Friday, January 7, 2011

ENGELS ON CAPITAL AND SURPLUS VALUE

Thomas Riggins

In chapters seven and eight of part two of Anti-Dühring ("Capital and Surplus Value"), Engels continues his role as Marx's bulldog. Again, Herr Dühring has gone too far in his criticisms of Marx and must be put in his place by sounder judgment and sharper intellect. Dühring has claimed Marx says that "capital is born of money" and the birth pangs took place at the "opening of the sixteenth century." Dühring calls Marx's ideas a mixture of history and logic which have become "bastards of historical and logical fantasy."

This upsets Engels to no end who himself responds that Dühring has "a crude and inept manner of expressing himself." Marx's real statement on this subject is found in Das Kapital vol. 1, part 2, chapter 4 "The General Formula For Capital" where he writes: "As a matter of history, capital, as opposed to landed property invariably takes the form at first of money; it appears as moneyed wealth, as the capital of the merchant and of the usurer. But we have no need to refer to the origin of capital in order to discover that the first form of the appearance of capital is money. We can see it daily under our very eyes. All new capital to commence with, comes on the stage, that is, on the market, whether as commodities, labour, or money, even in our days, in the shape of money that by a definite process has to be transformed into capital."

But how does this transformation take place. Capital is used to invest to make more money and more capital. So how do I turn money into capital? Engels says when I take my own commodities to market I sell them to get money to buy things I need to live on. This is simple exchange. The capitalist goes to market to buy things he does not to live on; he buys them in order to sell them for what he paid plus a profit – and increment in money. "Marx calls this increment SURPLUS VALUE."

But where does it come from? Capitalism results in an increase in the values in circulation so it can't come from cheating (that would effect the distribution not the amount of values) nor from buying under or selling above the values of the commodities because the sum of values still remains the same. Yet capitalists do accumulate riches by selling dearer than they have bought."This problem," Engels says,"must be solved, and it must be solved in a PURELY ECONOMIC way, excluding all cheating and the intervention of any force – the problem being: how is it possible constantly to sell dearer than one has bought, even on the hypothesis that equal values are always exchanged for equal values?"

The most important contribution of Marx to economic thought was the solution to this problem; Engels calls it "epoch-making." Here is the solution as presented by Engels. The increment doesn't take place in the money itself, nor in the price of the commodity sold (at this stage we are dealing with the exchange of equivalents: price = value, later we see how they can differ). But something does change in the bought commodity – not its exchange VALUE but its USE-VALUE. The increment takes place during the commodity's consumption; and not just any commodity, but a very specific one.

Here is what Marx says about this from Das Kapital vol. 1, chapter VI "The Buying and Selling of Labour Power": "In order to be able to extract value from the consumption of a commodity, our friend, Moneybags, must be so lucky as to find, within the sphere of circulation, in the market, a commodity, whose use-value, whose actual consumption, therefore, is itself an embodiment of labour, and, consequently, a creation of value. The possessor of money does find on the market such a special commodity in capacity for labour or labour-power."

But how is the value of labour-power determined? Again Marx: "The value of labour-power is determined, as in the case of every other commodity, by the labour-time necessary for the production, and consequently also the reproduction, of this special article. So far as it has value, it represents no more than a definite quantity of the average labour of society incorporated in it. Labour-power exists only as a capacity, or power of the living individual. Its production consequently pre-supposes his existence. Given the individual, the production of labour-power consists in his reproduction of himself or his maintenance. For his maintenance he requires a given quantity of the means of subsistence. Therefore the labour-time requisite for the production of labour-power reduces itself to that necessary for the production of those means of subsistence; in other words, the value of labour-power is the value of the means of subsistence necessary for the maintenance of the labourer."

This also includes the cost of raising a family of little baby laborers to take his place in the next generation. Suppose a worker could produce in six hours the value of goodies he needs to live on and Moneybags gives the worker the full value of his labor power. The goodies cost $60 and that is what the capitalist gives the worker, paying him $10 an hour. The worker has also made $60 worth of goodies for the capitalist. An even exchange – no increment for the capitalist.

What to do? The capitalist will hire the worker for $5 an hour for 12 hours. This is what free labor and the labor market are all about. After 12 hours the worker gets his agreed upon wage, buys his $60 of goodies and goes home. The capitalist however has been left with $60 from the first 6 hours AND $60 from the last six hours of the worker's toil. He sells the first $60 worth of goodies and gets his money back – and sells the surplus $60 of goodies and makes a profit; a profit he did not work for but that he expropriates from the surplus value created by the worker. And this, Engels says, is how the "trick has been performed. Surplus-value has been produced; money has been converted into capital." Marx has thus demonstrated how surplus-plus value is created and has revealed "the core around which the whole existing social order has crystallized."

Now, under capitalism there is a "prerequisite" without which the capitalist can not get his hands on surplus-value and that is he must go to market and hire a FREE LABOURER. That is, a worker who can sell his labour power as a commodity and it is the only commodity he can sell. This is the condition working people have found themselves in since the end of the fifteenth century and the disintegration of the feudal order. Marx says "It is clearly the result of a past historical development." Marx and Engels appeared after this transitional period had been underway for about 400 years and we are two centuries further on than they. The present great world wide capitalist depression may or maynot be the "final conflict" which will mark the disintegration of capitalism and the arrival of the socialist order but as Marxists we must always be open to that possibility and continue to hold down the fort.

What is the upshot of all of Dühring's criticism of Marx and his proposed explanation of how capitalism works? Well, we need not go over all of Dühring's arguments and bombast against Marx. Suffice it to say that Engels concludes that Dühring actually steals his ideas from Marx, puts them forth in his own words and style and attacks Marx to cover up his theft; as Engels puts it Dühring "commits a clumsy plagiarism of Marx."

Just what, then, is the difference in Dühring's conception of capital and Marx's? For Marx every class-dominated mode of production sweats surplus labour out of the productive class – be they slaves, serfs, or modern workers (wage slaves). But it is only when, under a regime based on commodity production for a market, when the means of production employ surplus labour in the form of surplus value, that we have capitalism. This is a specific historical stage in the evolution of production. Dühring says any system that uses "surplus labour in any form" produces capital. He thus blurs the distinctions between different modes of production and makes capital an eternal law of nature with regard to economic activity.

What is more, for Dühring surplus value becomes simply the earnings of capital and is equivalent to profit. Whereas Marx makes it very clear in volume one of Das Kapital that surplus value should NOT be confused with profit. Dühring appears to only credit the capitalist in his role as a manufacturer as generating profit (surplus value.) Since Dühring claims to be explaining what Marx believes, Engels points out that Dühring should have paid more attention to what Marx ACTUALLY wrote. The profit made by the MERCHANT, Marx clearly says, is also a part of surplus value and the merchant can make a profit only because the industrial or manufacturing capitalist sells his product to him BELOW its full value "and thus relinquishes to him a part of the booty."

There are other subforms of surplus value besides manufacture's and merchant's profit, e.g., interest and ground-rent. But the explanations of these subdivisions will have to await volumes two and three of capital: only the outlines are being laid down in volume one. The complete explanation awaits "a scientific analysis of competition" and we can't make that analysis until the real inner nature, the essence, of capital is revealed in volume one. Engels gives as an analogy the understanding we have of the seeming motions of the planets which is based on knowledge of their real motions "which are not directly perceptible to the senses." [Empiricists take note!] Nevertheless, Marx gives us enough information in volume one to at least grasp in broad outline the subforms of surplus value to be dealt with in the later volumes.

It is because he doesn't know how competition works and also doesn't understand what Marx has said about it in volume one of Das Kapital, that Herr Dühring can't figure out how capitalists get back all that they have put out plus the surplus product at prices way above "the natural outlays of production." Where does this profit come from? He can't answer this question so he flees from the field of economics to that of politics and claims that the capitalist imposes a surcharge on his products by means of force. But Engels says FORCE can seize wealth but cannot produce it. Not only that, but Dühring leaves unexplained the ORIGIN of force itself. Dühringian economics gets us nowhere.

But all is not lost for Herr Dühring. His research finally leads him to some correct answers, although his distinctive way of expressing himself is not as clear as we might wish. Engels provides two quotes from Dühring that are on the right track. "IN EVERY CASE THE NET PROCEEDS OBTAINED BY THE UTILIZATION OF LABOUR-POWER CONSTITUTE THE INCOME OF THE MASTER...." And: "The characteristic feature of earnings of capital is that they are AN APPROPRIATION OF THE MOST IMPORTANT PART OF THE PROCEEDS OF LABOUR-POWER."

What, Engels asks, is the INCOME OF THE MASTER but the surplus product the worker makes after the deduction for wages? What is THE MOST IMPORTANT PART OF THE PROCEEDS OF LABOUR-POWER but that part which comes after the worker has created the value of his own maintenance – i.e., surplus value? So where did Herr Dühring finally get a clue to the correct explanation of the relation between capital and surplus value? He got it, Engels says by "in his own style, DIRECTLY COPYING from CAPITAL"[i.e., volume one of Das Kapital]. So much for Herr Dühring's alternative theory of economics.

Monday, January 3, 2011

Case: Thoughts on left criticism of Obama


Thoughts  on Left criticism of Obama:

The Left press and blogosphere is rife with analyses on the mistakes of the Obama administration that allegedly 'caused' the Republican resurgence in the mid-term elections.  Chiefly Obama's stimulus effort is scored as half-hearted, less than half the amount needed using the most precise Keynesian calculations. And from the perspective of Hyman Minsky's Post-Keynesian followers, the absence of a strong employer of last resort strategy gravely threatens a country's ability to recover stability or sustainable growth from the chaos of a 'government-constrained great depression' (the more accurate term for this crisis than 'the great recession'). 

On the social safety net front, increasing the economic rights of the American people, Obama's (and Pelosi's and Harry Reid's, Chris Dodd's and Barney Frank's)  accomplished reforms in health care and finance are seen as compromised by excessive concessions to corporate interests. It has shocked some to discover, or re-discover, some of the basics of class politics in this era of giant transnational corporations. To  left and even most liberal thinking forces, the ideological arguments for universal health care and for more constrained and sustainable financial markets disciplined to more useful investment strategies seem unassailable, stronger than ever from an historical perspective. The uneven but nonetheless unmistakable worldwide advance of objective socialization processes in the global economy and national economies are strongly reflected in the ever increasing degree and sophistication of regulation in markets, and in the advancing sector of public and quasi public goods, including infrastructure, in advanced economies. More and more these processes have the tinge of inevitability, though we should have learned to be careful of such appearances. They are grounded in both technological and interconnected social evolution, especially the division and re-division of labor. Given the vast transformations in the class and occupational diversification since the 18th century dawn of capitalism, it's likely a longstanding idealist tendency on the left that seeks to reduce them by referring to capitalism as single system throughout, even though certain features certainly persist.  

The socialization tendency, for example, regardless how inevitable it may be, paradoxically makes corporations and the rich ever more dependent upon the public sector for essential services and infrastructure, and thus in proportion, ever more -- not less --  fierce in their efforts to manipulate and dominate public institutions   This is obviously an inherently corrupting process however and thus compels --- again, and not for the first time -- a no less fierce defense of democracy and democratic institutions. The expansion of democratic rights -- i.e. entitlements -- inherently challenges unjustified wealth inequality.  Yet some on the left draw a different conclusion, namely, that democratic struggle in all  state and public  institutions is a dead end, and the president's departure from the ideal an illustration of this, rather than simply a testimony to its difficulties, and importance.

In foreign policy, Obama's efforts to "draw down" wars in Iraq and Afghanistan have been excoriated as false and dishonest and, indeed, simply a continuation of 20th Century imperial policies.

In most cases  critics decline to place the president's 'defects' in context of what is politically possible given the balance of forces in and between Congress, state legislatures and governors, the Supreme Court, and not least --  the armed forces and their institutions and vast economic clientele. "Out Now!", "Jobs Now", "nationalize the banks" are slogans that epitomize these tendencies. They prefer instead to measure his performance ideological standards. Even the most trenchant and credible critics of the president's 'compromises' -- such as Paul Krugman -- frequently preface their objections with "....it's unknown if a better bill was politically feasible, but.....". The "but" usually includes the argument that its better to hold a more pure, but failed, position, than legislate a piece of sausage which most folks would prefer not to inspect too closely.

The problem with the hatred or disgust of sausage making is that all legislation, in fact all governing, is really like sausage making. The problem with primarily ideological objections to the president is that they are too often distractions from the harder mobilizing and organizing activity that's at the heart of the challenges to move the democratic restructuring agenda forward, and send its enemies to the dustbin of history. To expect any elected president to fall on his or her sword is, well, foolish.

More sober analysis, it seems to this writer, points out that the weaknesses in the stimulus response, the reforms, and the setbacks in the mid-term elections are, more than ever, calls to arms at the grass roots. Overcoming the corrupting forces of monopoly corporations and their owners on the political process needs exponentially more horsepower from the bottom up. The failure and nullification of existing democratic institutions, the spread of ungovernability, are the greatest threat posed by both the current assaults from the Right, the arrogance of the military, and especially the failure of existing institutions to effectively counter the economic crisis. It's an opportunity for the Left, broadly speaking, that has not presented itself since at least the Sixties, and perhaps even the Great Depression. But seizing the opportunity means a strategic re-focus on breaking out of its electoral and governing isolation, breaking out of the political sidelines.

Local power is the chief link the chain of tactics I think we need to grasp, to borrow Lenin's famous metaphor. It's not the only link, but the one most accessible to us given the organizational chaos on the Left. And the essence of the challenge in local electoral battles is how to galvanize, neighborhood by neighborhood, workplace by workplace, majority coalitions of workers, nationally and racially oppressed, women, youth, seniors, small business, democratically minded intellectuals and liberal corporate interests that expand the mandate of local government to take aggressive action on the immediate needs of the people, AND become much more foundations on which to force state-wide and, in turn, national institutions to turn back demagogic and corrupted attacks and address the key problems.

In some ways I am convinced that the organizational chaos is largely a product of our relative electoral isolation -- and thus isolation from the real vicissitudes of exercising working people's great power.

jcase









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John Case
Harpers Ferry, WV