Marxism and the Modern Capitalist Society

“As Darwin discovered the law of evolution in organic nature, so Marx discovered the law of evolution in human history; the simple fact, previously hidden under ideological growths, that human beings must first of all eat, drink, shelter and clothe themselves, before they can turn their attention to politics, science, art and religion”

INTRODUCTION:

To the development of human history a Marxist perspective informs us that society will not be overturned in response to moral imperatives, incentives or ideologies. Society can only be changed when it fails to succeed in its own terms, when it calls its own existence into question. Until such situations arise, society will manage to go on reproducing itself, albeit somewhat fitfully, regardless of our criticisms. In Marx’s work on Capital, capitalism was an unstable system.

MARX’S WORK:

Capital represented the culmination of Marx’s work. He devoted many years to studying political economy and the capitalist mode of production, before he attempted to present his analysis and criticisms of both subjects. Indeed, capital is eminently a “critique of political economy”. Marx undertakes the task of demonstrating how the very mechanisms that allow capitalist society to reproduce itself and expand also undermine its stability. The contradictions are totally immanent, i.e. bourgeois society is seen to contain within itself the seeds of its own destruction. Capitalism is shown to be an inherently unstable system, regardless even of the conscious activities of its own actors. This analysis was an integral part of Marx’s critique of political economy, a discipline which had proclaimed that capitalism was a system in harmony with men’s needs and would last until the end of time. Capital is a critique of this bourgeois notion of the glorious future of capitalism

Marx realised that the fundamental question for every society was how to regulate labor time, how to allocate social labor. Feudalism, for example, was a system based on a conscious, direct regulation of labor time. Capitalism, however, represents a real break with feudalism in this respect. Labor time is allocated indirectly, “behind the backs” of the producers. Exchange, i.e. market relations, regulate the distribution of social labor time. This is established through the comparison and exchange of commodities, the finished products of capitalist production. In a nutshell, this is Marx’s Theory of Value. It represents the indirect and unconscious allocation of social labor time in capitalist society. Here, already, in the “anarchy” of capitalist production, we can see the potentially for disequilibria and crisis .

Marx ended Volume 1 of Capital with an abstract description of the accumulation of capital and its outcome: “Along with the constantly diminishing number of the magnates of capital, who usurp and monopolize all advantages of this process of transformation, grows the mass of misery, oppression, slavery, degradation, exploitation; but with this too grows the revolt of the working class, a class always increasing in numbers, and disciplined, united, and organized by the very mechanism of the process of capitalist production itself. The monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with, and under it. Centralization of the means of production and socialization of labour at last reach a point where they become incompatible with their capitalist integument. This integument is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated”.

However, today, since the Second World War, the “cycle” seems to have changed. There have been no serious crisis, in the United States, or in the rest of the capitalist world, although there have been recessions and downturns of a not inconsequential nature . It is clear that capitalism has changed. The most important new feature is the growing importance of state intervention in the economy. Laissez-faire capitalism as an ideal type has lost its hegemony to the “mixed-economy”. On the surface, state intervention, which has increased effective demand and accelerated material production, seems to have succeeded in removing the possibility of a crisis . However, when relating this to Marxist’s work on capital, this “superficial” view of a characterization of the reality of modern capital accumulation has its faults, and merely mistakes the postponement of a problem for its disappearance.

The basic problem of modern capitalist production is the creation of a sufficient mass of surplus-value to ensure continued accumulation. To approach this problem in the light of government-induced production, it is important to keep in mind the fact that not all production under capitalism is productive of surplus-value. All enterprises may be organised in a capitalist fashion (i.e. their workers perform unpaid labour under the control of the capitalist), and all capitals may seem to “produce” surplus-value (when in reality every capital receives a share of the total surplus-value proportional to the size of the capital), but only those enterprices which exchange variable capital for value (and therefore surplus-value) creating labour are capable of producing surplus-value. The productive labourer produces commodities for the buyer of his labour-power. The fundamental distinction is the purpose for which the worker has been hired – to create a surplus value which will be used for capital accumulation or to provide an immediate service. This service can take the apparent form of the production of a material object. For example, if I buy all the materials for a piano and have a workman come into my home to make it, he is an unproductive laborer “because his labour is exchanged directly against my revenue.

In order to understand the nature of government-induced production, it is important to be aware of this distinction between productive and unproductive labour – that some labour is productive of surplus-value and other labor can only be seen as a consumption of surplus-value – and the fact that every capital, whether or not it is itself a producer of surplus value, shares in the total social surplus-value in proportion to its size.

In analysing the nature of state intervention, which had grown to such a tremendous extent over the last fifty years (since WW2), this intervention appeared in response to the problems of capital stagnation, i.e. the inability of capital to accumulate quickly enough to compensate for the failing rate of profit. “Capital stagnation, expressed as it is in effective demand, hinders an increasing number of capitalist entities from partaking in the social “pool” of surplus-value in sufficient measure. If their continued existence is a social necessity, they must be maintained by government subsidies. And if the number of unemployed constitutes a danger to social stability, they too, must be fed out of the declining “pool” of surplus-value. Control of surplus-value becomes essential for the security of capitalism and the distribution of profits a governmental concern”

However, state intervention is narrowly limited in the economic activities in which it can be engaged. Above all the state cannot become a competitor of private capital. This would only succeed in making the problems of private capital that much more severe. Therefore, government-induced production, although it may well increase employment and utilise means of production that might otherwise remain idle, must be non-profitable in nature, i.e. unproductive of surplus-value. It cannot increase the total surplus-value and therefore can be of no assistance to private capital in its search for additional surplus value.

State-induced production is financed by an exchange of revenue for labour-power, not by an exchange of variable capital for value-creating labour power. It must be financed through taxes or borrowed funds – in either case, a consumption of surplus value and a drain on the total social mass of surplus-value . This is so even though the state can increase material production, bringing together ever larger masses of means of production and workers. An increasing rate of private capital formation could stabilize government expenditures. But, empirically, this appears to be futile hope within the context of modern capitalism. Government expenditures have grown by leaps and bounds since the 1940s. Such an increase implies a relative decline in private capital formation. So far, however, there has been no severe crisis. The only apparent immediate effect has been persistent inflation over the years. The contradictions of capitalist production still exist, and with them, the likelihood of crisis. Increases in government-induced production have managed to postpone a severe crisis, but this cannot go on forever, or much longer, due to the problems of American capital today. As, such production can only hinder long run capital expansion, and thus becomes another factor pushing contemporary capitalism into crisis. It is highly unlikely that the expansion of government-induced production will slow down in the foreseeable future.

Should the government cease to stimulate effective demand and raise the employment of labour and means of production, stagnation would probably immediately appear, and with it massive unemployment and social unrest. The continual growth of the state sector can only temporarily postpone stagnation and crisis, and in the process of doing to undermine its own stabilizing efforts by decreasing the amount of surplus-value available to private capital, and therefore, hindering further accumulation. Thus, its expansion – and its seeming success – cannot go on forever. “There must be a limit to the expansion of the non-profitable sector of the economy. When this limit is reached, deficit-financing and government-induced production as policies to counter-act the social consequences of a declining rate of accumulation must come to an end. The Keynesian solution will stand exposed as a pseudo-solution, capable of postponing but not of preventing the contradictory course of capital accumulation as predicted my Marx”

CONCLUSION:

Perhaps the face of capitalism has changed in the last few decades, but its essence has not. Capitalism remains a mode of production doomed by its necessity to develop absolutely the material means of production and its regulation by value production, i.e. its drive for exchange-value and surplus-value. State intervention, the fundamental feature of its “change” is capable only of postponing the emergence of crisis , but it cannot prevent its eventual breakout. Capitalism is, consequently, a system which must periodically can its own existence into question and therefore provide working people with an impetus to overthow it. It will not collapse automatically, but it will give a chance – a necessity – to those exploited by it to do away with it. This is the most that can be predicted, which is in fact what Marx predicted over a hundred years ago.

FOOTNOTE

1 A quote from Friedrich Engels over his friend Marx in 1883.

2 Marx make much more explicit criticisms of specific theories in his Theories of Surplus Value.

3 Value production is such an indirect and unsatisfactory method of allocating social labour that it should not be seen as corresponding in its functions within capitalist society to a socialist plan within socialism.

4 Maurice Flamant and Jeanne Singer-Kerel, Modern Economic Crisis and Recessions, 1970.

5 It could be acknowledged that, state expenditure, military and space expenditure have been decisive, and had played a significant role in maintaining social and political stability since the Second World War.

6 Mattick, Paul, Marx and Keynes: the limits of the mixed-economy, Boston, Porter-Sargent, 1969, p.115. The basic argument of the Keynesians was that government intervention in the economy was needed to increase effective demand and compensate for the decline in the rate of private capital formation. This was necessary to prevent large-scale unemployment and consequent social unrest.

7 The point about state expenditure is that they are financed and paid for out of taxes.

8 Ibid, p.163

9 another noticeable change is the growth of monopoly (i.e. oligopoly) firms. But they are unable to solve the problem of the declining rate of accumulation.

Article Source: http://www.articleset.com