Frederick Douglass

African Revolutionary Writers, Part 1

Frederick Douglass, 1818 - 1895

Frederick Douglass

This is the first main post of our series of African Revolutionary Writers. As a rule, you will receive four instalments in each weekly part, over ten weeks, with each instalment highlighting one revolutionary writer. These are your regular political education posts for the first quarter of 2013. They are distinguished from other posts by the background colour, and are also clearly marked as “African Revolutionary Writers”.

We begin with a giant: Frederick Douglass.

Context

The first part of our ten-part series on African Revolutionary Writers covers the period from slavery to Imperialism. The Atlantic slave trade begun when Portuguese ships passed Cape Bojador on the coast of present-day Western Sahara in 1434, bringing them south of the great desert for the first time.

They immediately took slaves. These, the first slaves of the bourgeoisie, were sold to Spanish colonists on the Canary Islands, where the original inhabitants (the Guanches) had already been enslaved in situ and worked to extinction. The triangular slave-trade pattern: Portugal – Africa – Canary Islands was soon afterwards scaled up to Britain – Africa – West Indies (or alternatively Brazil or North America). The Atlantic Trade took slaves across the ocean via the “Middle Passage” and brought sugar, tobacco, cotton and other plantation-grown commodities to Europe.

Christopher Columbus had crossed the Atlantic to the West Indies in 1492, and touched the continent of South America in 1498, the same year that Vasco da Gama reached India by the Cape sea route. By 1502 the trans-Atlantic slave trade was in full flow, first as a Portuguese monopoly, and later as a British monopoly.

Although Marx notes in “Capital” that capitalism began in the 1500s, yet for more than three centuries the dominant business of the Western European bourgeoisie was not capitalism, but the Atlantic slave trade, and the biggest operator in that business was Britain. This situation lasted until the capitalist “Industrial Revolution” of the late 1700s, also in Britain.

Only when the Western bourgeoisie made its turn towards capitalism did it become expedient for it to let some blacks, released slaves, to create a literary genre known as the “slave narrative”, as part of the capitalist campaign to suppress slavery. This was done so as to make room for a new, more productive, exploited class: the wage-slaves or working proletariat.

An early example of the “slave narrative” genre is the work of Olaudah Equiano, who wrote a book about his “Interesting Life” as a slave and then rescued slave, published in 1789. Such slave-narrative books tended not only to expose the evils of slavery, but also to praise Christianity and capitalism in equal measure, in order to flatter their sponsors and readers.

But Frededrick Douglass took the genre to a new level, transcended it, and left behind an incomparable and permanent liberatory resource.

Douglass

Frederick Douglass’s work was exceptional for the breadth and the rebellious fearlessness of his rhetoric. Douglass broke free from the limits of the slave narrative genre so as to begin to create a truly revolutionary black literature. This is why our series begins with him.

After escaping by train from twenty years of slavery, Douglass wrote an extraordinary slave narrative called My Bondage and My Freedom, first published in 1855. He included, in the same volume, a series of six transcripts of speeches or orations that he had given as a campaigner against slavery.

Slavery was abolished in the USA in 1865 at the end of the US Civil War, ten years after the publication of Frederick Douglass’s book.

These six particular lectures of Douglass’s are contained in one of the two attached documents. “What to the slave is the Fourth of July?” is a famous one, but they are all outstanding. This was an orator!

Power concedes nothing without a demand

But the main reading, attached, is the most immortal of all of Frederick Douglass’s speeches, known as “If There Is No Struggle, There Is No Progress” from 1857. It contains the famous phrase: “Power concedes nothing without a demand.” If you read nothing else of Douglass’s, do read this extraordinary piece of revolutionary literature, for the good advice that it gives: power concedes nothing without a demand.

The American Civil War of 1861-1865 was an armed conflict between one part of the bourgeoisie and another. It represented the real capitalist revolution in the USA, when the specifically capitalist bourgeoisie gained its dictatorship over the slaveholding part, and also over the new proletariat that it had created. In this way the US bourgeois dictatorship that still exists today came into being.

For Africans, the global abolition of slavery was a relief after three centuries of terrible mass-scale atrocity. But the abolition of outright slavery also marked the beginning of wage slavery, and of military invasions, conquests, domination, plunder, settlement and colonialism, including a “scramble for Africa” in the second half of the 19^th Century. In the second half of the 20^th Century, globalist neo-colonialism followed.

African political writing tracked all these changes. This week we look at the literature of the period of slavery and colonial expansion. In the next part, we will move into the literature of the post-WW2 era of decolonisation.

·        The above serves to introduce the original reading-text - Frederick Douglass’s 1857 “If There Is No Struggle, There Is No Progress”

·        PDF files of the reading text are attached, including six more lectures of Frederick Douglass

·        To download any of the CU courses in PDF files please click here.

Introduction: African Revolutionary Writers: Weapon of Theory

African Revolutionary Writers, Part 0

Amilcar Cabral, 1924 - 1973

Introduction: Weapon of Theory

Next week, the CU-Africa begins to post a ten-part course on African Revolutionary Writers. This will be the first of four ten-week courses to be run through this e-mail channel in 2014.

As usual, the CU gives you original texts, attached to a short introduction or “opening to discussion”. You are welcome to reply to the CU postings, continuing the discussion, or adding your own new comments on the text.

As a suitable introduction to the new course, herewith attached please find Amilcar Cabral’s “Weapon of Theory”.

Cabral is the most profound and the most sublime of African Revolutionary writers. He is one of those Africans who contributed indispensable new lessons to the universal revolutionary legacy. “The Weapon of Theory” is relevant to our course as a whole, and to all our courses, for that matter. At a later stage in this course we will return to Amilcar Cabral and to the great single-volume compendium of his work called “Unity and Struggle”, recently republished in English in South Africa.

The Weapon of Theory

The Tricontinental Conference of the Peoples of Asia, Africa and Latin America was held in Havana in January, 1966, 46 years after the Baku Conference of the Peoples of the East and seven years after the Cuban Revolution.

Forty-eight more years have passed since the Tricontinental. A lot has been achieved in that time, including our South African democratic breakthrough, almost twenty years ago, and the unbanning of the ANC, twenty-four years ago.

The full defeat of Imperialism has not yet occurred. What we can say is that from early in the 20^th Century the historical agenda was set by the liberation movements, and that Imperialism represents the degeneration and the decline of bourgeois class power, and not its heyday.

The great political change in the world in the last century was the taking of sovereign independence by the formerly oppressed peoples of the former colonies, affecting the great majority of the population of the planet and opening the road of democracy for them.

This gigantic movement and huge change was achieved with the weapon of theory.

In 2014 with direct Imperialist armed aggression still taking place on the continent of Africa it is, however, clear that the struggle continues.

In this connection we can note that Amilcar Cabral, in the speech to the Tricontinental that has always been known by the title “The Weapon of Theory”, said the following:

“It is often said that national liberation is based on the right of every people to freely control its own destiny and that the objective of this liberation is national independence. Although we do not disagree with this vague and subjective way of expressing a complex reality, we prefer to be objective, since for us the basis of national liberation, whatever the formulas adopted on the level of international law, is the inalienable right of every people to have its own history, and the objective of national liberation is to regain this right usurped by imperialism, that is to say, to free the process of development of the national productive forces.

“For this reason, in our opinion, any national liberation movement which does not take into consideration this basis and this objective may certainly struggle against imperialism, but will surely not be struggling for national liberation.

“This means that, bearing in mind the essential characteristics of the present world economy, as well as experiences already gained in the field of anti-imperialist struggle, the principal aspect of national liberation struggle is the struggle against neo-colonialism.”

Amilcar Cabral was a true vanguardist. He was both a great leader, and a great intellectual.

The struggle against neo-colonialism continues.

·        The Weapon of Theory (PDF download)

·        A PDF file of the reading text is attached

·        To download the full African Revolutionary Writers course in PDF files, please click here

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Revenues and their Sources

Capital Volume 3, Part 7

Revenues and their Sources

Capital Volume 3, Part 7, Revenues and their Sources

The last part, of the last book, of Capital begins as Volume 1 ended, with a reminder that capital is not a thing, but is a relationship. In Part 1 of our chosen text, Chapter 48, The Trinity Formula (download linked below) Marx writes:

“Capital, land, labour! However, capital is not a thing, but rather a definite social production relation, belonging to a definite historical formation of society, which is manifested in a thing and lends this thing a specific social character. Capital is not the sum of the material and produced means of production. Capital is rather the means of production transformed into capital, which in themselves are no more capital than gold or silver in itself is money. It is the means of production monopolised by a certain section of society, confronting living labour-power as products and working conditions rendered independent of this very labour-power, which are personified through this antithesis in capital…”

Shortly afterwards, Marx turns to a summary of the illusory and impossible conception of the same relationship as seen by self-serving “vulgar” bourgeois economists, starting like this:

“Vulgar economy actually does no more than interpret, systematise and defend in doctrinaire fashion the conceptions of the agents of bourgeois production who are entrapped in bourgeois production relations. It should not astonish us, then, that vulgar economy feels particularly at home in the estranged outward appearances of economic relations in which these prima facie absurd and perfect contradictions appear and that these relations seem the more self-evident the more their internal relationships are concealed from it, although they are understandable to the popular mind. But all science would be superfluous if the outward appearance and the essence of things directly coincided. Thus, vulgar economy has not the slightest suspicion that the trinity which it takes as its point of departure, namely, land — rent, capital — interest, labour — wages or the price of labour, are prima facie three impossible combinations.”

Later in this paragraph (section III of the chapter), Marx refers to Volume 1 (“Book 1”) and contrasts the irrational bourgeois concept of value with the true understanding of surplus value.

To finish by returning to Engels’ introductory remarks: Yes, Capital Volume 3 is important. It is not superfluous. Volume 3 is directly helpful in the current circumstances of “Global Economic Meltdown” and “Debt Crisis”. But Volume 3 does not render Volume 1 redundant. On the contrary, Volume 3 relies upon and leans upon Volume 1 and constantly confirms Volume 1, throughout.

The last Chapter of Capital Volume 3 is Chapter 52, “Classes”, and it ends: “[Here the manuscript breaks off.]”

Engels provided a supplement to Volume 3 which can be found on MIA, here.

Picture: A representation of the Christian “Holy Trinity”. “Pater”, “filius” and “spiritus sanctus” are Father, Son and holy spirit (Holy Ghost), and “deus” is God. “Est” means “is”, and “non est” means “is not”. These are “prima facie” three impossible combinations. If all are God, then it follows in logic that all must be the same as each other; but the diagram says they are not the same as each other. This is a logical “non sequitur” (i.e. “it does not follow”).

Marx is not challenging Christianity. Christians may, as some of them do, accept the Trinity as an article of faith, while others may say (as do the Jesuits, for example) that the Trinity may be a mystery, but we must constantly strive to understand it.

Marx is rather saying that the Christian Trinity is not reconcilable by logic, and the bourgeois Trinity of capital, land, and labour likewise does not constitute three of a kind, and, like the Christian Trinity, this bourgeois Trinity it does not constitute a logical unity.

·        The above is to introduce the original reading-text: Capital Volume 3, Chapter 48, The Trinity Formula.

Ground Rent

Capital Volume 3, Part 6

Ground Rent

Capital Volume 3, Part 6, Transformation of Surplus-Profit into Ground-Rent

In this 11-chapter part of Capital Volume 3, Karl Marx relates capital (reproduction of surplus value) to the much older, pre-capitalist concept and practice of rent. He shows how rent became, and remains, part of the capitalistic system.  Our chosen Chapter 38 (download linked below) deals with the “surplus-profit” over and above the general rate of profit, that may arise from fortuitous factors like the possession of a waterfall; and the concept of differential rent as a means of taking account of such a variation from the norm.

But first, let us exploit the summarising paragraphs on rent, given below in a shortened version, which Marx gives in the Introduction to this section. Note that, as Marx reminds us, these remarks bear upon the question of mining as much as they bear upon agriculture:

“The analysis of landed property in its various historical forms is beyond the scope of this work. We shall be concerned with it only in so far as a portion of the surplus-value produced by capital falls to the share of the landowner. We assume, then, that agriculture is dominated by the capitalist mode of production just as manufacture is; in other words, that agriculture is carried on by capitalists who differ from other capitalists primarily in the manner in which their capital, and the wage-labour set in motion by this capital, are invested. So far as we are concerned, the farmer produces wheat, etc., in much the same way as the manufacturer produces yarn or machines. The assumption that the capitalist mode of production has encompassed agriculture implies that it rules over all spheres of production and bourgeois society, i.e., that its prerequisites, such as free competition among capitals, the possibility of transferring the latter from one production sphere to another, and a uniform level of the average profit, etc., are fully matured. The form of landed property which we shall consider here is a specifically historical one, a form transformed through the influence of capital and of the capitalist mode of production, either of feudal landownership, or of small-peasant agriculture as a means of livelihood, in which the possession of the land and the soil constitutes one of the prerequisites of production for the direct producer, and in which his ownership of land appears as the most advantageous condition for the prosperity of his mode of production.

“Just as the capitalist mode of production in general is based on the expropriation of the conditions of labour from the labourers, so does it in agriculture presuppose the expropriation of the rural labourers from the land and their subordination to a capitalist, who carries on agriculture for the sake of profit…

“For our purposes it is necessary to study the modern form of landed property, because our task is to consider the specific conditions of production and circulation which arise from the investment of capital in agriculture. Without this, our analysis of capital would not be complete… (Or, instead of agriculture, we can use mining because the laws are the same for both.)

“Landed property is based on the monopoly by certain persons over definite portions of the globe, as exclusive spheres of their private will to the exclusion of all others. With this in mind, the problem is to ascertain the economic value, that is, the realisation of this monopoly on the basis of capitalist production.

“With the legal power of these persons to use or misuse certain portions of the globe, nothing is decided. The use of this power depends wholly upon economic conditions, which are independent of their will. The legal view itself only means that the landowner can do with the land what every owner of commodities can do with his commodities. And this view, this legal view of free private ownership of land, arises in the ancient world only with the dissolution of the organic order of society, and in the modern world only with the development of capitalist production…

“In the section (in Volume 1) dealing with primitive accumulation we saw that this mode of production presupposes, on the one hand, the separation of the direct producers from their position as mere accessories to the land (in the form of vassals, serfs, slaves, etc.), and, on the other hand, the expropriation of the mass of the people from the land.

“To this extent the monopoly of landed property is a historical premise, and continues to remain the basis of the capitalist mode of production, just as in all previous modes of production which are based on the exploitation of the masses in one form or another. But the form of landed property with which the incipient capitalist mode of production is confronted does not suit it. It first creates for itself the form required by subordinating agriculture to capital. It thus transforms feudal landed property, clan property, small peasant property in mark communes — no matter how divergent their juristic forms may be — into the economic form corresponding to the requirements of this mode of production.

“One of the major results of the capitalist mode of production is that, on the one hand, it transforms agriculture from a mere empirical and mechanical self-perpetuating process employed by the least developed part of society into the conscious scientific application of agronomy, in so far as this is at all feasible under conditions of private property; that it divorces landed property from the relations of dominion and servitude, on the one hand, and, on the other, totally separates land as an instrument of production from landed property and landowner — for whom the land merely represents a certain money assessment which he collects by virtue of his monopoly from the industrial capitalist, the capitalist farmer; it dissolves the connection between landownership and the land so thoroughly that the landowner may spend his whole life in Constantinople, while his estates lie in Scotland. Landed property thus receives its purely economic form by discarding all its former political and social embellishments and associations, in brief all [its] traditional accessories…

“The rationalising of agriculture, on the one hand, which makes it for the first time capable of operating on a social scale, and the reduction ad absurdum of property in land, on the other, are the great achievements of the capitalist mode of production. Like all of its other historical advances, it also attained these by first completely impoverishing the direct producers.”

Once again, Marx refers back to matters dealt with in Volume 1.

Among other things, Marx is here providing us with explanations as to why the land question in South Africa is so intractable. Land is part of capitalism, and so are mines. There can be no going back, but only forward, because in its productive aspect land has never been more socialised. Only in its ownership can land become more socialised than it already is, and it can only be fully re-socialised by the complete abolition of capitalism.

As with banking, so also with landowning: Under capitalism the take is a portion of surplus-value. This part shows how such rent arises and how it is calculated for the various conditions, of which the first example given is as clear as any, and can serve as typical.

·        The above is to introduce the original reading-text: Capital Volume 3, Chapter 38, Differential Rent: General Remarks.

Interest-Bearing Capital

Capital Volume 3, Part 5

Interest-Bearing Capital

Capital Volume 3, Part 5, Division of Profit into Interest and Profit of Enterprise. Interest-Bearing Capital.

This is a long part of Volume 3 and is really too much with its sixteen chapters (21 – 36), almost a book in itself, to be covered in a single discussion. Therefore let us concentrate as before on the question of whether Volume 1 of Capital is undermined or over-ruled by Volume 3.

Marx makes it clear that this is not the case at the beginning of Chapter 23 where he writes:

“Interest, as we have seen in the two preceding chapters, appears originally, is originally, and remains in fact merely a portion of the profit, i.e., of the surplus-value, which the functioning capitalist, industrialist or merchant has to pay to the owner and lender of money-capital whenever he uses loaned capital instead of his own.”

These pages contain great good sense and a lot of assistance to people trying to understand the “Global Economic Meltdown” that has been going on since 2008, and is now also generally referred to as “the debt crisis”, or just “the crisis”. As an example, here are some paragraphs from our sample Chapter 29, Component Parts of Bank Capital, (download linked below).

“We shall now consider labour-power in contrast to the capital of the national debt, where a negative quantity appears as capital — just as interest-bearing capital, in general, is the fountainhead of all manner of insane forms, so that debts, for instance, can appear to the banker as commodities. Wages are conceived here as interest, and therefore labour-power as the capital yielding this interest. For example, if the wage for one year amounts to £50 and the rate of interest is 5%, the annual labour-power is equal to a capital of £1,000. The insanity of the capitalist mode of conception reaches its climax here, for instead of explaining the expansion of capital on the basis of the exploitation of labour-power, the matter is reversed and the productivity of labour power is explained by attributing this mystical quality of interest-bearing capital to labour-power itself. In the second half of the 17th century, this used to be a favourite conception (for example, of Petty), but it is used even nowadays in all seriousness by some vulgar economists and more particularly by some German statisticians.[1] Unfortunately two disagreeably frustrating facts mar this thoughtless conception. In the first place, the labourer must work in order to obtain this interest. In the second place, he cannot transform the capital-value of his labour-power into cash by transferring it. Rather, the annual value of his labour-power is equal to his average annual wage, and what he has to give the buyer in return through his labour is this same value plus a surplus-value, i.e., the increment added by his labour. In a slave society, the labourer has a capital-value, namely, his purchase price. And when he is hired out, the hirer must pay, in the first place, the interest on this purchase price, and, in addition, replace the annual wear and tear on the capital.

“The formation of a fictitious capital is called capitalisation. Every periodic income is capitalised by calculating it on the basis of the average rate of interest, as an income which would be realised by a capital loaned at this rate of interest. For example, if the annual income is £100 and the rate of interest 5%, then the £100 would represent the annual interest on £2,000, and the £2,000 is regarded as the capital-value of the legal title of ownership on the £100 annually. For the person who buys this title of ownership, the annual income of £100 represents indeed the interest on his capital invested at 5%. All connection with the actual expansion process of capital is thus completely lost, and the conception of capital as something with automatic self-expansion properties is thereby strengthened.

“Even when the promissory note — the security — does not represent a purely fictitious capital, as it does in the case of state debts, the capital-value of such paper is nevertheless wholly illusory. We have previously seen in what manner the credit system creates associated capital. The paper serves as title of ownership which represents this capital. The stocks of railways, mines, navigation companies, and the like, represent actual capital, namely, the capital invested and functioning in such enterprises, or the amount of money advanced by the stockholders for the purpose of being used as capital in such enterprises. This does not preclude the possibility that these may represent pure swindle. But this capital does not exist twice, once as the capital-value of titles of ownership (stocks) on the one hand and on the other hand as the actual capital invested, or to be invested, in those enterprises. It exists only in the latter form, and a share of stock is merely a title of ownership to a corresponding portion of the surplus-value to be realised by it. A may sell this title to B, and B may sell it to C. These transactions do not alter anything in the nature of the problem. A or B then has his title in the form of capital, but C has transformed his capital into a mere title of ownership to the anticipated surplus-value from the stock capital.”

It remains the case that in Volume 3, Karl Marx is constantly referring back to Volume 1, and reminding us that whatever “financial” profits (as we would now call them) there may be, these are only portions of the surplus value generated at the point of production by the capitalistic exploitation of living human labour-power.

Picture: Max Keiser, of Russia Today’s “Keiser Report” television programme, in a London taxi. Keiser is particularly eloquent about the insane role of “fictitious capital” in present conditions, which appear not to have changed at all from the time of Karl Marx, where finance capital is concerned. RT is on DSTV channel 405.

·        The above is to introduce the original reading-text: Capital Volume 3, Chapter 29, Component Parts of Bank Capital.

Money-Dealing Capital

Capital Volume 3, Part 4

Money-Dealing Capital

Capital Volume 3, Part 4: Conversion of Commodity-Capital and Money-Capital into Commercial Capital and Money-Dealing Capital (Merchant's Capital)

Since 2008 in particular, the world has been described as being in a “global economic meltdown”. This crude bogey is not in fact a new phenomenon. The nature of banking and money-dealing has been well known since the publication of Capital Volume 3, as was noted in various publications at the start of the “meltdown”. One good example is an article by Dave Lindorff in CounterPunch on 3 October 2008, which quotes Chapter 30 in Part 5 of Capital Volume 3 (“Money Capital and Real Capital”) to show that Marx had in that chapter described the working of the “meltdown” very completely and very concisely.

Here is the quote, with Lindorff’s edits:

"In a system...where the entire continuity of the...process rests upon credit, a crisis must obviously occur -- a tremendous rush for means of payment -- when credit suddenly ceases and only cash payments have validity. At first glance, therefore, the whole crisis seems to be merely a credit and money crisis. And in fact it is only a question of the convertibility of bills of exchange into money. But the majority of these bills represent actual sales and purchases, whose extension far beyond the needs of society is, after all, the basis of the whole crisis. At the same time, an enormous quantity of these bills of exchange represents plain swindle, which now reaches the light of day and collapses; furthermore, unsuccessful speculation with the capital of other people; finally, commodity-capital which has depreciated or is completely unsaleable, or returns that can never more be realized again. The entire artificial system of forced expansion of the [economy] cannot, of course, be remedied by having some bank, like the [Federal Reserve], give to all the swindlers the deficient capital by means of its paper and having it buy up all the depreciated commodities at their old nominal values. Incidentally, everything here appears distorted, since in this paper world, the real price and its real basis appear nowhere, but only bullion, metal coin, notes, bills of exchange, securities. Particularly in centres where the entire money business of the country is concentrated, like London [or New York]...the entire process becomes incomprehensible."

Broadly it appears that the ability of bankers and of traders in financial instruments to create money is unrestrained. In Marx’s time there was a link between money and gold and silver, and this link remained officially until the 1970s. The de-facto position of gold remains, but even gold has now been fictionalised to an extent, so that there is a lot more gold “on the books” than physically exists.

This is therefore another area wherein the writings of Karl Marx, particularly here in Capital volume 3, speak directly to the bourgeois economists of today. Marx is however quite explicit in saying that the source of increase of wealth in capitalist society remains one and the same as before: surplus value extracted by the exploitation of labour power paid for with wages at the point of production.

In Chapter 19, on “Money-Dealing Capital” (attached; download linked below) Marx states at the beginning:

“A definite part of the total capital dissociates itself from the rest and stands apart in the form of money-capital, whose capitalist function consists exclusively in performing these operations for the entire class of industrial and commercial capitalists. As in the case of commercial capital, a portion of industrial capital engaged in the circulation process in the form of money-capital separates from the rest and performs these operations of the reproduction process for all the other capital. The movements of this money-capital are, therefore, once more merely movements of an individualised part of industrial capital engaged in the reproduction process.”

There is nothing in the above to suggest that the identification of the extraction of surplus value in Capital Volume 1 as the essence of capital has been surpassed or rendered obsolete. On the contrary, Capital Volume 1 is hereby confirmed as continuing to be the essential and necessary basis and foundation in reality upon which the ever-more-fantastic world of money-dealing is erected.

Marx concludes the chapter as follows:

“It is evident that the mass of money-capital with which the money-dealers operate is the money-capital of merchants and industrial capitalists in the process of circulation, and that the money-dealers' operations are actually operations of merchants and industrial capitalists, in which they act as middlemen.

“It is equally evident that the money-dealers' profit is nothing but a deduction from the surplus-value, since they operate with already realised values (even when realised in the form of creditors' claims).”

“Nothing but a deduction from the surplus-value” is as plain a statement as could be, and this corresponds to the current jargon of “the real economy”, or otherwise “Main Street” as opposed to “Wall Street”.

·        The above is to introduce the original reading-text: Capital Volume 3, Chapter 19, Money-Dealing Capital.

Tendency of the Rate of Profit to Fall

Capital Volume 3, Part 3

Tendency of the Rate of Profit to Fall

Capital Volume 3, Part 3, The Law of the Tendency of the Rate of Profit to Fall

The most well-known insight of Capital Volume 3 is the Law of the Tendency of the Rate of Profit to Fall, often abbreviated to “TRPF”.

Chapter 13 (attached) describes the Law very directly and simply.

The TRPF is not a mystical law. The TPRF is in the first place a consequence of the simple fact that surplus value extracted from wage-workers is the only source of increase, and profit is surplus value less the capitalists’ other costs, or what Marx calls “constant capital”, where wages are “variable capital”.

The tendency for these other costs to increase over time in relation to the amount of labour-power used, is what causes the TRPF, the tendency of the rate of profit to fall.

The constant capital includes technology and the cost of technological inputs rises as more scientific methods are used, in relation to the amount of labour applied.

This produces an apparent paradox: When productivity rises, profits fall. The more “capital-intensive” is a business, the less profit is made in proportion to the amount of money invested.

Does this mean that capitalism is going to fade away? Does it mean that there is an entropy in play for capitalism, like the winding-down of the solar system? So that profits will eventually reduce almost to zero, and the capitalist relationship therefore become unsustainable and cease to exist?

Perhaps Kautsky might have thought so, but there are “counteracting influences”, some of which Marx describes in the following Chapter 14 of Capital Volume 3. Wikipedia (here) lists Marx’s “counteracting influences” as follows:

·        more intense exploitation of labour (raising the rate of exploitation)

·        reduction of wages below the value of labour power

·        cheapening the elements of constant capital by various means

·        the growth and utilization of a relative surplus population (the reserve army of labour)

·        foreign trade reducing the cost of industrial inputs and consumer goods

·        the increase in share capital which devolves part of the costs of using capital on others.

Do the “counteracting influences” balance out the TRPF and produce a capitalist equilibrium?

No, not exactly. Instead, what we actually have is a very dynamic, unstable, and finally political, living world. We have constant crises, contradictions, and conflict.

“Marxism” is for many purposes practiced as a hidden science in capitalist society. For example, the business pages of newspapers seldom relate what is happening in businesses from day to day to theories of surplus value. Marx gets a nod now and again but mostly he is ignored.

But it is not the case that in the world of economic theory, Marx is never consulted by bourgeois economists. The terrain on which the parlay happens is here, in Capital Volume 3. The TRPF and its countervailing tendencies are familiar to bourgeois economists. They have their own variations on the problematisation of the TRPF, or its equivalent as they see it, such as “the law of diminishing returns”.

·        The above is to introduce the original reading-text: Capital Volume 3, Chapter 13, The Law As Such.

The General Rate of Profit

Capital Volume 3, Part 2

The General Rate of Profit

Capital Volume 3, Part 2, Conversion of Profit into Average Profit

The source of increase under capitalism is surplus value. This is the truth that is revealed in exhaustive detail in Capital, Volume 1, and it is not going to be contradicted here in Volume 3.

But the rate of what is called “profit” is not the increase as a whole, but the increase in relation to all costs of production.

Marx’s definition of the rate of profit is “the ratio of surplus labour (s) to necessary labour plus the value of components and materials used in production (v + c) – the capitalist’s costs of production.”

Labour power is paid for at cost, but yields more labour than is required to reproduce labour-power. The extra labour thus found (i.e. surplus labour) generates surplus value

All other inputs such as materials, equipment and general overhead expenses are inert costs that have no regenerative power. They are simply consumed in production and their cost is passed on directly to form part of the commodity price of the resultant product.

Only labour can produce surplus value. All other inputs, even if their cost is passed on in full into the selling-price, neither add nor take away from profit, but go to reduce the overall rate of profit. When labour and the corresponding surplus-value it produces become a smaller proportion of the whole, the rate of profit on the whole outlay is less.

It follows that the only way that profit can be made is by the employment of people. This is in turn is why the threat of employers to employ machinery instead of people is hollow. To make more money, the capitalist must generally employ more people.

The jargon used today is “labour-intensive” versus “capital-intensive”. In a capital-intensive business, the costs of other inputs are higher in proportion to the labour-power employed, and the rate of profit is consequently lower.

This is shown in the table given at the beginning of the well-known Chapter 9 of Volume 3 (download linked below).

This chapter is full of quite simple examples, interspersed with categorical general statements. It is readable to people with a business background.

In general, the chapter is about the development of the overall “economy” out of its individual-capitalist parts, so that we now enter the world of “financial markets”, with an idea of what comes through from the basic relationships and what begins to feed back from the overall (social) level so as to affect individual enterprises.

·        The above is to introduce the original reading-text: Capital Volume 3, Chapter 9, Formation of a General Rate of Profit.

The Rate of Profit

Capital Volume 3, Part 1

The Rate of Profit

Capital Volume 3, Part 1: The Conversion of Surplus-Value into Profit and of the Rate of Surplus-Value into the Rate of Profit

Marx begins Volume 3 as follows:

“In Book I we analysed the phenomena which constitute the process of capitalist production as such, as the immediate productive process, with no regard for any of the secondary effects of outside influences.

“But this immediate process of production does not exhaust the life span of capital. It is supplemented in the actual world by the process of circulation, which was the object of study in Book II. In the latter, namely in Part III, which treated the process of circulation as a medium for the process of social reproduction, it developed that the capitalist process of production taken as a whole represents a synthesis of the processes of production and circulation.

“Considering what this third book treats, it cannot confine itself to general reflection relative to this synthesis. On the contrary, it must locate and describe the concrete forms which grow out of the movements of capital as a whole. In their actual movement capitals confront each other in such concrete shape, for which the form of capital in the immediate process of production, just as its form in the process of circulation, appear only as special instances. The various forms of capital, as evolved in this book, thus approach step by step the form which they assume on the surface of society, in the action of different capitals upon one another, in competition, and in the ordinary consciousness of the agents of production themselves.”

In Chapter 21 of Volume 2 Marx had written:

“Let us note by the way: Once more we find here, as we did in the case of simple reproduction, that the exchange of the various component parts of the annual product, i.e., their circulation …does not by any means presuppose mere purchase of commodities supplemented by a subsequent sale, or a sale supplemented by a subsequent purchase, so that there would actually be a bare exchange of commodity for commodity, as Political Economy assumes, especially the free-trade school since the physiocrats and Adam Smith.”

Like that of the physiocrats and Adam Smith, the “ordinary consciousness of the agents of production themselves” is confined to “the surface of society”. In the journey through Volume 1 and Volume 2, from Marx’s point of departure in the first line of the entire work (“The wealth of those societies in which the capitalist mode of production prevails, presents itself as ‘an immense accumulation of commodities’") we have submarined among the deep and hidden workings of the system, so as to comprehend its true nature. Now, in Volume 3, we are going to emerge again into the visible world, and examine the phenomena that form the conscious narrative of politics, and which inform the subjective reactions of men and women from day to day and year to year.

But we must continue to hold in mind the revelations of Volumes 1 and 2. Marx is still exploring “the secret of the self-expansion of capital”.

In the beginning of Chapter 2 of Volume III, Marx again allows himself to be terse and direct:

“The general formula of capital is M-C-M'. In other words, a sum of value is thrown into circulation to extract a larger sum out of it. The process which produces this larger sum is capitalist production. The process that realises it is circulation of capital. The capitalist does not produce a commodity for its own sake, nor for the sake of its use-value, or his personal consumption. The product in which the capitalist is really interested is not the palpable product itself, but the excess value of the product over the value of the capital consumed by it.

“…he is a capitalist, and can undertake the process of exploiting labour only because, being the owner of the conditions of labour, he confronts the labourer as the owner of only labour-power. As already shown in the first book, (i.e. Volume 1) it is precisely the fact that non-workers own the means of production which turns labourers into wage-workers and non-workers into capitalists.”

Capital is more of a relationship than a thing. It is permanently a relationship. It may have a money-form as part of its cycle, but the relationship of labourer to capitalist is constant throughout the cycle.

Volume III is divided into seven parts. We will take one part at a time, and choose one chapter from each part as a reading text.

·        The above is to introduce the original reading-text: Capital Volume 3, Chapter 2, The Rate of Profit, Karl Marx.