Apologies for leaving such an incredibly long gap between posts. Since I last posted, Nate and NP both have new Marx posts up, and Roger is writing on Marx again. (Those with too much time on their hands can follow a lengthy debate Roger and I have been having in the Limited Inc. comment boxes). [EDIT: For personal archiving purposes, I’ll note further debate on Marx between myself and roger here and here.] Plus Qlipoth has been responding to Roger’s posts too. All in all a wealth of blogospheric Marx riches!

Anyway – in sympathetic mimicry of Marx’s method, I’ve revised the below enough times that it probably makes no fucking sense. Basically it really ought to (and at one point did) have a long discussion of different interpretations of Marx’s value theory as a preamble. But the literature on value theory is a goddamn oubliette; so I’ve cut the discussion down to a bare minimum.

One way of slicing up interpretations of Marx’s theory of value, then, is by dividing them into ‘production-oriented’ and ‘circulationist’ theories of value. The former more or less says that price is determined by labour-time inputs (this is how the ‘labour theory of value’ is often understood). The latter reverses the causality, and says that labour-time inputs are generally determined by price (among other factors), because supply and demand regulates the distribution of labour between and within industries.

The latter theory has the benefit of being true [in the complicated sense that I’m about to outline]; the former has the disadvantage of being false. (My earlier remarks on the labour theory of value: 1; 2; 3) But there are plenty of places in the three volumes of Capital where Marx seems to be saying stuff that implies the former. What gives?

N Pepperell has been writing at length about Marx’s presentational strategy – and about everything else relevant to the interpretation of Capital…; as usual my debt to NP’s work is profound throughout this post. In a word: Marx has an extremely rococo organising principle for Capital v.I. He starts with common (for his time) political-economic propositions, then gradually embeds them in the social conditions and practices that give rise to them – shows how these perspectives on the reproduction of capital are made available by moments of capital’s reproduction. At the same time, Marx argues that these perspectives fail to give a fully adequate analysis of capitalist society because they overgeneralise from a specific slice of social reality – they take a moment of capital’s reproduction as representative of the whole, failing to see that this social moment can only function as it does, as part of the reproduction of capitalism, because of other social moments, many of the consequences of which directly ‘contradict’ the consequences of the social practices that produce this specific perspective.

This critique of overgeneralisation from specific social practices intersects with another vector of Capital‘s analysis, where Marx suggests that inhabitants of capitalist society are systematically prone to misattributing the effects of a complex set of interactions between different social actors and processes, to a single moment of this larger social process. This latter misattribution is what Marx calls fetishism.

Marx thinks that even the best political-economic discourse is guilty of these kinds of naturalisation. Nonetheless, Marx still generally thinks that the political-economic-style analyses he gives us in Capital are in some sense true. (When he thinks political economic analysis is false, he’s not shy about saying so.) Marx just thinks that the ‘labour theory of value’ analyses he appropriates for Capital are not true for the reasons political economists (such as Ricardo or Adam Smith) think they are. Marx uses a lot of quasi-Ricardian formulations in Capital – formulations which suggest that labour qua labour produces value – a claim that I believe Marx considers to be, literally speaking, false. On my – Pepperellian – read of Capital, one of the tasks Marx sets himself for the work as a whole is to show why the political-economic claims oriented around this value theory might nonetheless be true – why, that is, they are true for the specific social context of capitalism – and, just as importantly, how this truth is produced by a host of apparently unrelated social activities.

In other words, Marx believes he can ‘derive’ his version of the ‘labour theory of value’ from the dynamics of the general social context: show how these formulations are made true by the aggregate effects of many different activities in capitalist society. In good (right side up) Hegelian style, Marx aims to demonstrate that his apparently dogmatic starting point can be shown to be generated as a product of the system as a whole.

Does Marx succeed in this project? Not altogether, is my opinion. But I’m not going to talk about that in this post.

What I am going to talk about is the organic composition of capital. On one ‘classic’ read of Capital the organic composition of capital [roughly, the ratio of variable capital (labour) to constant capital (machines, etc.) in any given unit of investment capital] plays a key explanatory role in Marx’s account of crisis. The read (with which I disagree) would go something like this: If labour qua labour is taken to generate value, then all else being equal a greater ratio of variable to constant capital is going to generate more value, which means (again all else being equal) more profit. If there’s a secular trend towards mechanisation – i.e. if the amount of constant capital is increasing relative to variable capital – then on this value theory you’re going to get a decline in the value produced by any given investment unit of capital. There is, therefore, a tendency for the rate of profit to fall – which is, ultimately, the source of capitalist crisis.

[The causal chain re: crisis might go something like:
– profits fall
– which reduces or eliminates incentives to invest
– which reduces investment
– which both directly and via knock-on effects on wages, etc., reduces aggregate demand
– which produces a crisis of underconsumption
Though there are plenty of other possible accounts.]

On a read like this, Chapter 13 of Volume III – on the tendency of the rate of profit to fall – finally cashes out an analysis of capitalism’s inherent tendency towards crisis, by using the labour theory of value initially elaborated in Volume I.

I don’t accept this interpretation of the direction of Marx’s argument. I think, instead, that Marx’s discussions of the organic composition of capital should be seen as treating the changing organic composition of capital as an effect of changing profit rates (among other factors), rather than as a cause. [Though I have some provisos I’d like to attach to this, which I am going to postpone until some subsequent post.] I think we can see how some of this argument plays out in Chapter 25 of Volume I.

So – ‘The General Law of Capitalist Accumulation’. Very crudely, the argument to which this chapter contributes runs something like this:

Capitalism as a system is oriented towards blind economic growth, and generally characterised by wage-labour as a form of production. [Why a drive towards growth? Various reasons, but most importantly the credit system. Historically speaking, capitalism really starts gathering steam when governments/ruling cliques become dependent on the newly created national debts for institutional self-perpetuation – this dependence ties state power & state violence to the capitalist drive to productivity.] Anyway, the drive towards growth manifests and reproduces itself at a capitalist-firm level as the profit motive. Capitalist-firm-level imperatives towards profit can be responded to by:
– Simple appropriation – ‘primitive accumulation’
– Simple expansion – seeking out new markets.
Or, especially if these two routes are blocked
– Increased productivity.
Increased productivity in turn can be achieved by lengthening the working day; intensifying work; or mechanization.

Chapter 25 is concerned, in large part, with this connection between the drive to accumulation and mechanisation. There is a loose tendency towards mechanisation in a given industrial sector, driven by the need to increase productivity. Competition within a sector (which is part of the structural incentive to increase productivity in the first place), plus the increased supply as a sector expands its output, will also tend to drive down prices as a sector develops. Here you have a (loose) tendency for lower profits to accompany increased organic composition of capital – and this has nothing to do with a causal link from labour-time-inputs to profit.

At the same time, as labour is expelled from mechanising industries, it enters and increases the ‘reserve army’ of labour. This has the effect of driving down the price of labour-power on the wage-labour market. This is one of the ways in which the capitalist system ‘self-regulates’ (not via ‘efficiency’ but via economic convulsions with an extremely high human cost). [This idea has purchase in the mainstream economic literature via (among other things) Schumpeter’s (Marx-derived) concept of ‘creative destruction’.] Loss of profits in a sector (say via overproduction, or price reductions through competition) will tend to result in the failure of some firms & cost-cutting from others, which means unemployment for workers in that sector.

But as profits from over-producing sectors decrease, there’s also an orientation within the system to find or produce new markets & create new industries which can generate a better profit rate. These industries will often tend initially to be more artisanal/labour-heavy – sometimes because they can simply absorb cheap labour expelled from more profit-crisis-ridden sectors, and therefore don’t have an incentive to mechanise; but also because it takes time to figure out how to mechanise new industries, and because the drive to mechanisation is in large part produced by the falling profit rate produced by competition – which only really starts to bite once a new sector has been up and running for a while.

And these factors can also tend to produce an (again very loose) correlation between the organic composition of capital and the value produced by a given industry per unit of capital – more variable capital per unit of capital goes along (here) with more profits. Again, though, the causal mechanism does not run from labour-time inputs to surplus-value production. The reverse is closer to the truth.

These are some of the themes that Chapter 25 of Capital is touching on. Architectonically Chapter 25 is therefore key to Marx’s argument because:
1) The discussion of the movement of labour into reserve army and then back into (newly created) labour articulates one of the dynamics that Marx regards as the heart of capitalism.
2) The connection of this dynamic to the changing organic composition of capital is an important step in Marx’s attempt to derive the (more or less) Ricardian ‘law of value’ from the social dynamics of capitalism as Marx (but not Ricardo) understands them.

There’s a lot more I should say; but I think I’ll go ahead and put this post up as is. Given how long it’s taken me to write this, I’m not overly confident about having another up any time soon. But in any possible future posts on Chapter 25 I’d like first to spend some time on how the category of ‘value’ functions in Marx, given the above interpretation, and then get down more into the nitty-gritty of Chapter 25.

I suppose I should say that I reserve the right to alter any aspects of the interpretation above as we go along – Capital may not be written as a series of ever-more-adequate approximations to reality, but this blog is.

[NB: If anyone leaves comments and I don’t respond very fast it’ll be because I’m busy; I’ll get back to you soon…]