EVER since the publication of the English translation of Marx’s Grundrisse in 1973, it has been widely recognised that Marx used Hegel in his economic writings, including Capital. But up till now no one has been able to show how.
THERE are three distinct layers of structure in Capital, each of which originates from Hegel’s Logic and the Encyclopaedia.
IN LIEU of the rights-bearing person, the moral subject and the citizen of Hegel’s Philosophy of Right, Capital presents the capitalist economy in three layers each of which is a specific economic ethos, each an analytical abstraction which has logical, historical and social basis. This three-layer structure does not correspond to the division of the work into three volumes.
In Bourgeois Society, independent producers (individuals or companies) own their own means of production and exchange their products at their value, that is, according to the average labour-time required for the production of each commodity. One commodity singles itself out to play the role of a universal equivalent, money. The producers do not necessarily appropriate a surplus, but may stop work once they have produced the equivalent of the necessities for their subsistence (or a surplus is acquired by some means foreign to bourgeois society, such as taxes).
This formation is presented in Part I of Volume One of Capital. Bourgeois society originated in the Middle Ages within the interstices of feudal society. Guildmasters organised themselves in guilds and companies in which decisions were made on the basis of one man one vote. These guilds included merchants concerned with the technical business of the circulation of commodities.
Since people must labour whatever the social form of that labour and however the surplus labour is appropriated, this chapter establishes the meaning of “value” in its simplest social form, the commodity, and its magnitude as abstract labour-time.
In Productive Capitalism, capitalist firms buy and sell their products as commodities. The independent producers of Bourgeois Society have been split into capitalists and the proletarians. The capitalists use labour-power purchased from the proletarians who lack means of production and are paid a subsistence wage and forced to work long hours, the surplus of which is appropriated by the capitalists.
It is only in Part II of Volume Three that we find that the capitalist firms sell their products not at value but at cost-price plus profit, profit being proportional to the total capital turned over in a given period of time.
Commercial capital develops as a branch of productive capital engaged in the technical business of the circulation of commodity-capital and its conversion into money-capital returning to production.
Productive capital is dealt with beginning with Part II of Volume One in which the unit of capital is defined, up to Part III of Volume III. Part IV deals with commercial capital, which exists side-by-side with industrial capital.
Finance Capital arises out of commercial capital but is concerned only with the loaning of capital and trading in various forms of credit. The productive capitalist is essentially transformed into a salaried manager or supervisor of productive capital. Ownership is separated from function, and capital achieves its pure form lacking any role in production. Just as productive capital reduced the worker to the rank of an instrument which the capitalist uses in production, finance capital reduces the industrial and commercial capitalist to the status of a salaried employee of finance capital.
Alongside Finance Capital is Landowning Capital, which has ancient roots, but like Finance Capital plays no role in production. Finance capital is dealt with in Part IV and landowning capital in Part V of Volume Three.
EACH of these three layers corresponds to a distinctive economic ethos. In bourgeois society, products are sold at their value. In productive capitalism, products are sold at the cost of production plus profit. Finance and landowning capital play no role in production and its property (credit or land) is loaned at interest, but never alienated.
The above formation represents developed industrial capitalism, now dominated by finance capital.
LIKE the Encyclopaedia, made up of Logic - the pure essentialities of Spirit, Nature - Spirit still in itself and Spirit for itself, the three Volumes of Capital form a syllogism.
Based on the foundation created with the definition of value in Part I, Volume One defines the unit of capital in Part II. In the Immediate Production of Capital, each is analysed as independent of every other unit. Each unit produces commodities each of whose value is composed of constant capital (the value of means of production consumed in production), variable capital (the value of the labour-power consumed) and surplus value (the product of unpaid labour-time).
The total values of each of these components corresponds to the same component parts of the total social labour, which can be derived by simple addition because each unit of capital is considered side by side.
Commodities are sold at their value by each unit. Although competition between independent units and the independence of its units are essential to the nature of capitalism, Marx only touched on an analysis of competition at the end of Part II of Volume Three.
But the tendency of prices to their average does not affect the total value of each component, but only the division of value between buyer and seller. The division of the total social labour between constant, variable and surplus value is the secure outcome of Volume One. Nothing which follows in Capital or in real life undermines this conclusion.
A number of important tendencies are also established, such as the revolutionisation of technique with the resulting reduction necessary labour time, the drive to increase the length of the working day, the dependence of profit on the length of the working day and the impoverishment of the working class.
Volume Two concerns the Circulation of Capital. Each of the separate capitals of Volume One are now analysed as connected in circuits of value beginning and ending with the sum of money-capital advanced for production. The simple passage from money-capital purchasing inputs for production of commodity-capital and its sale, returning an expanded quantity of money-capital to conversion into productive capital. This value circuit cannot on its own create conditions for the continued accumulation of capital and an on-going form of life. It is not enough that value must complete the circuit from money-capital through production to commodity-capital and conversion back into money-capital - each of the actual forms of labour and components of capital must be renewed.
The unit on which Volume Two is based is the circuit of a single capital, like the unit defined in Part II of Volume I, but now including the production process and the circulation of commodities within the unit. Each component part of the production process, including all the machinery and the raw materials and labour-power, must be renewed, as well as all the divers artefacts and activities which are realised as equivalents of the surplus labour appropriated in production, activities without which the capitalist social formation cannot exist.
This circuit, beginning and ending with money-capital, is the universal circuit of capital, and must be accompanied by the circuit of commodity-capital (recovering a stock of commodities of all kinds, approximating in abundance the demand for each) and the circuit of productive-capital (the maintenance, repair and upgrading of machinery, acquisition of new supplies of raw material, as well as meeting the needs of the workforce ready for a new cycle of production).
In addition to these three units, the circuit of commodity-capital must be divided into the circuits corresponding to constant capital, the subsistence products for the life of the workers and the luxury consumer goods of the capitalists themselves (called Department One and Department Two).
Note that the two-layer logical division of the subject matter set out by the foregoing accords with Hegel’s requirement that each unit first be analysed on its own, before it is mediated through its relations with other units. However, the different capitals are still taken as if completing the circuit as independent units of capital, as if the renewal of all its components was the work of each unit of value acting separately.
Volume Three concerns the process of Capitalist Production as a Whole, the unity of production and circulation. The units of capital now no longer act side-by-side, independently of one another, but act upon one another. The social capital is taken to be an integral whole, with each unit of capital acting upon others through the commodity market and the capital market.
Specifically, this means that the surplus value appropriated from unpaid labour by each of the capitals is shared amongst units of capital, whether or not they are productive, in proportion to the size of each capital. This sharing of surplus value effects the equalisation of the rate of profit on capital, and products are accordingly sold at cost-price plus profit, profit being calculated according to the general rate of profit.
With Part III of Volume Three, this completes the conceptual reconstruction of industrial capital as such.
Volume Three continues the examination of the process whereby productive capitals share their surplus value to include the sharing of surplus value with finance capital and landowning capital. The schema used in the forgoing parts of Capital, in which first the total is determined is repeated in the relation between productive capital and finance capital. No new surplus value is produced by finance capital and landowning capital.
Just as industrial capital arose on the basis of bourgeois society and subordinated bourgeois society to its own laws, finance capital arises from productive capital and subordinates productive capital to its own laws.
I HAVE presented the major arcs of synthesis so that the reader may get an overall picture of the structure of the whole work before plunging into matters of detail. However, before it is possible to synthesise one must analyse. Just as each book of Hegel’s Encyclopaedia begins from a simple “germ cell,” the finer detail of Capital is composed of the identification of a series of 14 novel units each followed by the identification of a contradiction within the unit and the development of that contradiction up to its limit. I say “novel” because each unit represents a unique insight into the structure of the subject matter, with each successive unit arising out of the foregoing exposition. Each Part of Marx’s Capital corresponds to the introduction of one of these units.
Once the entire field of phenomena is analysed into units, the synthesis (as outlined above) reconstructs the whole.
Capital begins with the commodity, the simplest social form of value. The commodity is the foundation of the whole work in the sense that the whole of Capital is concerned with the transformation and distribution of value in a series of different forms of value. The concept of “value” is thus concretised by the identification of these successive forms, each arising in given circumstances. A concrete concept of “value” necessarily entails connecting all of these forms together.
The commodity is a particular kind of labour, use-value, and its magnitude, exchange value, is abstract labour-time, being the socially average time required for the production of the given use-value. Exchange value is more fundamental than price, which is but the appearance of value, affected by a multiplicity of social conditions manifested only when the commodity is exchanged. The substance of value is therefore abstract labour-time, whatever the form of value.
The contradiction within the commodity is that the need of the user which is served by the use-value on one hand, and on the other hand, the seller’s riches constituted by the exchange value, each belong to distinct processes. Whilst this contradiction provides the engine which Adam Smith identified as a great organising principle, ‘self-interest’, the two processes inevitably come into conflict and prove to be antagonistic.
The embryonic unit of capital is an individual capitalist who buys in order to sell more dearly. The individual capitalist develops into a capitalist firm. The universal form of capitalist firm is the industrial capitalist, which exists alongside the continued existence of the merchant capitalist and the usurer.
Capital is a unique form of value which can arise neither within circulation nor outside circulation, but must continuously be put into circulation and withdrawn again. The universal form of capital is industrial capital which employs labour-power and expands its magnitude by appropriation of surplus value from the labourer.
The surplus value acquired by an industrial capitalist through the employment of wage-labour is the unpaid labour-time worked every day by the labourer over and above the time necessary to produce the equivalent of their wage, their subsistence needs for the day. This surplus value is appropriated by forcing the labourer to work unpaid labour time. All the surplus value accrued by the total social capital and subsequently redistributed among the various sectors of the capitalist class, and subsequently shared with landowners and finance capitalists is equal to the total of unpaid labour time of all the workers involved in the cooperative production process.
In Part III, Marx also defines second order units which are the three component parts of capital: constant capital, variable capital and surplus value. Constant capital is the value of the productive capital which is merely transformed and reproduced with a constant magnitude of value in production.
Unpaid labour time is the bone of contention between the two classes, workers and capitalists.
The necessary labour time is the time required by each worker, on average, to produce the equivalent of their daily needs. This is paid by the capitalist to the worker. It’s significance is that the progressive development of the productive forces by productive capital tends to continuously reduce this necessary labour time, which constitutes the share of the total social labour which accrues to the working class.
In their endeavours to increase their profits by increasing the productivity of labour with the aim of increasing their profits, the capitalists collectively reduce the rate of profit by reducing the value of variable capital.
Here Marx identifies the unit of productive labour. Unlike the capitalist who counts only the “hands-on” front line worker as “productive,” Marx says that “it is no longer necessary for you to do manual work yourself; enough, if you are an organ of the collective labourer.” On the other hand, there may be labour which the capitalist rates as the most productive which in fact does not add to surplus value at all.
The industrial capitalist pays the day’s wage to the worker for the use of their labour-power for an entire working day. It’s value is the necessary labour time. Marx isolates this unit to analyse the various particular forms of payment which serve to disguise the nature of the value of the worker’s labour-power.
The basic unit of Volume Two is the complete circuit of a commodity from the form of money-capital to productive capital to commodity-capital and back to money-capital, ready for reinvestment, but in expanded form.
This universal unit is interlaced with the particular units being the circuit of commodity-capital and the circuit of productive capital.
Each individual capital plays a little part in ensuring the conditions for the renewal of each circuit. Through crises and accidents the multitude of blockages must be overcome in the absence of any overall plan.
Turnover is the time taken for a unit of capital to complete its circuit and return to capital in the same form. The turnover time makes the denominator of constant capital in determination of the rate of profit.
The need to put capital into circulation and pull it back out as fast as possible forces the capitalist to try to reduce the turnover time.
This circuit is the process by means of which a unit of capital circulates so as to reproduce the entire capitalist social formation, and not confined to the circuit of productive capital, which functions as the unit which is generalised here to include the reproduction of all facets of the capitalist social formation.
Capital must not only renew itself, but must renew the entire social formation.
The cost-price of production is the portion of the total value of a commodity which is accounted for by the total capital invested, irrespective of its division into constant capital and wages. The price of production is the cost-price plus profit on the total capital invested.
Cost-price and price of production are both mere appearances and do not correspond to objective needs of society for its reproduction. This is the appearance of the economic categories under the rule of capital.
The average rate of profit is the total social surplus divided by the total capital invested in a given period of time, such as a year. This rate is determined by the joint action of the commodity market and the capital market and applies to all units of capital whether productive or commercial.
The rate of profit can be equalised only by industries which are inherently more profitable cross-subsidising those sectors which have a large quota of constant capital to sustain. This happens by commodities being sold above or below their value and by the movement of capital on the capital market.
Marx demonstrates that the drive to increase the productivity of labour inevitably leads to a disproportionate increase in the mass of material and machinery which the capitalist has accumulated and which must be engaged in production. Therefore, with the increase in the rate of surplus value, the absolute value of profit grows, but its proportion to capital advanced, the rate of profit, tends to decline. Here the fundamental contradiction between production for profit and production for human needs is manifested.
The commercial capitalist is a capitalist firm which buys in order to sell more dearly, but deals solely with forms of credit arising in the circuit of commodity capital.
The activity of commercial capital in its pure form is speculative and does not contribute to creation of the social surplus at all.
The finance capitalist is a capitalist firm which loans money-capital without releasing ownership of it, and charges interest for use of the money-capital. This is the universal form of finance capital; particular forms of finance capital include those firms who hire out the use of infrastructure such as platforms like Facebook or Google Earth or networks like Starlink on the same basis.
In finance capital function is divorced from ownership. The interest of finance capital in the expansion of credit serves only as a burden on the back of productive capital and the source of a new class antagonism.
The private landowner is a unit which plays no part in production whatsoever, but charges a levy on productive capital by means of its monopoly control of land.
The private landowner is a redundant class, surviving only on the basis of an inherited monopoly of the land.