Marx's Scientific Critique of Political Economy

Marx moved from economic philosophy to scientific critique by way of his reinterpretation of Hegelian dialectic, which Hegel had left ‘standing on its head. It must be inverted, in order to discover the rational kernel within the mystical shell'.^⁵ The mystical shell was the ontology of Hegel's Logic; the rational kernel was ‘the self-creation of man as a process', which was implicit in Hegel's Phenomenology.

The ‘inversion' had to do with what is abstract and what is concrete. For Marx, as for Hegel, the concrete is ultimately the whole, the concrete universal as the self-mediated unity of subject and object. But whereas each dialectical advance, in Hegel's Philosophy of Right, represented the increasing ‘concreteness' of Spirit in a widening consciousness of unity in diversity, in Marx's dialectic a different movement occurs. It is value that expands; the expanded reproduction of capital, as value, involves movement towards the concrete through a succession of economic categories, each of which is more universal than its predecessor (more internally diverse and thus more concrete) but also more abstract (in the sense of being further removed from the concrete human activity of social labour). The dialectical movement of value categories continues until an entire society of self-seeking capitals, unconsciously mediated through reified relations of production and exchange, ultimately leads to total negation and transcendence in communist community, where self-determining labour returns to itself in the concrete universal of a social plan determined by the associated producers. Of the articles that we have translated for this anthology, the most comprehensive in treating this dialectical movement of the forms of value is Isaak Rubin's ‘The Dialectical Development of Categories in Marx's Economic System'.

Since the activity of social labour was central, rather than the Hegelian activity of thought, Marx began with the labour of individual commodity producers that must first be abstracted before it can ever be evaluated as ‘socially necessary'.

In pre-capitalist economies, individual labour was immediately a part of social labour. It was concrete because it was part of the whole. But in conditions of commodity production, the labour of each producer only becomes part of the total social labour when the product is equated as exchange-value with that of all other producers in terms of money, the universal measure of value and medium of exchange. Apart from this initial abstraction, the labour expended in production cannot possibly be determined as socially necessary. The contradiction here is that society itself plays no conscious role in determining what is, and what is not, socially necessary. That question is objectively answered by the ‘law of value', which specifies that socially necessary labour, in the capitalist mode of production, is labour that creates profit for capital. The result is that the fate of the worker (and also of each individual capitalist) depends entirely upon the external force of the market. In the Grundrisse Marx wrote:

... the exchange relation establishes itself as a power external to and independent of the producers. What originally appeared as a means to promote production [exchange through the division of labour] becomes a relation alien to the producers. As the producers become more dependent on exchange, exchange appears to become more independent of them. Money does not create these antitheses and contradictions; it is, rather, the development of these contradictions and antitheses which creates the seemingly transcendental power of money.^[281] ^{^[282] ^[283]}

The real world of capitalism is the inverted opposite of Hegel's portrayal of ethical life in the state; it is one of commodity fetishism and reification - a world in which human relations are objectively mediated by the movement of things and the worker himself is a commodity, a thing produced for sale. Money is the reified objectification of the ‘social bond' and the ‘dead pledge of society'.!’⁷ ‘Circulation is the movement in which the general alienation appears as general appropriation and general appropriation as alienation'?’⁸ In the self-expansion of capital, the Hegelian right of property ‘is inverted, to become, on the one side, the right [of capital] to appropriate alien labour, and, on the other, the duty of respecting the product of one's own labour, and one's own labour itself, as values belonging to others'.^[284] The result is ‘an alien social power',^[285] ^{^[286] ^[287] ^[288] presiding over a world in which the laws of the market operate ‘behind the backs of the producers',201 and things lay down the law to their creators.}

The very notion of self-determination appears to be an absurdity. In the first chapter of Capital, Marx elaborated upon the theme of alienation first set out in the 1844 Manuscripts, showing how the ‘commodity-form' inverts human relations into relations between things and drawing once again upon Feuerbach's anthropological insight into religion.

It is nothing but the definite social relation between men themselves which assumes here... the fantastic form of a relation between things. In order, therefore, to find an analogy we must take flight into the misty realm of religion. There the products of the human brain appear as autonomous figures endowed with a life of their own, which enter into relations both with each other and with the human race. So it is in the world of commodities with the products of men's hands. I call this the fetishism which attaches itself to the products of labour as soon as they are produced as commodities. This fetishism of the world of commodities arises from the peculiar social character of the labour which produces them.202

Behind all of capitalism's contradictions, however, Marx also found - in a way that reminds us of Smith, Kant and Hegel - a hidden lawfulness that not only regulates the apparent anarchy of the market but also points beyond it to a rational economic plan. Capitalism is a moving system of contradictions, but ‘the most extreme form of alienation. is a necessary point of transition - and therefore already contains in itself, in a still only inverted form, turned on its head, the dissolution of all limited presuppositions of production, and moreover creates. the full material conditions for the total, universal development of the productive forces of the individual'^³

Since capital's sole ambition is profit, the concern of every capitalist is to increase the exploitation of workers. Marx first discussed the source of profit in Wage-Labour and Capital (1847). His explanation turned on the distinction between labour and all other commodities.

When the latter are consumed (either directly or as fixed capital that gradually wears out) they lose their value, whereas the activity of labour not only reproduces the value of the wage that the worker receives but also a surplus in the form of profit.^[289] ^{^[290] ^[291] In Wage-Labour and Capital, Marx distinguished the value components of commodity production in the analytical terms that would reappear throughout all his later works: The selling price of the commodities produced by the worker is divided, from the point of view of the capitalist, into three parts: first, the replacement of the price of the raw materials advanced by him, in addition to the replacement of the wear and tear of the tools, machines, and other instruments of labour. [designated in Capital as ^lc' for constant capital]; second, the replacement of the wages advanced [‘v', for variable capital]; and third, the surplus left over, i.e., the profit of the capitalist [‘s', for surplus value].20⁵
Hegel had thought the parties to a contract always relate on the basis of equality: each simultaneously alienates and appropriates an identical sum of va- lue.206 Marx's analysis of the elements of value showed that the wage contract is fundamentally different; it involves formal equality but its content is exploitation. Having distinguished these value components of each individual commodity - and thus of the social product as a whole - Marx could then examine the decisive quantitative relations that determine the system's overall movement: the rate of surplus value (s/v), the rate of profit (s/c+v) and the organic composition of capital (c/v).
In the rivalry of the market, every capitalist endeavours to increase his individual rate of profit by raising labour productivity, which generally involves adopting more advanced means of production relative to his competitors.^[292] The result is that some capitalists survive and others perish. Each capital aspires to universalise itself as monopoly, but ‘A universal capital, one without alien capitals confronting it.
is. a non-thing'.20^[293] Competition points towards monopoly, but monopoly invites new competition, and competition then moves again in the direction of monopoly. In terms of aggregate outcome, the historical tendency is for one capitalist to strike down many∕0^[294] a process that Marx characterised in terms of the law of centralisation of existing capital and the concentration of new accumulation..^[295] ^{^[296] Capitalist production can never be rational because it can never meet the dialectical standard of concreteness, that is, the conscious unity of a selfdetermining subject. The inability to achieve ex ante coordination - or the inability to plan - also means that the system can never be in equilibrium?¹¹ ‘In capitalist society. where any kind of social rationality asserts itself only post festum, major disturbances can and must occur constantly’.^[297] ^{^[298] ^[299] ^[300] In the absence of rational foresight, Hegel’s ‘circle of necessity’ repeats itself continuously in the expansions and crises of the market, the sort of movement that Hegel called a ‘bad infinity’ and which, for Marx, took the form of the capitalist business cycle.}
Typically, a cyclical expansion raises wages at the expense of profit due to capital’s increased demand for exploitable labour power.21³ Rising labour costs then help to precipitate the crisis, curtailing profits and deterring further investment until labour costs can be reduced through mass unemployment. The consequence is another fundamental law of capitalism’s motion, ‘a law of population peculiar to the capitalist mode of production’,21⁴ which periodically renders part of the population ‘relatively superfluous’. Hegel had seen the ‘pauperised rabble’ as an inexplicable affront to reason. Marx explained in Capital that the ‘reserve army’ of the unemployed is objectively necessary in order to restructure the market for labour power and thus resume the expanded reproduction of capital:
.
a surplus population of workers is a necessary product of accumulation. a condition for the existence of the capitalist mode of production. It forms a disposable industrial reserve army, which belongs to capital. a mass of human material always ready for exploitation. The path characteristically described by modern industry, which takes the form of a decennial cycle (interrupted by smaller oscillations) of periods of average activity, production at high pressure, crisis and stagnation, depends on the constant formation, the greater or less absorption, and the reformation of the industrial reserve army or surplus population. In their turn, the varying phases of the industrial cycle recruit the surplus population, and become one of the most energetic agencies for its reproduc- tion.21⁵ Capitalist crises involve commodities with obvious use-value losing their exchange-value and thereby becoming worthless (socially unnecessary) from the standpoint of capital. When commodity prices fall, due to cyclical unemployment and the consequent over-production in relation to demand, capitalists are compelled to reduce unit production costs in order to survive. Recovery requires the renovation of fixed capital in order to raise labour productivity and the rate of surplus value. The self-expansion of capital thus moves in another contradiction: a portion of the existing fixed capital, which has become technologically obsolescent, must be prematurely destroyed. Destruction of existing capital, both physically and through bankruptcy, is necessary in order to resume the accumulation of capital. ‘Catastrophes, crises, etc. are the principal causes that compel such premature renewals of equipment on a broad social scale’.^[301] ^{^[302] ^[303] ‘A crisis is always the starting-point of a large volume of new investment', and compulsive replacement of machinery then provides the ‘material basis for the next turnover cycle’?¹⁷}
The renewal of capital investment, by increasing employment and creating new demand, causes prices to rise once more, beginning in the sectors that produce means of production. As employment recovers, rising prices spread outwards into the consumer-goods industries. But now the problem is that every individual capitalist, motivated by today’s rise in prices, aspires to capture the entire future increase of expected social demand. When today’s investments actually become operational, causing a steadily expanding stream of commodities to enter the market, the result turns out once more to be general over-productionand disproportions between various branches of the economy. Today’s prices can never be a rational guide to future production, but individual capitalists are incapable of making coherent investments that would anticipate the future on the basis of a social plan.21⁸ Capital moves from crisis to recovery, from recovery to over-production, and from over-production back to crisis.
Behind the surface of repeated cyclical crises, however, another contradiction, even more profound in its implications, is at work. Each recovery involves the advance of technology, but technological advance also tends to displace living labour and raise the ‘organic composition of capital’ (designated by the ratio c/v). The problem is that only living labour can create surplus value. Machinery and materials merely transfer their value to the commodity as costs of production. ‘Things' cannot be exploited to create surplus value. But if capitalism involves a long-run replacement of living labour with machinery, the result is another objective law that points to the ultimate transcendence of the capitalist mode of production; that is, the tendency for the social average rate of profit to fall.^[304] ^{^[305]}
Through cyclical waves of technological advance, capitalism raises productivity and necessarily points beyond itself to the potential elimination of scarcity. At the same time, however, capitalism makes this outcome objectively impossible on its own terms. The greater is the potential for growth, the greater still are the obstacles. Capital ‘frees' labour from toil, but the ‘freedom' occurs in the form of labour displacement, dehumanisation and enforced cyclical unemployment. Marx summarised the consequences in Volume iii of Capital:
Here we have once again the characteristic barrier to capitalist production, and we see how this is in no way an absolute form for the development of the productive forces and the creation of wealth, but rather comes into conflict with it at a certain point in its development. One aspect of this conflict is presented by the periodic crises that arise when one or another section of the working population is made superfluous in its old employment. The barrier to capitalist production is the surplus time [i.e. enforced redundancy] of the workers. The absolute spare time that the society gains is immaterial to capitalist production. The development of productivity is only important to it in so far as it increases the surplus labour-time of the working class and... not just... the labour-time needed for material production in general; in this way it moves in a contradiction... Capital shows itself more and more to be... an alienated social power which has gained an autonomous position and confronts society as a thing, and as the power that the capitalist has through this thing... [But] this development also contains the solution to this situation, in that it simultaneously raises the conditions of production into general, communal, social conditions^⁰
Capitalism reduces socially necessary labour time, which simultaneously curtails the capacity for extracting surplus value, and thus ultimately capitalism itself. This outcome is inevitable because particular capitals - each trying to raise its particular rate of profit through higher labour productivity - contradict the fundamental need of the capitalist system to sustain the social rate of profit.}}

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Source: Day R.B., Gaido D.F. (eds). Responses to Marx’s Capital. Leiden: Brill,2017. — 856 p. 2017

Marx's Scientific Critique of Political Economy

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