Capital Volume 1, Chapter 6: The Sale and Purchase of Labour-Power

What Marx did in the last chapter in reaching the impasse that we currently find ourselves in was of course to deal with, in order to dispense with, the theories of vulgar bourgeois political economy regarding the source of profit (and hence capital). What characterises these theories as a whole is a failure to distinguish between use-value and exchange-value, a failure to see that in the exchange of commodities, while what changes hands is use-value, what is exchanged is value. And since we know that value, although it appears in circulation, arises in production, in that it is the determined by the quantity of labour expended in the production of commodities, we are already close to resolving our problem. We shall see that the conclusion that surplus-value arises in circulation and does not arise in circulation is not such a contradictory finding, for we shall see that surplus-value arises in part in circulation and in part in production, i.e. outside of circulation.

Vulgar bourgeois political economy now dispensed with, Marx proceeds with his own argument. He summarises: we know that M–C–M΄ exists, because people do it. We know that ΔM, the extra value with which value self-valorises itself cannot originate within the circuit of capital, within M–C–M΄. But we know that it manifests itself there (in the form of M΄, i.e. M+ΔM). Marx now effects a reduction by elimination with regard to the circuit of capital, with regard to M–C–M΄, to see exactly where surplus-value can, and does, come from.

More (pdf: 128 KB): capital_v1_ch6

Previous post: Chapter 5: Contradictions in the General Formula

Nex post: Chapter 7: The Labour Process and the Valorisation Process

Read Full Post »

Capital Volume 1, Chapter 5: Contradictions in the General Formula

We have now established that capital is self-valorising value. The killer question now is, established what capital does, how does it do it? Whence the ΔM? But as soon as we ask this question, problems present themselves at every turn.

First problem: the difference between the simple circulation of commodities and the circuit of capital is only the sequence in which the two inverted acts of sale and purchase occur. How can such a simple difference of form introduce such a radical difference of content?

Second problem: this formal difference is moreover only a subjective difference, since it is only different from the point of view of the process’s mediator, the buyer-seller; for the other two people involved it would be the same whether they were taking part in C–M–C or M–C–M.

But, as we have established, M–C–M must be M–C–M΄, M–C-M+ΔM (at least in intention, and therefore in possibility). Where does the ΔM come from, and how does it arise? Since the circuit M–C–M is circulation, Marx reasons, we need to look to see where, and how, in circulation the valorisation of values occurs (and in so doing we will surely find we have solved our problems above). Marx now tries three different ways of looking at M–C–M to try to find an answer to these questions.

First attempt: the exchange of equivalents

Let us assume for simplicity’s sake that two commodity owners exchange their products, with money acting as money of account, i.e. it is used after the exchange to settle outstanding balances and does not enter into the exchange of commodities as such. What we have is something approximating to simple barter. It is undoubtedly the case that there is a possibility of advantage accruing to one or another – probably both – parties; indeed, were it not so (or not believed to be so) the exchange would not take place. Each gains a use-value she did not have and which she wanted. It is also the case that such an exchange could give rise to an increase in productivity – more use-value for less labour – since the motivation for the exchange may well be that each of the contractees produces her own commodity more productively than the other. But if the commodities are equivalents (which is both normal and our assumption here) then no gain with respect to exchange-value can occur: value is exchanged for value; no new value appears.

What happens when money does indeed enter into the transaction, when sale and purchase form two distinct acts? We have already seen that value is not determined in circulation (although it is realised here), but in production, in the labour expended in producing the commodity. This is indicated that the price of a commodity is established before it enters into circulation. Moreover, as we have seen, the exchange of commodities mediated by money passes through a series of metamorphoses – not changes of substance, merely of form. This means that, independently of the fact that use-values change hands, the same quantity of value, i.e. the same quantity of social labour, remains throughout the process in the hands of the same commodity-owner, first in the shape of her own commodity, then in the shape of the money realised by its price, and finally in the shape of the commodity into which the money is transformed. Again, no new value appears (and no value is lost). Any gain which might accrue to either party pertains solely to use-value.

More (pdf: 95 KB): capital_v1_ch5

Previous post: Chapter 4: The General Formula for Capital

Next post: Chapter 6: The Sale and Purchase of Labour-Power

Read Full Post »

Capital Volume 1, Chapter 4: The General Formula for Capital

I  From the circulation of commodities to capital

Marx begins by making two observations about ‘capital’ (a term he has yet to define). First, he notes that commodity circulation is the starting point and historical presupposition of capital (Marx will say that capital is money – hence the necessity of commodity production, which leads to money – which differentiates itself first from money by the manner of its circulation). Marx clarifies ‘commodity circulation’ as ‘the production of commodities and their circulation in its developed form, namely trade.’ Second, he notes that the modern history of capital starts to unfold from the emergence of world trade and the world market, from the sixteenth century.

Marx now makes an historical observation: ‘Historically speaking, capital invariably first confronts landed property in the form of money; in the form of monetary wealth, merchants’ capital and usurers’ capital.’

Money as capital only distinguishes itself from money in general by virtue of its different form of circulation (with the significant consequence that if you look at, say, a €5 note you cannot tell if it is capital or not, it is simply money).

II  The cycle of commodities and the cycle of capital

The movement of commodity circulation – C–M–C – arose because of the conflict between the two distinct tasks of realising value and obtaining use-value – a conflict which itself arises from the conflict between individual private labour and the social division of labour – that direct exchange (barter) broke into two steps, whose overall rubric could be ‘selling in order to buy’.

But alongside C–M–C we find another circulatory movement: M–C–M, buying in order to sell. This is the cycle of capital.

Clearly, M–C–M would be absurd if the second quantity M was not greater than the first. Nevertheless, independently of this fact, it is necessary to establish the similarities, and the differences, between the two cycles of C–M–C and M–C–M.

III  Similarities between the cycle of commodities and the cycle of capital

1. Both are composed of the same elements.
2. Each cycle is formed by a unity of two opposite phases, a sale and a purchase.
3. Each circuit is mediated through the participation of three agents, one who buys, one who sells, and one who both buys and sells (and it is this third agent that gives the process its unity; for the other two the circuit is incomplete.

More (pdf: 113 KB): capital_v1_ch4

Previous post: Chapter 3: Money, or the Circulation of Commodities

Next post: Chapter 5: Contradictions in the General Formula

Read Full Post »