[OPE-L:2903] Re: starting point and capital

From: Gil Skillman (gskillman@mail.wesleyan.edu)
Date: Tue Apr 25 2000 - 13:41:50 EDT

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In response to this comment by me,

>>in my reading of Marx, capital can indeed be "conceived, posited, or
>>defined" without wage labor. The latter, rather than an aspect of the
>>*definition* of capital, is a *consequence* of particular developments in
>>the social relations corresponding to the circuit of capital (developments
>>unspecified in Vol. I, but suggested in Vol. III and elsewhere) that
>>capitalists predominantly hire and subsume labor power *as a commodity*
>>rather than either a) lending value producers the wherewithal to finance
>>means of production, as in the circuit of usury capital, or b) purchasing
>>labor *services* as a commodity within labor processes run by producers
>>(i.e., no formal subsumption), as in the putting-out system.

Alfredo responds:

>I think that this is primarily a methodological difference.

I'm not convinced of that, since at this point we're only discussing what
Marx actually says or validly establishes in Part 2 of Vol. I and
elsewhere. It's probably true that this discussion has been prompted by
differences in methodological priorities (see my upcoming response to
Rakesh for an illustration of this), but right now we're on (or should be
on) the same page: what did Marx actually say, and what claims did he
validly prove?

> In my view, Marx
>derives capital in chapter 4 starting from circulation (M-C-M': the form of
>appearance of capital, value that begets value).

Well, actually he doesn't "derive" it, in the sense of making an argument;
he *observes* it: "But alongside this form we find another form, which is
quite distinct from the first: M-C-M..." (p. 248, Penguin edition), and
then modifies this to M-C-M' on the basis that the circuit doesn't make
sense unless M'>M. And since no argument is given in introducing this
circuit, no basis is established here for ruling out usury capital or
merchant's capital extended to small producers (which circuits, to
anticipate a bit, involve the creation and capitalist appropriation of
*newly created* value, and so do not involve mere redistribution) as
instances of M-C-M. In other words, no basis has been given in chapter 4
for requiring wage labor as part of the *definition* of capital.

> Then he analyses how this
>can exist systematically, i.e., as the *social* form of production. His
>answer is that capital cannot arise out of circulation *on a systematic

Several points here. First, it strikes me that this formulation grants, or
at least avoids, my point: wage labor is not part of the *definition* of
capital, but a *consequence* of particular (and as yet unstated)
developments in class relations that make wage labor a necessary condition
for the "systematic" reaping of surplus value.

Second, so far as I can see Marx makes no stipulation whatsoever in Chapter
4 or 5 about particular "social" relations of production. Thus, again,
wage labor is not invoked directly or indirectly as part of the
*definition* of capital.

And, critically, third: Marx's extended argument in Ch. 5 to the effect
that surplus value cannot arise simply out of circulation, "systematically"
or otherwise, is an utter red herring, for two reasons: on one hand, no
argument is called for, since as it turns out this fact is true *by his
definition* rather than by derivation--it's just that this aspect of his
Ch. 4 definition is not revealed until Ch. 5; on the other hand,
price-value disparities may be required for capitalist *appropriation* of
surplus value, even if they are insufficient for its *creation*--and an
argument on the former point is necessary, because both *value creation*
(VC) and *value appropriation* by capitalists (VA) are aspects of Marx's
*definition* of surplus value made explicit in Ch. 5.

Since the above statements are both complex and absolutely central to the
issue here, let's step back and look at them more closely. On the first
point: Marx defines surplus value as the differential between M and M' in
the circuit of capital such that "[t]he value originally advanced,
therefore, not only remains intact while in circulation, but increases its
magnitude, adds to itself a surplus-value, or is valorized [verwertet
sich]. {N.B.: a footnote adduced here notes that this is a neologism by
Marx, and that there is no extant word in English for this term, so the
translators coin the word "valorization."} And this movement converts it
into capital." [p. 252]

Now, no law of logic or rule of English or German usage outlaws the
possibility that the difference between M and M' corresponds to a mere
redistribution of existing value. From the capitalists' point of view,
value has certainly "begetted" value: they get back more than they started
with. The German term, and the English translation, are newly coined, and
there's no way of knowing on the basis of the above-quoted passage that
Marx requires something stricter as a matter of *definition.*

This isn't made clear, in fact, until Chapter 5, where he argues that even
given a redistribution between parties A and B, "the value in circulation
has not increased by one iota." [p.265] That's the first we hear that this
condition is part of what is stipulated by the as-yet mysterious term

OK, suppose that we grant this restriction. Then all of the remaining Ch.
5 argument to the effect that surplus value cannot emerge from commodity
exchange, *considered by itself*, is **redundant**, since by Marx's
*definition* in Chapter 1, increasing value requires production, and
exchange is not production. Thus, if it had been made clear in Ch. 4 that
"valorization" presupposes the creation of new value, then all of the
argumentation from mid-p. 262 to top-p. 266 would have been rendered
superfluous, since the latter only elaborates what we might already have
known, had terms been fully defined to begin with.
But now the second point: value creation (VC) is only *one* aspect of
Marx's definition of surplus value. The other aspect is value
appropriation (VA): capitalists must be able to *appropriate* some portion
of the newly created value--created by someone else, that is-- made
possible by the initiation of a circuit of capital, or surplus value does
not exist. Marx makes this clear on p. 268 of Ch. 5, where he says that
commodity-owners can't valorize *their own* values, and it is "therefore
impossible that, outside the sphere of circulation, a producer of
commodities can, without coming into contact with other commodity-owners,
valorize value, and consequently transform money or commodities into
capital." [p. 268]

As a consequence, value-price disparities are necessary for the existence
of surplus value, *as Marx defines the term*, if they are necessary, within
given social formations supporting circuits of capital, for VA,
*regardless* of whether they are necessary for VC. And on this quite
central point, the possible connection between VA and price-value
disparities, Marx's Ch. 5 argument is entirely silent.

Again to anticipate a bit, targeted price-value disparities are *required*
for VA in the historical cases of usury capital and merchant capital
extended to small producers. Since these circuits of capital support VC,
some of which the capitalists appropriate via interest payments (in the
case of usury capital) or piece rates below average value created (in the
case of the putting-out form of merchant's capital), they represent
instances of surplus value in Marx's strictest sense--a point he repeatedly

Conclusion, the bulk of Marx's Ch. 5 argument is doubly beside the point.
[The remainder of his argument is also invalid, but for a different reason,
requiring a different post.]

>This argument does not deny that unequal exchange, 'profit upon
>alienation', 'fleecing' of the consumers by commercial capital, exploitative
>interest rates, etc are impossible: of course they are possible, and they
>have existed for thousands of years.

This is completely beside the point. I am not talking about instances of
the circuit of capital that involve mere redistribution of value that
pre-existed the initiation of that circuit. Indeed, from the vantage point
of Ch. 5 we know that Marx does not consider these instances of "surplus
value"--and thus "capital" in the strict sense--at all. All along I have
limited attention to cases of the circuit of capital that satisfy *all* of
Marx's conditions for surplus value, and thus "capital" in the strict
sense--that is, *both* VC and VA. These conditions are satisfied by the
canonical case of industrial capital, of course, but they are also
satisfied by instances of usury and merchant capital extended to producers
to support the creation of new value--again, as Marx repeatedly affirms.

> But they cannot be *generalised*, i.e.,
>these forms of exploitation do not provide the basis for the existence of a
>stable and self-sufficient *system* of production.

First, even if I accept this, it concedes that wage labor is not part of
the *definition* of capital, but rather a *consequence* of a given state of
class relations. But second, *why don't* these alternative systems of
exploitation "provide the basis for the existence of
a stable and self-sufficient *system* of production"? Marx makes no
argument whatsoever with respect to this claim in Chapters 4 or 5, where he
defines what he means by "capital." Indeed, he doesn't really make the
argument anywhere in Vol I, except indirectly. The best hints are found in
the chapters on interest in V. III, the historical chapter on merchant
capital in V. III, and in the discussion of usury in the Economic
Manuscript of 1861-63. Could this argument be made? Of course--but it
would involve explaining how the state of class relations dictates that
capital hires and subsumes labor power--i.e., establishing the latter as a
historically specific *consequence* rather than a matter of *definition.*

>Even though some people
>can live out of this type of exploitation, it is a fallacy of aggregation to
>presume that everyone can become rich by exploiting everyone else.

And it is a fallacy of division to suggest that this point, albeit true in
itself, has anything to do with the issue at hand (as Marx does in Ch. 5,
in making the similar claim that "The capitalist class of a given country,
taken as a whole, cannot defraud itself." [p. 266]) It is *beside the
point* that everyone can't exploit everyone else, just as it is *beside the
point* that the capitalist class can't defraud itself. What is at issue is
whether one class, i.e. capitalists, can systematically exploit another
class, i.e. workers, by a process that integrally involves targeted
value-price disparities, as in the historical cases of usury and merchant
capital extended to small producers. And *no valid argument* in Chs. 4-6
of Vol. I shows that this cannot be done. As I've argued elsewhere, any
argument that does so would have to proceed along historically contingent
strategic lines (as Rakesh's does, at least implicitly) rather than
value-theoretic ones.

>In sum, M-C-M' is the *form* of capital, which can potentially represent many
>different forms of exploitation, opportunistic behaviour and so on. However,
>the point about capital as the social mode of production (including the
>separation of the workers from the means of production, wage labour as the
>social form of labour and generalised commodity production) is this: Only in
>this case can M-C-M' become systematic and provide the principle of social
>organisation and of social production, rather than existing in the 'pores' of
>(any type of) society.

Same arguments as above: this does not show that wage labor is part of the
*definition* of capital; Marx makes no argument to the above effect in the
section of Capital I'm discussing, and does so only indirectly in the
remainder of Vol. I; and any argument sufficient to establishing this claim
would have to proceed along different lines than those established in
Chapters 4 and 5.


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