From: Jurriaan Bendien (andromeda246@HETNET.NL)
Date: Sun May 09 2004 - 10:06:44 EDT
Leave 'capitalist development' as
> the loose (non-theoretical) expression; sharpen the meaning of
> 'accumulation' and, in the process 'overaccumulation' (referred to often
> by Harvey).
Well I can tell you what my understanding of it is. Capital is value lodged
in tradeable objects or money, used specifically for the purpose of
increasing that value, i.e. value in search of surplus-value, money applied
to obtain or capable of obtaining, more money. The word Capital is derived
from the latin "caput" meaning head, originally referring to heads of
cattle. Capital accumulation may occur through:
(1) direct appropriation without exchange (dispossession)
(2) economic exchange (trade)
(3) appropriation of a surplus product in production (exploitation)
That is just to say, that to accumulate assets as capital, you could
- directly take wealth from other people,
- obtain it through trading,
- get other people to create it for you, on the basis that you have an
enforcible claim or entitlement to what they produce.
The rate of accumulation can be measured as the net increase in real capital
stock, or as the rate of re-investment of realised capital assets.
In the case of capital accumulation through production, the appropriation is
a double one:
(a) the appropriation of surplus-labour via the legal entitlement to
ownership of the product of that labour, and
(b) the realisation of the additional capital value ("value added") of that
product, through exchange.
Karl Marx's discussion notes that capital may be alternately lodged in:
(i) money as the universal trading equivalent ("money capital"),
(ii) in tradeable objects ("commodity capital"),
(iii) in means of production and living labour ("production capital"),
(iv) in so-called "fictitious capital" (legally sanctioned financial claims
to assets or income - capitalisation of property ownership)
(v) in state-owned assets.
and he describes how capital may be converted from one form into another.
Given the multiple functions of money, money may also function as "commodity
capital" in the Marxian sense. The 16 main use-values of money which are
decisive for capitalist development, such as they emerge in Marx's writings,
can be summarised as follows (this is often not made very explicit in the
literature):
A. A means for the observation and cognition of economic value relations; a
general means of logical abstraction, economic/financial communication and
economic/financial calculation, applied in exchange negotiations, relating
prices and values used for general economic valuation purposes (it is not
necessary to actually possess money for this, it is sufficiently to name or
calculate prices, either actually existing prices or ideal prices).
B. A means of creating competition and cooperation between people.
C. A means of exchange, making possible the purchase/sale and circulation of
goods (including other money, commodities and capital) and services
(including financial services), if exchange can freely occur (inclusion of
people into a market).
D. A universal equivalent which makes it possible to purchase or sell any
particular good or service on offer to the general public, if an open market
exists.
E. A universally recognised means of payment or contractual settlement in
transactions, insofar as the transition is made from ideal money to real
money offered in exchange ("hard cash").
F. A store of economic value enabling the continuity, equilibration and
regulation of economic processes (production, circulation, distribution and
consumption) and the maintenance of economic security.
G. A unit of value and a standard for pricing.
H. A practical measure of value expressing the relative values of goods
and services; ideal money or money-of-account, as distinct from cash
or actual prices, can express the value of any good or service
("medium of account").
I. A means for the accumulation of capital (chrematistic activity)
principally through trading, lending, borrowing, investment, seignorage and
revaluation
J. An objectified potential or actual claim (entitlement) to ownership of
goods and services.
K. A means of hoarding, saving or forming reserves.
L. An objectified means for appropriation, ownership-acquisition and
exploitation of goods and services, and the maintenance of asset ownership.
M. An objectified means of social exclusion from market activity (market
closure) or social inclusion through market activity (market expansion) by
virtue of money-ownership or lack thereof.
N. An objectified universal means of expression of social and material
wealth, and of the value of labour effort.
O. A means of expressing or symbolising a social relation.
P. A means for enforcing terms of exchange and asserting power among people,
social classes and nations.
Incidentally, function (K) becomes particularly important in economic
reproduction on a smaller scale, the opposite of expanded reproduction.
In an economy which is mainly non-market, reproduction on a reduced
scale means mainly an absolute reduction of the physical
stock of means of production and consumption. This can occur through
natural disasters, war destruction, or adverse changes in the distribution
of means of subsistence.
In a market economy, reproduction on a reduced scale means an absolute
decline in real capital, implying an absolute reduction of the value and/or
quantity of labour-power (with consequences for the reproduction of labour
power) and an inability to renew the real stock of constant capital assets.
This takes the form of cumulative devalorisation and
devaluation of capital, and the application of capital funds for activities
which fail to restore the necessary proportions for constant and expanded
economic economic reproduction. No natural disasters or war destruction are
in principle necessary for this, i.e. the causes could be due purely to the
specific social/financial organisation of production and trade (contemporary
examples might be Argentina and Russia).
In regard to "tradeable objects", the minimum requirement is that they could
be traded, not that they are actually traded. Goods may be temporarily or
permanently withdrawn from the market, including withdrawal to consume them
in order to produce other goods - in that case, those goods do not have a
real market price, only a value, and a hypothetical price. Similarly, goods
may be offered for sale with a real market price, without being sold, i.e.
the intention is to trade them, but in reality they aren't traded.
Consequently, capital accumulation in its totality must be understood as a
process occurring in real time which encompasses basically 7 "moments" or
facets, namely
- appropriation of property without compensation
- the re-valuation of financial claims
- the investment of capital (conversion of one form of capital into another
form)
- the valorisation of capital (productive consumption of resources yielding
a product with a higher capital value)
- the realisation of an additional capital value through exchange
- unequal exchange as a source of additional capital value
- the re-investment of an augmented capital value
As a corollary, the loss of capital could take the following 7 forms:
- dispossession
- devaluation of outstanding financial claims
- failure to invest (including hoarding)
- devalorisation of capital (unproductive consumption of resources resulting
in a lower capital value)
- the loss of capital value through exchange, including unequal exchange
- the failure to re-invest a capital value
A problem of so-called "primitive, original or primary" accumulation arises
in economics, not simply because the origin of capital must be explained
without myth, but because the transformation of money capital or commodity
capital into production capital is not simply an automatic process. It
requires that you can actually buy and sell means of production and labour
capacity, and for that purpose, means of production and labour capacity must
be (1) privatised and (2) tradeable. Another way of putting the same thing
is, that market expansion is not simply an automatic process, or simply a
commercial process, but a social-political process, since making things
tradeable and privatising them, requires changing social relations and
social rules for the disposition of economic resources and assets, i.e. the
assertion of power.
To be tradeable, resources and assets must not be hoarded, not be communally
shared and not be consumed, but rather be available for exchange and
exploitation. And to be privatised, the control over resources must be
vested with private owners or institutions through some or other enclosure
strategem - owners or institutions whose entitlement is legally sanctioned
and enforced. These are social processes. If we just focused all the time on
peasants being forced off the land, we don't really get to the core of the
problem.
The concept of "over-accumulation" raises the question of "over-accumulation
of what, relative to what". Marx never specified this clearly, but he
implies that it could consist of:
(1) relative over-accumulation, which occurs if realised capital can no
longer be invested to obtain the previously ruling rate of profit, but
rather obtains a lower rate of profit, even although the volume of profit
might grow.
(2) absolute over-accumulation, which occurs if the total volume of
surplus-value decreases.
The problem in explaining capitalist crises is then to understand the causal
concetenation of events which creates these results. For example, is it due
to oversupply or lack of demand ? About this there has been a voluminous and
often useless debate, but that's just because neither have the key concepts
been specified adequately, nor have the empirical facts been investigated.
Paul Mattick, for example, philosophised in his book "Krisen und Krisen
Theorien" (Frankfurt, 1974) that "The accumulation of capital thus does not
depend upon the realization of surplus-value, but the realisation of
surplus-value depends on the accumulation of capital" (p. 111). Implicitly,
therefore, he accepts Say's Law that supply will find its own demand
here. But a few pages lateron, he argues "When [total] surplus-value is not
sufficient to continue the accumulation process in a profitable way, it can
also not be realised through accumulation; it becomes unrealised
surplus-value, or over-production." (p. 115).
So then first Mattick is arguing that not enough surplus-value is produced
to augment the value of previously accumulated capital assets. Then
subsequently he argues there is enough additional surplus-value realised,
but this additional surplus-value is not re-invested, because a competitive
rate of profit can no longer be realised on the additional capital. This
view really implies:
(1) a misunderstanding of markets, since falling market prices for output
which reduce profitability to an unsustainable low level under competitive
conditions, reflect both overproduction of output (excess capacity) and
over-investment in productive capital assets used to make that output.
(2) a conflation of the valorisation process and the realisation process,
and a conflation of the increase in the total capital stock, and the
re-investment of realised surplus-value.
(3) a failure to understand that in an economic downturn, overproduction of
output and overaccumulation of productive capital assets co-exist; commodity
capital (output) and production capital (productively applied assets) are
merely
two different forms of capital, thus overproduction and over-accumulation
entail each other.
(4) ignoring that accumulation of capital may continue regardless through:
(i) trade in already existing productive and unproductive assets, or trade
in claims to future output and future assets, assisted by credit facilities,
(ii) trade of a type which displaces the burden of stagnating domestic
demand to other countries, with less bargaining power in the market.
(5) Failure to understand Marx's concept of market value.
In truth, Marx's basic argument in value theory is just that the rising
productivity of human work must cause the rate of profit in real production
to decline over time, irrespective of what the precise demand conditions
might be, ultimately creating a situation of "excess capital" which can no
longer be reinvested productively at the previously ruling rate of profit,
resulting in dumping and unemployment. That is, ultimately rising
labor productivity sets a limit to the total volume of
surplus-value which can be distributed as net income, such that a
rising volume of profit can no longer offset a falling rate of profit.
Thus the ultimate barrier to capitalist expansion is capital itself;
if production of output is conditional on capital accumulation,
as Mattick suggests, then if capital accumulation falters, the growth
of output is reduced and thereby the growth of the stock of
what can be traded is reduced. Consequently, capitalist
development in the longer term must be really understood
from a systemic point of view as being spurred by the attempt
to counteract the falling average rate of profit (though, of course,
this is not how it may appear to businessmen).
But this obviously does not mean:
(1) that crisis phenomena must always repeat themselves in the same specific
sequence;
(2) that fluctuations in final demand cannot influence the volume of profit
realised - because they do; falling unit labor costs ceteris paribus imply a
reduction of employment requirements, hence also a reduction of buying power
by wage & salary earners, creating the necessity for the extension of more
and more credit.
(3) that falling domestic demand could not be offset by international
transactions based on a favourable bargaining position in international
trade, or through a new round of dispossession.
Far be it from me however to rewrite the Grundrisse, or pander to poetic
appetites - I'll leave it at that and get on with other things.
Jurriaan
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