PART 4
An ongoing series going through Marx, Capital Volume 1. Access free electronic copies of Volume 1 here or here. [Capital Volume I, Chapters 4-6, pgs. 244-280, of Penguin Press]
We’ve finished chapters 1-3, which together are a section called “Commodities and Money”, Part One in Marx’s organization of the book. You may have noticed that the book is called “Capital”, Marx is known exclusively for telling capitalism to go fuck itself, but the word “capital” or “capitalism” hasn’t really shown up in Parts 1-3. Don’t worry: the next three chapters, 4-6, are Part Two: “The Transformation of Money into Capital”. We’re going to do all three chapters of this part at the same damn time.
We’ve finished chapters 1-3, which together are a section called “Commodities and Money”, Part One in Marx’s organization of the book. You may have noticed that the book is called “Capital”, Marx is known exclusively for telling capitalism to go fuck itself, but the word “capital” or “capitalism” hasn’t really shown up in Parts 1-3. Don’t worry: the next three chapters, 4-6, are Part Two: “The Transformation of Money into Capital”. We’re going to do all three chapters of this part at the same damn time.
Chapter 4: The General Formula for Capital
It turns out that, in a way, we’ve already been talking about capital. We’ve talked about how objects have exchange value and use value, and how these objects become commodities in the kind of societies and communities where they are produced for the sake of exchange. Each of those exchanges exists in large overlapping movements of exchanges, anticipating further exchanges and responding to previous ones. That’s the “circulation” of commodities and of money. That’s also the “starting point of capital”. (247).
Remember from part 1 that historical context is important: objects are what they are because of the historical moment they’re in. It’s no surprise, then, that capitalism is not some list of formal ideas. It’s a historical development, which Marx thinks starts in the sixteenth century, with world trade and the world market. Just like an object becomes a commodity in a particular kind of history, money becomes capital in the same way. What way is that? That “circulation” we talked about.
In part 3 we used “C-M-C” as a way to describe how commodities circulate through an economy, transforming into money with C-M (sale) and then back into a commodity with M-C (purchase). But we also noticed that describing something as a sale or a purchase depends on the perspective we decide to take, and we could describe any sale C-M or purchase M-C backwards as an M-C or C-M, respectively. The same goes for our formula., we can describe the circulation of commodities C-M-C as M-C-M, the circulation of money.
This time I’m going to use the same good from the example Marx uses, because it’s historically significant. Say I purchase (M-C) 2,000 pounds of cotton for $100 and resell it for $110 (C-M). Overall the M-C-M circulation is $100->2000lb->$110, which we can shorten to $100->$110. It makes sense to shorten that because probably don’t care too much about cotton, and it makes it easy to see what I’m really after. I wouldn’t bother with this if I would just end up with another $100 dollars – if I wanted to get that, I could just stay where I started and save myself the trouble of lugging a bunch of cotton around. But instead I end up with $110. What’s important isn’t the precise number by which I come out ahead by the second M, what is important is that I come out ahead by the second M.
We can keep this lesson in mind by rewriting our description of circulation as M-C-M’. We just need to remember that M’ is some bigger number than M. We can do that by defining M’ with some basic arithmetic: M’ = M + ΔM, where “ΔM” is just a fancy way to say “the change in M”. In our earlier example, the change in M was $10, since I started out with cotton bought for $100 and re-sold it for $10 more, at $110. Another, very important fancy way of describing “ΔM”: surplus-value.
I could cash out of the cotton game after this. Maybe $10 in surplus value is enough for me, I just want to buy some plantains and keep it pushing. But maybe I’m in too deep. I start moving more tons of cotton. I want more than $10, I want a stack. More. More. More.
That is when money becomes capital, when I hoard it (as we discussed in part 3). I’m not in it for the muhfuckin cotton.(254) I stack paper to stack more paper. There’s no end point: my money M is always looking for its M’, and cotton is just the C in the middle that I can use to get there. These commodities themselves begin to represent money (256). M-C-M’ is what we were promised: the general formula for capital, the description of how money becomes capital (257, 258).
Chapter 5: Contradictions in the General Formula
Let’s not leave C-M-C hanging. We described the general formula of capital around the circulation of money, but we could talk about a situation that looks like the circulation of commodities, maybe as they could possibly go in a non-capitalist economy.
Marx makes the point that the kind of circulation non-capitalist societies may have used money to facilitate, C-M-C, doesn’t have to have surplus value in the mix. His example: a corn farmer and wine farmer could sell each other goods. From the perspective of use values, there’s obviously something good about this trade – the corn farmer has more corn than she needs, the wine farmer more wine than she needs, so they can both benefit by getting what the other’s got. But the amounts of corn and wine that they’re selling each other both cost $50, there’s no exchange value upside: they both take something which is worth $50 (measured in labor-time) and exchange it for something else of the same value. Then there’s no surplus value, but we haven’t lost track of why people would do this – corn farmers need more in their lives than corn, wine farmers need more in their lives than wine. They have dreams too. Their specialization allows them to use trade to get ahead in terms of use value, not exchange value. (258-262) Circulation by itself doesn’t create value, it just moves it around (266).
You might remember the old adage, “buy low sell high”. Maybe that’s what explains surplus value – some sellers are just weirdly privileged enough to sell commodities for more than they’re worth, selling cotton worth $100 to $110. But cotton sellers also have dreams too, they want plantains and all the other wonderful things in life. But they aren’t sellers in those markets, they are buyers. If sellers in those markets have the cotton man’s superpower, the super powers will cancel out from the view point of the whole community: sellers get surplus value in their markets only to have it snatched away in markets where they are buyers, and there isn’t surplus value from the perspective of the whole community. (262-263)
But that’s not how it is with capitalism: surplus value is generated on a world scale. This is because, unlike the exchange of the corn and wine farmers, equivalents are not exchanged under capitalism.
Marx gives two examples of this: merchants, who “parasitically” insert themselves between producers and buyers, and usurers, who lend money and demand that it be repaid with interest. Marx calls merchants’ capital and interest-bearing capital “derivative forms” the primary form of capital.
Chapter 5: Contradictions in the General Formula
Let’s not leave C-M-C hanging. We described the general formula of capital around the circulation of money, but we could talk about a situation that looks like the circulation of commodities, maybe as they could possibly go in a non-capitalist economy.
Marx makes the point that the kind of circulation non-capitalist societies may have used money to facilitate, C-M-C, doesn’t have to have surplus value in the mix. His example: a corn farmer and wine farmer could sell each other goods. From the perspective of use values, there’s obviously something good about this trade – the corn farmer has more corn than she needs, the wine farmer more wine than she needs, so they can both benefit by getting what the other’s got. But the amounts of corn and wine that they’re selling each other both cost $50, there’s no exchange value upside: they both take something which is worth $50 (measured in labor-time) and exchange it for something else of the same value. Then there’s no surplus value, but we haven’t lost track of why people would do this – corn farmers need more in their lives than corn, wine farmers need more in their lives than wine. They have dreams too. Their specialization allows them to use trade to get ahead in terms of use value, not exchange value. (258-262) Circulation by itself doesn’t create value, it just moves it around (266).
You might remember the old adage, “buy low sell high”. Maybe that’s what explains surplus value – some sellers are just weirdly privileged enough to sell commodities for more than they’re worth, selling cotton worth $100 to $110. But cotton sellers also have dreams too, they want plantains and all the other wonderful things in life. But they aren’t sellers in those markets, they are buyers. If sellers in those markets have the cotton man’s superpower, the super powers will cancel out from the view point of the whole community: sellers get surplus value in their markets only to have it snatched away in markets where they are buyers, and there isn’t surplus value from the perspective of the whole community. (262-263)
But that’s not how it is with capitalism: surplus value is generated on a world scale. This is because, unlike the exchange of the corn and wine farmers, equivalents are not exchanged under capitalism.
Marx gives two examples of this: merchants, who “parasitically” insert themselves between producers and buyers, and usurers, who lend money and demand that it be repaid with interest. Marx calls merchants’ capital and interest-bearing capital “derivative forms” the primary form of capital.
Marx isn’t saying yet what the “primary form” is. But he points out that there is a big contradiction to figure out: Marx has said earlier that the value of objects comes from labor-time. But exchange of commodities for money doesn’t put more labor into the commodities. So circulation can’t make the commodities any more valuable than they are. As a result, capital can’t arise from circulation. But the whole point of M-C-M’ was to describe how capital arises from circulation!
Find out the thrilling conclusion to this quandary on the next episode of Capital Z (this may or may not involve Marx angrily powering up his theory for 40 more episodes – we are talking about a 900+ page book here).
Chapter 6: The Sale and Purchase of Labor-Power
Okay, how can there be surplus value?
Lucky for us, Marx actually gets to the point pretty quickly this time around (don’t get used to that).
The change in the value that we get in M’ can’t come from money, cause all money does is “realize” the price of the commodity that it buys or pays for, that’s the whole point of money: it’s a yardstick. So the change has gotta be in the commodity. But not in its exchange value – again, all money does is measure the value of the thing traded for it. So we’re looking in use-value-ville, specifically for the sort of thing that, by being used, makes other things more valuable. (270)
Chapter 6: The Sale and Purchase of Labor-Power
Okay, how can there be surplus value?
Lucky for us, Marx actually gets to the point pretty quickly this time around (don’t get used to that).
The change in the value that we get in M’ can’t come from money, cause all money does is “realize” the price of the commodity that it buys or pays for, that’s the whole point of money: it’s a yardstick. So the change has gotta be in the commodity. But not in its exchange value – again, all money does is measure the value of the thing traded for it. So we’re looking in use-value-ville, specifically for the sort of thing that, by being used, makes other things more valuable. (270)
Now wait a second. We measure value in labor-time, which means that putting labor into a thing makes it more valuable, we want a commodity that itself is a source of value…
It’s labor-power!
Labor-power or labor-capacity, the sum total of the ability of a person to create value in other things, is itself something that could be a commodity. But, like any other object, this can only become a commodity under certain historical conditions? What are thoooose?
Well, exchange is one of the things that makes an object a commodity. So a worker has to sell their labor power, which we learned in part 3. Like with any other object, someone has to be considered an owner of that object, with the socially recognized right to enter into contracts over that object, for it to be a commodity. So a person must own their labor power, and enter into market contracts over it on a “footing of equality”, “equal in the eyes of the law” with the person to whom he (it was gendered this way for a hot minute) enters into a contract with. For someone to be so recognized, they have to only sell their labor power temporarily, otherwise they would effectively be giving up ownership of their labor power. Marx points out that this distinguishes this political position sharply from slavery, bringing up the complications I discussed in part 2. (271).
By contrast, a person who can sell commodities other than their labor power must possess two things. One of these is the means of production: raw materials, tools, etc. The second is the means of subsistence: no one can live on use-values that aren’t here yet, and the M-C-M’ process takes time. You gotta be able to eat, clothe, and shelter yourself between M and M’. Marx doesn’t say this yet but this person is, of course, the capitalist.
So, the free owner of money and the free owner of labor power (free to sell his labor and also ‘free’ of the means of production) can make a deal: the capitalist rents out the means of production to the worker and skims a bit off the top of what’s produced. This will only happen in societies with a developed enough distribution of labor that use-value has already been separated from exchange-value, where things can be produced for the purposes of exchange.
This will happen in the historical context when you have a class that has ‘freed’ some people from the means of production and means of subsistence, leaving them with only their labor power to bargain with in the market with the other capitalists, who history has already provided with food and factories before he sits down on his side of the “equal” negotiating table. These are the concrete, historical analogues of the abstract concepts of “Freedom, Equality, Property, and Bentham(referring to one of the originators of ’utilitarianism’, an ethical philosophy that evaluates decisions in terms of costs and benefits)” (280).
How do we determine the value of labor power? Like every other commodity: by the labor time necessary for its production. But work wears a person down: one’s ability to produce on Monday could be very different from their ability on Friday. Their labor power, their capacity to do work, needs to be produced again by rest and rejuvenation. Call that the reproduction of labor.
But we wouldn’t estimate the value paid by the capitalist to the owner of labor power not through the reproductive, but a different kind. Remember, the capitalist’s goal is to get from M to M’. The process and point of consuming labor-power (getting folks to work for you) is the production process of commodities but is also the production of surplus value (279).
Commentary on Reproduction and Reproductive Labor
Marx saw some of the clear social implications of reproduction of labor: workers have to survive in order to keep working, which costs food and fuel; they will have to be educated in some fashion and to some extent, taught to do various things that will allow them to generate value for capitalists.(276) Also, the workers will eventually die, and must be replaced, so a society must procreate: “The means of subsistence necessary for the production of labor power must include…his children” (275). But this isn’t just a conversation about literal biological reproduction: reproducing the labor power of a living worker from day to day is itself work, despite the fact that this work isn’t always regarded, valorized, discussed, or economically rewarded as such. In (at least) the European societies where capitalism developed, the division of productive wage labor and reproductive labor – by no historical accident – corresponded to, was shaped by and itself helped shape a gender binary between men and women. For a good introduction to this topic, see the first chapter of Angela Davis’ “Women Race and Class” and this paper by Silvia Federici
It’s labor-power!
Labor-power or labor-capacity, the sum total of the ability of a person to create value in other things, is itself something that could be a commodity. But, like any other object, this can only become a commodity under certain historical conditions? What are thoooose?
Well, exchange is one of the things that makes an object a commodity. So a worker has to sell their labor power, which we learned in part 3. Like with any other object, someone has to be considered an owner of that object, with the socially recognized right to enter into contracts over that object, for it to be a commodity. So a person must own their labor power, and enter into market contracts over it on a “footing of equality”, “equal in the eyes of the law” with the person to whom he (it was gendered this way for a hot minute) enters into a contract with. For someone to be so recognized, they have to only sell their labor power temporarily, otherwise they would effectively be giving up ownership of their labor power. Marx points out that this distinguishes this political position sharply from slavery, bringing up the complications I discussed in part 2. (271).
By contrast, a person who can sell commodities other than their labor power must possess two things. One of these is the means of production: raw materials, tools, etc. The second is the means of subsistence: no one can live on use-values that aren’t here yet, and the M-C-M’ process takes time. You gotta be able to eat, clothe, and shelter yourself between M and M’. Marx doesn’t say this yet but this person is, of course, the capitalist.
So, the free owner of money and the free owner of labor power (free to sell his labor and also ‘free’ of the means of production) can make a deal: the capitalist rents out the means of production to the worker and skims a bit off the top of what’s produced. This will only happen in societies with a developed enough distribution of labor that use-value has already been separated from exchange-value, where things can be produced for the purposes of exchange.
This will happen in the historical context when you have a class that has ‘freed’ some people from the means of production and means of subsistence, leaving them with only their labor power to bargain with in the market with the other capitalists, who history has already provided with food and factories before he sits down on his side of the “equal” negotiating table. These are the concrete, historical analogues of the abstract concepts of “Freedom, Equality, Property, and Bentham(referring to one of the originators of ’utilitarianism’, an ethical philosophy that evaluates decisions in terms of costs and benefits)” (280).
How do we determine the value of labor power? Like every other commodity: by the labor time necessary for its production. But work wears a person down: one’s ability to produce on Monday could be very different from their ability on Friday. Their labor power, their capacity to do work, needs to be produced again by rest and rejuvenation. Call that the reproduction of labor.
But we wouldn’t estimate the value paid by the capitalist to the owner of labor power not through the reproductive, but a different kind. Remember, the capitalist’s goal is to get from M to M’. The process and point of consuming labor-power (getting folks to work for you) is the production process of commodities but is also the production of surplus value (279).
Commentary on Reproduction and Reproductive Labor
Marx saw some of the clear social implications of reproduction of labor: workers have to survive in order to keep working, which costs food and fuel; they will have to be educated in some fashion and to some extent, taught to do various things that will allow them to generate value for capitalists.(276) Also, the workers will eventually die, and must be replaced, so a society must procreate: “The means of subsistence necessary for the production of labor power must include…his children” (275). But this isn’t just a conversation about literal biological reproduction: reproducing the labor power of a living worker from day to day is itself work, despite the fact that this work isn’t always regarded, valorized, discussed, or economically rewarded as such. In (at least) the European societies where capitalism developed, the division of productive wage labor and reproductive labor – by no historical accident – corresponded to, was shaped by and itself helped shape a gender binary between men and women. For a good introduction to this topic, see the first chapter of Angela Davis’ “Women Race and Class” and this paper by Silvia Federici
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