by “its equally sudden contraction”42.

In this way, the reserve army of labour becomes a “condition for the existence of the capitalist mode of production”: “a mass of human material always ready for exploitation by capital in the interests of capital’s own changing valorisation requirements”43; a reserve for the capitalist system, available to absorb the sudden shocks and spurts of growth in production.

Conditions have changed somewhat, however, since Marx wrote Capital. In discussing the industrial reserve army, Marx was describing a human reservoir of labour, the level of which would rise and fall with the boom-slump cycle of capitalism. But, as with the Great Depression of the 1930s, during today’s even greater crisis we see a different phenomenon: no longer that of a reserve army of labour, but a permanent scar of mass unemployment due to an organic crisis of capitalism. Imposed on the boom and slump cycle is the general crisis of ‘secular stagnation’.

The enforced idleness on the part of the ‘surplus population’, however, exists in a dialectical unity with its opposite: namely, the over-work on the part of those remaining in work. Millions cannot find employment, and yet others have to work in multiple jobs just to get by. The two condition each other: the reserve army of labour is used to create competition between workers and put a downward pressure on the wages of those in work. Meanwhile, the harder the capitalist can make their workers labour, the fewer workers the capitalist must employ. ‘Work for less or I will get someone else to do your job and you will not work at all!’ – this is the chorus of the bosses, with their industrial reserve army behind them.

“The over-work of the employed part of the working class swells the ranks of its reserve, while, conversely, the greater pressure that the reserve by its competition exerts on the employed workers forces them to submit to over-work and subjects them to the dictates of capital. The condemnation of one part of the working class to enforced idleness by the over-work of the other part, and vice versa, becomes a means of enriching the individual capitalists, and accelerates at the same time the production of the industrial reserve army on a scale corresponding with the progress of social accumulation.”44

Whilst the capitalists can decide who will work and who will not, workers are clearly not given the same freedom to restrict the supply of their labour. The only chance they have of doing this is to combine into trade unions. Hence the hue and cry raised by the bosses and their representatives in parliament and the press about any regulations imposed by trade unions, with the whole might of the capitalist state being used to eliminate any barrier to the supply of labour. The bosses must not be denied access to cheap labour!

“…as soon as, by setting up trade unions, etc., they try to organise planned co-operation between the employed and the unemployed in order to obviate or to weaken the ruinous effects of this natural law of capitalist production on their class, so soon does capital and its sycophant, political economy, cry out at the infringement of the ‘eternal’ and so to speak ‘sacred’ law of supply and demand.”45

Alongside the general rise and fall of wages due to the expansion and contraction of production, and its corresponding rise and fall in the demand for labour relative to the surplus population available, there are also, explains Marx, “the local oscillations of the labour-market in a particular sphere of production” – that is, a rise and fall of the wages available in particular industries, “which accompany the distribution of the working population into the different spheres of outlay of capital, according to its varying needs.”46

Just as the oscillations in the price of a commodity indicate the relative supply and demand of different commodities and provide a signal to the capitalist of where investments should be channelled, the relative change in wages in different industries acts, under capitalism, to direct labour into different sectors.

Today, as in the time of Marx, we have the contradiction of mass unemployment alongside an abundance of needs in society that are not fulfilled. Clearly, on a rational basis, there is work that needs to be done to fulfil these needs; likewise, there are people looking for work – and yet this work remains undone and those looking for work remain idle. The problem, the capitalists tell us, is not the lack of people looking for work, but their willingness to work. They must be forced or coerced into taking the first job that comes along. They also complain of the lack of people with the right skills for the work that is available. The solution, therefore, is education, as The Economist report asserts:

“The best hope for reducing the glut of less-skilled labour is to transform some of it into the more-skilled sort through higher spending on education. In the 19th and 20th centuries it took significant public investment to ensure that newly-industrialised economies had a supply of labour with the right qualifications. Something similar is needed today.”

But, as Marx notes, it is capitalism that creates this very conundrum, on the one hand by automating industry and creating this “glut of less-skilled labour”; and, on the other hand, by reducing the very funding for education that is needed to help workers learn new skills to move from the old industries and into the new.

“That the natural increase of the number of workers does not satisfy the requirements of the accumulation of capital, and yet, at the same time, exceeds those requirements, is a contradiction inherent in capital’s very movement. Capital demands more youthful workers, fewer adults. This contradiction is no more glaring than the other contradiction, namely that a shortage of ‘hands’ is complained of, while, at the same time, many thousands are out of work, because the division of labour chains them to a particular branch of industry.”47

Whilst the accumulation and growth of capital may increase the demand for labour, workers in old industries are thrown onto the scrapheap due to the development of new technologies and processes that make their skills redundant and obsolete.

“Capital acts on both sides at once. If its accumulation on the one hand increases the demand for labour, it increases on the other the supply of workers by ‘setting them free’, while at the same time the pressure of the unemployed compels those who are employed to furnish more labour, and therefore makes the supply of labour to a certain extent independent of the supply of workers.”48

Advances in production and technology, therefore, do not liberate us, but are used under capitalism to enslave us. Man is in a race against the machine. We do not control production; production controls us.

“On the basis of capitalism, a system in which the worker does not employ the means of production, but the means of production employ the worker, the law by which a constantly increasing quantity of means of production may be set in motion by a progressively diminishing expenditure of human power, thanks to the advance in the productivity of social labour, undergoes a complete inversion, and is expressed thus: the higher the productivity of labour, the greater is the pressure of the workers on the means of employment, the more precarious therefore becomes the condition for their existence, namely the sale of their own labour-power for the increase of alien wealth, or in other words the self-valorisation of capital. The fact that the means of production and the productivity of labour increase more rapidly than the productive population expresses itself, therefore, under capitalism, in the inverse form that the working population always increases more rapidly than the valorisation requirements of capital.”49

All the increases in wealth and productivity do not translate into an equivalent increase in living standards and leisure time. On the contrary, as explained above, in recent times, not only is the share of wealth in society going to labour decreasing, but real wages have also declined. Meanwhile, workers work harder than ever. The development of the productive forces has not meant the general betterment of society and humanity, but instead only the enrichment of the few at the expense of the many.

The Economist sums up the situation today in their report, describing a world where growing inequality in society and an ever-widening chasm between the rich and the rest are seen as a result of automation and technological innovation:

“Technology has created a growing reservoir of less-skilled labour while simultaneously expanding the range of tasks that can be automated. Most workers are therefore being forced into competition between each other and against machines. No wonder their share of the economic pie has got smaller, in developing economies as well as in the rich world.”

What a nonsensical and contradictory world we live in under capitalism, where mass unemployment and underemployment exists alongside overwork; where living standards fall whilst technology advances; where leisure time is reduced despite an abundance of automation and time-saving devices. This is the economics of the mad house!

It is this contradiction which Marx called “the absolute general law of capitalist accumulation”50: the inevitable product of a productive process that is completely interconnected and social in its scope, but in which the means of production are privately owned and the wealth generated is privately appropriated. As Marx so eloquently summarises and concludes:

“Within the capitalist system all methods for raising the social productivity of labour are put into effect at the cost of the individual worker; all means for the development of production undergo a dialectical inversion so that they become means of domination and exploitation of the producers; they distort the worker into a fragment of a man; they degrade him to the level of an appendage of a machine, they destroy the actual content of his labour by turning it into a torment; they alienate from him the intellectual potentialities of the labour process in the same proportion as science is incorporated in it as an independent power; they deform the conditions under which he works, subject him during the labour process to a despotism the more hateful for its meanness; they transform his life-time into working-time, and drag his wife and child beneath the wheels of the juggernaut of capital… But all methods for the production of surplus-value are at the same time methods of accumulation, and every extension of accumulation becomes, conversely, a means for the development of those methods. It follows therefore that in proportion as capital accumulates, the situation of the worker, be his payment high or low, must grow worse. Finally, the law which always holds the relative surplus population or industrial reserve army in equilibrium with the extent and energy of accumulation rivets the worker to capital more firmly than the wedges of Hephaestus held Prometheus to the rock. It makes an accumulation of misery a necessary condition, corresponding to the accumulation of wealth. Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery, the torment of labour, slavery, ignorance, brutalisation and moral degradation at the opposite pole, i.e. on the side of the class that produces its own product as capital.”51


1 p711

2 p724

3 p716

4 p719

5 p719

6 p723

7 p725

8 p726

9 p729

10 p729

11 p730

12 p733-734

13 p717

14 p717

15 p717

16 p734-735

17 p739

18 p742

19 p739

20 p739

21 p735

22 4th October 2014

23 p741

24 p754

25 p753

26 p757

27 4th October 2014

28 p763

29 p763

30 p770

31 p769

32 p772

33 p776

34 p776

35 p776-777

36 p777

37 p777

38 p780

39 p777

40 p778

41 p782

42 p785

43 p784

44 p789-790

45 p793

46 p792

47 p794-795

48 p793

49 p798

50 p798

51 p799

bck2back“The origins of capitalism were a matter of the expropriation of the mass of the people by a few usurpers; but with the socialist revolution, we have the expropriation of a few usurpers by the mass of the people..” – Marx, Capital Vol I, Chapter 32

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