A Companion to Marx’s Capital Vol. 2

tags : [[Marx]] [[Capital Vol. 2]]

source : harvey_companion_2018

1. The Circuits of Capital (1-3) :ATTACH:

[Harvey’s chart for the circuits of capital](Screenshot from 2020-12-21 22-12-00.png)

• Money only becomes capital depending on its function in the capital circuit
• Laborers live in the C-M-C relationship (or more specifically, L-M-C)
• Money-as-capital vanishes, but money-as-money remains, when it is paid to a laborer
• There are two preconditions for the circulation of capital are:
  1. The class relation between capitalist and wage-laborer
  2. General commodity production for the market
• Money cannot function as capital if these are not met
• Historically, all other forms of commodity production are subsumed into capitalist commodity production
• What distinguishes capitalism in particular is the MP/LP split in the circuit of capital: that labor power and means of production must be brought together
• C’, commodity capital, is the product to be transformed into money and sold. As long as its on the market, the process is held up
• Each phase of capital is not its own distinct form of capital, but are functions of a greater totality
• Money is the ultimate fetish, because for the capitalist, there would be no tangible measure of reward
• the consumption of all surplus-value with no reinvestment
• Marx says that simple reproduction in capitalism is impossible but spends time on it in Harvey’s opinion because he finds it easier to expose the functions of industrial capital that way
• m-c (surplus-value) is the capitalist participating in consumption
• There can be gaps in between each step of the circulation process
• If workers save their money this represents an interruption in the circulation process
• Capitalists must depend on other capitalists to carry out commodity production
• At the beginning and end of the circulation process, we’re dealing with commodities impregnated with surplus-value, unlike M and P, which start the production process with surplus-value removed
• The circuit of commodity capital is special because it allows us to look at the aggregate flow of surplus-value and surplus product. Steel, for example, is a commodity that enters the production process already having gone through it, and contains within itself surplus-value

2. The Three Figures of the Circuit an the Continuity of Capital Flow (4-6)

• Marx implies in ch. 4 that any delay in the circuit causes a greater delay in the entire individual capital. Work interruptions and strikes, therefore, can disrupt the flow of capital, including means of production to other capitals

• Marx mentions that crises can arise from things outside of the class relations of capital, i.e. in circulation, that have nothing to do with the capital-labor contradiction

• For Marx, capital can continue to exist so long as it valorizes value

• The fact that social capital can suffer revolutions in value illustrate that value is not independent of itself, but is maintained through its movement in the circuit of capital

• Harvey believes this section describes deindustrialization: capital is organized around the creation of relative surplus-value, therefore capital creates new relations through which it can destroy itself

• If a reserve of money is needed to deal with uncertainties in revolutions of value (i.e. technological development), it may be better to be a money capitalist than a production capitalist

• “Monopoly power allows capital to control the pace of potentially disruptive technological changes”

  • See: X, a subsidiary of Alphabet

• “Capital can integrate with noncapitalist modes of production”

  • See, the antebellum United States

• When commodities from non-capitalist modes of production enter into circulation with capitalism, capitalism works to ensure that these commodities flow regularly, i.e. on the terms of capitalism

  • This creates a power relation with the non-capitalist mode of production
  • Could this be why chattel slavery was so harsh?

• A capitalist’s supply must be greater than his demand because he valorizes because he uses that supply to create value

• Marx believes that a [[society founded on the pursuit of greed]] is technically impossible, because it’s to say that capitalism as such does not exist.

• Harvey says that the creation of value and the creation of debt go hand in hand, since capitalists are able to buy now and pay later. [[Austerity and debt reduction will therefore result in economic stagnation]]

• Money predates capital, so [[not all capital is money]], though it may appear otherwise

• The buying and selling of labor-power can also exist without capital (see: feudalism)

• The essence of capital is a combination of factors

  The essence of capital, we are forced to conclude, is the class relation between capital and labor in production that facilitates the systematic production and appropriation of value and surplus-value.

• Harvey believes that a transition to communism would entail not only the eradication of class relations but also a reconstruction of the circuits of capital that, at the moment, support production

• Harvey believes that Marx has not found a worthwhile answer to the question of what counts as productive vs. unproductive labor

• time when surplus-value is actively being produced through productive consumption

• the entire amount of time for the valorization of capital, which includes the amount of time capital is held in reserve

• capital that is not actively being used in the production process

• Marx criticizes classical political economy for believing surplus-value can be derived from the sphere of circulation just by staying in circulation longer

• Value can be realized faster the less time it is in circulation, this is why capitalism is so focused on “speed-up”

  • See: Walmart, just-in-time production

    The geographical and spatial conditions of supply of means of production therefore impose constraints on capitalist production because of the time taken to bring these means of production to the point of production where laboring takes place.

• Stock and inventory management are critical in the development of capitalism, namely to keep the continuous flow of capitalist production

Summary

Chapters 4-6 in vol. 2 are mostly about the sphere of circulation, an often neglected part of analysis. Capital transforms between commodity and money forms over the course of circulation, allowing us to say things outside of commodity production strictly. These chapters explain why things like inventory management, factory managers, and transportation are important to the production of value.

3. The Question of Fixed Capital (7-11)

• The accumulation of knowledge and skill, is absorbed into capital rather than labor

  The accumulation of knowledge and of skill, of the general productive forces of the social brain, is thus absorbed into capital, as opposed to labour, and hence appears as an attribute of capital, and more specifically as fixed capital, in so far as it enters into the production process as a means of production proper. Machinery appears, then, as the most adequate form of fixed capital, and fixed capital, in so far as capital’s relations with itself are concerned, appears as the most adequate form of capital as such. In another respect, however, in so far as fixed capital is condemned to an existence within the confines of a specific use-value, it does not correspond to the concept of capital, which, as value, is indifferent to every specific form, and can shed or adopt any one of them as equivalent incarnations. In this respect, as regards capital’s external relations, it is circulating capital which appears as the adequate form of capital, and not fixed capital. — Marx, the Grundrisse, as quoted by Harvey

• Fixed capital is confined to its specific use-value

• No theory of surplus-value can be derived from understanding just fixed and circulating capital

• all constant and variable capital that is used in a single turnover period

• constant capital that carries over from one turnover period to another

• Fixed capital circulates in its value form, not in its physical form

• Marx doesn’t seem to have a clear cut definition of fixed capital, as it can be confused with other things

• The development of fixed capital implies a certain level of productivity in society, according to Marx in the Grundrisse

• Harvey mentions that microcredit being extended to peasants in Mexico or India to buy sewing machines and to convert their homes into sweatshops is a way to show that fixed capital is 1. a setup phase for capitalism and 2. a way to counteract the tendency for the rate of profit to fall

• Harvey believes the best way to understand fixed capital is as a relation rather than as a fixed concept

• Harvey says how fixed capital is valued is tricky, and Marx offers three ways to do it:

  1. Depreciation
  2. Replacement cost
  3. Social average lifetime and general level of effectiveness of the fixed capital (i.e. utility)

8. The Time and Space of Capital (12-14)

• There is a constant pressure to reduce the amount of capital held in an idle state

On Chapter 12: The Working Period

• Harvey conveys an anecdote about construction in China and how buildings can be built rapidly with prefabricated parts. These parts illustrate the desire to lower turnover times as well as the concentration of capital

On Chapter 13: Production Time

• For similar reason as to why you’d want to reduce the working period, reducing production time is often lucrative
• Agriculture is a sphere where production time is most obvious and hardest to reduce
• Work in agriculture is necessarily seasonal, as crops do not need to be harvested constantly
• “Just-in-time production” is a necessary conclusion of the desire to reduce production time to the smallest possible amount of time

On Chapter 14: Circulation Time

• With capitalism as exchange value becomes more important, so does exchange itself:

  The more production comes to rest on exchange value, hence on exchange, the more important do the physical conditions of exchange—the means of communication and transport—become for the costs of circulation. Capital by its nature drives beyond every spatial barrier. Thus the creation of the physical conditions of exchange—of the means of communication and transport—the annihilation of space by time—becomes an extraordinary necessity for it. (Grundrisse, 523–4), as quoted by Harvey

• Circulation time, the spatial and physical separation of capital itself, presents a barrier to labor productivity

• Marx remarks in the Grundrisse of the “[[annihilation of space by time]]”, a tendency of capital to reduce spacial barriers and any amount of friction in the movement of capital

  • Space is fixed by friction of distance
  • Time is more important to capital than space

9. Circulation and Turnover Times (15-17)

Chapter 15: Circulation Time and Magnitude of Capital Advanced

• Marx criticizes economists for not realizing how important turnover time is
• The general point of the first part of this chapter is that more money is always needed in a production process and circulation
• The whole point of this whole chapter is that capital requires the production process to basically be continuous, and if it isn’t then additional capital will have to be brought into the process

Chapter 16: The Turnover of Variable Capital

• By reducing turnover time the profit rate will increase
• For Marx, communism means that there will be no more money and “society must reckon” with the problem of production
• When there are crises in the money market this is usually a reflection of the crises of production
• Harvey remarks (and I agree) that this chapter really illustrates how each thread in capitalism is just a piece in a larger puzzle

Chapter 17: The Circulation of Surplus-Value

10. The Reproduction of Capital (18-20)

Chapter 17

• Harvey feels that these chapters anticipate a [[consumer economy]] to come out of capitalism (and I agree)

• Harvey mentions that it’s these chapters that served as a type of inspiration for the [[input-output tables]] used in the [[central planning]] of the [[Soviet Union]] and elsewhere

• [[Rosa Luxemburg]] felt that accepting the validity of the reproduction schemas Marx lays out in these chapters meant that political agitation was pointless

  Does this presume that harmonious and never-ending capital accumulation is actually possible within a capitalist mode of production? Engels, in his preface, worried that the materials provided no support for political agitation, while Rosa Luxemburg thought that accepting the validity of these schemas made political struggles pointless. Or does Marx mean to show that harmonious accumulation is impossible under capitalism because market allocations could not possibly converge on the correct proportionalities? Would it then follow that a rational proportionate allocation of labor to different aspects of the division of labor would be possible only under communism?

• Harvey believes that the point of these schemas is impossible to determine, and leaves a gaping hole in the study of Marx

• Harvey recommends the following reading list to follow up with these:

  There is an extensive literature on the reproduction schemas. Some of it requires higher-order mathematics, and the overall emphasis is upon exploring the technical aspects of the reproduction process while relaxing some of Marx’s more restrictive assumptions. The classic texts include Henryk Grossmann, The Law of Accumulation and the Breakdown of the Capitalist System: Being Also a Theory of Crises (London: Pluto, 1992); and Paul M. Sweezy, The Theory of Capitalist Development: Principles of Marxian Political Economy (New York: Monthly Review Press, 1942). For Luxemburg’s objections, see Rosa Luxemburg, The Accumulation of Capital (London: Routledge, 1951). Survey works include Meghnad Desai, Marxian Economics (Oxford: Blackwell, 1979); Michael C. Howard and John E. King, The Political Economy of Marx (London: Longman, 1975); and Shinzabur£ Koshimura, Theory of Capital Reproduction and Accumulation (Kitchener, Ontario: DPG Publishers, 1975). For those interested in a mathematically rigorous development of the argument from a Keynesian perspective, see Trigg, Marxian Reproduction Schema, cited earlier. For a sophisticated neoclassical exploration of the schemas, see Michio Morishima, Marx’s Economics: A Dual Theory of Value and Growth (London: Cambridge University Press, 1973)

Chapter 18

• Harvey believes that these chapters play an important role in imaging the construction of an alternative to capitalism

Chapter 19

• Marx very likely got the idea for the [[circulation of capital]] from the idea that blood itself circulates throughout the body, and that blockages of this flow cause problems for the body
  • The person who discovered blood circulation as also an economist, and was the first to term [[laissez-faire]]
• Harvey again underlines that Marx saw the capitalist system as a process, a flow, a system in motion, and not a static thing

Chapter 20

• Variable capital functions as capital in the hands of the capitalist and as revenue in the hands of the worker

11. The Problem of Fixed Capital and Expanded Reproduction (20-21)

The Case of Fixed Capital

• Over-production is a problem in capitalism

  Once we dispense with the capitalist form of reproduction, then the whole problem boils down to the fact that the magnitude of the part of fixed capital that becomes defunct and has therefore to be replaced in kind varies in successive years (here we are dealing simply with the fixed capital functioning in the production of means of consumption). If it is very large one year (if the mortality is above the average, just as with human beings), then in the following years it will certainly be so much the less. The mass of raw materials, work in progress, and ancillaries needed for the annual production of means of consumption – assuming that other circumstances remain the same – does not diminish on this account; and so the total production of the means of production would have to increase in one case, and decrease in the other. This can only be remedied by perpetual relative over-production; on the one hand a greater quantity of fixed capital is produced than is directly needed; on the other hand, and this is particularly important, a stock of raw materials etc. is produced that surpasses the immediate annual need (this is particularly true of means of subsistence). Over-production of this kind is equivalent to control by the society over the objective means of its own reproduction. Within capitalist society, however, it is an anarchic element. — Karl Marx, Capital Vol. 2, chapter 20 section 11

Chapter 21

• The central question Marx asks in chapter 17 and tries to answer afterwards is “where does the effective demand come from to pay for the surplus product?” This is the question [[Rosa Luxemburg]] and [[Keynesian economics]] tries to answer

• [[Keynesian economics]] believes that everything depends on the creation of viable technology to equate the value exchanges between departments

• From vol. 3:

  even after the capitalist mode of production is abolished, though social production remains, the determination of value still prevails in the sense that the regulation of labour time and the distribution of social labour among the various production groups becomes more essential than ever, as well as the keeping of accounts on this

12. Reflections

Backlinks

• [[A Companion to Marx’s Capital Vol. 2]]