[OPE-L:2479] Re: Re: Re: Re: Re: The employment contract

From: Gil Skillman (gskillman@mail.wesleyan.edu)
Date: Fri Mar 03 2000 - 19:07:17 EST


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In response to these passages from me,

>>So far as I know Marx never asserts as a matter of *definition* that the
>>phenomenon he labels "capitalist exploitation" must arise from a
>>*production relationship* between capitalists and workers. He does,
>>repeatedly and without ever reversing himself (more about the textual basis
>>for this claim below), identify historical circuits of capital which
>>involved no such production relationship (i.e., circuits other than that of
>>industrial capital) and yet involved capitalist exploitation. Thus, the
>>characterization you give, Ernesto, could be the historically contingent
>>consequence of given class conditions rather than a matter of definition.
>>The foregoing reading, if valid, suggests a broader interpretation of
>>"capitalist exploitation" as the appropriation of surplus value by
>>non-producers of that value via some circuit of capital.
>>
>>What Marx does insist is that surplus value, and thus capitalist
>>exploitation, must involve the production of new value (that is, value
>>creation arising within a circuit of capital) rather than the mere
>>redistribution of pre-existing value. But that's why I focused
>>specifically on the cases of usury and merchant capital extended to value
>>producers, rather than to "extravagant magnates" (to quote from Ch. 36 in
>>Vol. III of Capital) and other non-value producers. In these cases, the
>>circuit of capital provides the wherewithal for value producers to create
>>new value, as required, part of which is appropriated by the capitalist in
>>the form of interest or merchant profit (as in the putting-out system and
>>other proto-industrial forms).
>>
>>This vision is evidently what Marx has in mind, for example, in this
>>passage from the Resultate (with parallel passages in Capital V. III,
>>Grundrisse, and the Ec. Manuscript of 1861-63):
>>
>>"In India, for example, the capital of the usurer advances raw materials or
>>tools or even both to the immediate producer in the form of money. The
>>exorbitant interest which it attracts, the interest which, irrespective of
>>its magnitude, it extorts from the primary producer, is just another name
>>for surplus-value. It transforms its money into capital by extorting
>>unpaid labour, surplus labour, from the immediate producer. But it does
>>not intervene in the process of production itself...here we have *not yet*
>>reached the stage of the formal subsumption of labour under capital."
>>[Appendix to Penguin Classic edition of Capital V. I, p. 1023]

[...]

>>I would say the key point for this part of the discussion is that Marx
>>nowhere excludes *by definition* the possibility of capitalist exploitation
>>without capitalist production relations, and thus, the capitalist
>>employment contract.

, Ernesto writes:

>My understanding of Marx is that *Appropriation* of surplus value in the
>circulation process (e.g. by monetary capitalists) presupposes that surplus
>value has been produced. It can only be produced in the production process,
>not in the circulation process.

Two points: first, value added does not become "surplus value" *until* it
has been appropriated by capitalists via some circuit of capital. Marx
makes this point in V. I, Chapter 5 (p. 268 in Vintage and Penguin
editions) when he says that surplus value isn't created simply by a worker
transforming raw materials into a finished product. Thus the suggestion
that appropriation of surplus value "presupposes that surplus value has
been produced" can have no meaning in Marx's framework. *New value* is
produced, perhaps via the wherewithal provided by usury or merchant
capital. It doesn't become *surplus value* **until** some non-producer
appropriates it via some circuit of capital.

Second, I certainly agree that surplus value must *originate* in
production; that was my point in the passages reproduced above. But note
critically that this stipulation does not require that *capitalists*
control the production process. So if, as in Marx's India example cited
above, a usury capitalist provides the financing for the creation of new
value and then appropriates a portion of that newly created value in the
form of interest, that constitutes surplus value and consequently
capitalist exploitation.

A thought experiment may illustrate this point. Suppose that under the
historical conditions underlying Marx's India example, capitalists had for
some reason decided to run the production process (using the identical
technology and means of production) directly and as a result extracted the
same value equivalent as profit that was embodied in the interest paid to
the capitalist as usurer. By construction the conditions of production and
value distribution are *exactly the same*; it's just that in one case the
capitalist oversees the production process. By Ernesto's reading, if I
understand it, the value appropriated by the capitalist constitutes surplus
value, and thus capitalist exploitation, in the hypothetical case but not
in the historical one. Why?

Concerning the following passage I quoted from Capital V. III, concerning
the efficacy of usury (or merchant) capital as vehicles for capitalist
exploitation subsequent to the advent of the capitalist mode of production,

>>>>"If an inappropriately large number of capitalists sought to transform
>>>>their capital into money capital, the result would
>>>>be a tremendous devaluation of money capital and a tremendous fall in the
>>>>rate of interest; many people would immediately find themselves in the
>>>>position of being unable to live on their interest and thus compelled to
>>>>turn themselves back into industrial capitalists." [Capital V. III, p. 501]

Ernesto writes:

>Interest bearing capital is wider than money capital. It includes for
>instance fictitious capital. The passage you quoted clearly refers to a
>process of reduction in real capital investement and increase in liquid
>balances.

I must say I don't see this. To me the key phrase indicating Marx's
intended sense in this paragraph is that referring to the "still greater
nonsense....that the capitalist mode of production could proceed on its
course without capitalist production", after which the passage I originally
cited follows. But ultimately, our different interpretations of this
passage aren't the key point, in light of the following.

In response to this comment of mine,

>>.... first, it suggests that for Marx the connection between
>>capitalist production relations and capitalist exploitation is contingent
>>rather than categorical;

, Ernesto writes

>In my view the connection between capitalist production relations and
>capitalist exploitation is a fundamental category of Marx's analysis. It is
>a basic tenet of his general and abstract model of capitalism. At lower
>levels of analysis contingencies are introduced. May be we disagree because
>we are voyaging at two different levels of analysis.

Yes, it could be. That depends on what you mean by "fundamental category"
and "basic tenet." I certainly agree with you that the subsumption of
labor under capital is descriptively characteristic of the process of
capitalist exploitation in modern capitalism. But that leaves open the
question of whether a) capitalist exploitation depends on capitalist
production as a matter of *definition*, or b) the dependence is due to
class conditions which define, or at least universally characterize, the
capitalist mode of production. I think the answer to (a), at least
according to Marx, is clearly no: Marx nowhere *defines* capitalist
exploitation as requiring capitalist production. If I'm right that reduces
the issue to (b). In this reading "fundamental category" and "basic tenet"
mean, in effect, that the existence of capitalist exploitation *implies* or
*necessitates* capitalist control of production.

Thus Ernesto responds to the following comment of mine

>>second, and moreover, that surplus value and thus
>>capitalist exploitation would perhaps decline in magnitude but not
>>necessarily disappear even if capitalists could not subsume labor in the
>>formal or real sense.

by saying

>Sorry, I thoroughly disagree with this. There can be no capitalist
>exploitation without the despotism of capitalism in the production process.

There's nothing wrong with disagreement, of course, but I'm curious:
what's the basis for this categorical assessment? Is it in Marx's writing?
 If so, where? And if not, what's the underlying logic? In this
connection, for what it's worth, I note that mainstream "principal-agent"
(incentive) theory does not support such a categorical assessment,
suggesting instead that the impact on profitability of the sort of
contractual difficulties Ernesto has been discussing is a matter of degree
rather than kind. Insofar as Marxian thinking at least does not *rule out*
the sort of rationality and optimization conditions assumed in that
literature, it is of relevance to this issue.

In addition, the historical record does not clearly support a categorical
assessment re the connection between capitalist exploitation and capitalist
control of production. Historian Maxine Berg (a former student of OPE-Lmate
Mike Lebowitz, by the way), for example, writes concerning the persistence
of the putting-out system and other proto-industrial forms in the
capitalist era:

"The [capitalist] factory...was but one form of work organization among
several, including the putting-out system, small workshops and artisan
production...[that] reveal the existence of alternative forms which could
be exploited just as effectively as the factory and the machine to raise
capitalist profit and control. [ Berg, _The Age of Manufactures 1700-1820_,
pp 195-96]

Bottom line: unless one *defines* capitalist exploitation as requiring
capitalist production (which, as indicated above, I don't think Marx did),
I don't see the basis for asserting a *categorical* link between the two.

I think I'll save a discussion of the employment relation as a power
relation for later. But there I think it's much more likely that Ernesto
and I are simply using terms ("authority" vs. "power") differently.

In solidarity, Gil



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