david harvey 9 10 11 capital accumulation

Considerable attention has been paid in the preceding chapters to the various ways in which relative and absolute surplus-value can be procured. When Marx sets up a conceptual bifurcation of this kind, he invariably brings the duality back into a state of unity: finally, there is only one surplus-value, and its two forms are conditional on each other. It would be impossible to gain absolute surplus-value without an adequate technological and organizational basis. Conversely, relative surplus-value would have no meaning without a length of working day that allowed the appropriation of absolute surplus-value. The difference is only one of capitalist strategy that “makes itself felt whenever there is a question of raising the rate of surplus-value” (646). As usually happens when Marx moves to a point of synthesis, he both highlights materials already presented and takes them to a different vantage point whence it is possible to see the terrain of capitalism in a novel way. The new perspectives in chapter 16 have been more than a little controversial, and they therefore call for careful scrutiny.
Consider, first, the concept of the collective laborer, already appealed to several times in earlier chapters. Surplus-value is no longer seen as an individual relationship of exploitation but as part of a larger whole in which laborers, in cooperation and spread across the detail division of labor, collectively produce the surplus-value that the capitalists appropriate. The difficulty with this concept is to define where the collective laborer begins and ends. The simplest way would be to take, say, the factory as a whole and designate everyone in it, including the cleaners, janitors, warehouse managers and even trainees, as part of the collective laborer, even though many workers of this sort play no direct part in the actual production of commodities.
In order to work productively, it is no longer necessary for the individual himself to put his hand to the object; it is sufficient for him to be an organ of the collective labourer, and to perform any one of its subordinate functions. (643–4)
But a lot of labor does not take place in factories, and the tendency in recent times has been to resort to outsourcing and subcontracting behind which lie even other subcontractors. And what do we say about advertising, marketing and design functions as well as business services that are essential to the selling of commodities but are usually but not always separated from immediate production activities? Or do we confine ourselves solely to activities within the factory? The exact definition is hard to come by, and there seems to be no exact solution—hence the controversy. But without the help of such a concept, it would be difficult to make the move toward a more macro-theoretic approach to the dynamics of capitalism. So Marx plows ahead, asserting that the analysis so far “remains correct for the collective labourer, considered as a whole,” even as “it no longer holds good for each member taken individually.”
The second move is to contrast this broadening of the definition of productive labor with a narrowing of its compass such that “the only worker who is productive is one who produces surplus-value for the capitalist.” To depict everyone else as “unproductive” risks an emotive reaction because it sounds like a slur on all those who work extremely hard to make ends meet. But, as Marx hastens to point out, under capitalism, “to be a productive worker is therefore not a piece of luck, but a misfortune” (644). Marx’s notion of “productive” is not normative or universal, but a definition historically specific to capitalism. As far as capital is concerned, those who do not contribute to the production of surplus-value are considered nonproductive. The task for socialism would therefore be to redefine “productive” in a more socially responsible and beneficial manner.
But even within the context of capitalism, there are legitimate challenges on the issue of how “productive” might be defined. Feminists have long argued, for example, that unpaid domestic labor reduces the market value of labor-power and is therefore productive of surplus-value for the capitalist. Marx does not address this issue, but he does take up the question of the supposedly “natural basis” of productivity, and his analysis provides some clues as to how he might have approached some of these other questions. Productivity, he concedes, can be “fettered by natural conditions” or advantaged because “the greater the natural fertility of the soil and the kindness of the climate, the smaller the amount of labour-time necessary for the maintenance and reproduction of the producer.” All other things being equal, “the quantity of surplus labour will vary according to the natural conditions within which labour is carried on, in particular the fertility of the soil” (647–8). There is no reason not to say, therefore, that surplus labor will equally vary according to the social conditions (e.g., the productivity of family labor). We leave aside some odd passages that echo nineteenth-century thinking on environmental determinism and the domination of nature (“where nature is too prodigal with her gifts, she ‘keeps him in hand like a child in leading strings’”); Marx then concludes that “favourable natural” (to which we might now add social) “conditions can provide in themselves only the possibility, never the reality of surplus labour, nor … the reality of surplus-value and a surplus product” (649–50). That is, the dynamic relation to nature (or to daily life conditions and household labor) forms a necessary but not sufficient backdrop to the social processes and class relations whereby surplus-value is created and appropriated.
Marx urges us to recognize that the “capital-relation arises out of an economic soil that is the product of a long process of development,” such that the productivity of labor “is a gift, not of nature, but of a history embracing thousand of centuries” (647). Furthermore, he reminds us, “before [the laborer] spends [leisure time] in surplus labour for others, compulsion is necessary.” And the ultimate irony is that “both the historically developed productive forces … and its naturally conditioned productive forces, appear as productive forces of the capital into which that labour is incorporated” (651). The crux of the matter for Marx, rightly or wrongly, always lies in the specific configuration of surplus-value appropriation by capital from labor in the matrix of elements that define the totality of an ever-evolving capitalist mode of production. Had he addressed the issue, almost certainly Marx would have taken up the travails of domestic labor in the same way as he treats of the relation to nature (hinted at in his footnote on page 518).
The two moves, of both broadening and narrowing the definition of productive labor, are not independent of each other. Taken together, they help Marx move from an individual micro-perspective, in which the dominant image is of the individual worker being exploited by a particular capitalist employer, to a macro-analysis of class relations in which it is the exploitation of one class by another class that takes center stage. This class perspective is going to dominate in the remaining chapters.
Interestingly, all forms of economic theory encounter problems of some sort in moving from a micro- to a macro-theoretical terrain. Bourgeois political economy had no way to make the move since it had (and still has) no theory of the origins of surplus-value. Ricardo ignored the problem entirely and while John Stuart Mill at least recognized that it had something to do with labor he could not identify exactly what because he could not see the difference between what labor gets and what labor makes. Alas poor Mill: “on a level plain,” scoffs Marx, “simple mounds look like hills, and the insipid flatness of our present bourgeoisie is to be measured by the altitude of its ‘great intellects’” (654). While Marx’s theory of surplus-value does facilitate the move, the way he does it, as we have seen, is not above criticism. But we, too, have to plow on in order to harvest the fruits of his thinking.
The following two chapters do not pose any substantial issues. In chapter 17, all that Marx does is to recognize that surplus-value will vary according to three variables: the length of the working day, the intensity of labor and the productivity of labor, so that capitalists have, in effect, three strategies they can deploy. The diminution of possibilities on one dimension can be compensated for by resort to another. The underlying point is to emphasize, as Marx so often does, the flexibility of capitalist strategies in the search for surplus-value: if they cannot get it this way (by increasing intensity) then they will get it that way (by increasing the hours of labor). I emphasize this point because Marx is so often depicted as a rigid thinker operating with rigid concepts. Chapter 18 merely goes over (once again!) various formulae for interpreting the rate of surplus-value. There is a lot of repetition of this sort in Capital. It sometimes reads as if Marx is nervous that we have not quite got the point, so he feels constrained to repeat it just to make sure.
CHAPTERS 19–22: WAGES

The short chapters on wages, chapters 19–22, are relatively self-explanatory. Consequences flow, as might be expected, from the fact that it is the representation in money-form—wages—rather than the value of labor-power that provides the field of social action. This immediately poses the problem of the fetish mask that hides social relations beneath the ferment of representational politics. Marx begins, however, by reminding us that there is a huge difference between “the value of labor” (the term that classical political economists used) and “the value of labor-power.”
It is not labour which directly confronts the possessor of money on the commodity-market, but rather the worker. What the worker is selling is his labour-power. As soon as his labour actually begins, it has already ceased to belong to him; it can therefore no longer be sold by him. Labour is the substance, and the immanent measure of value, but it has no value itself.
To think otherwise is to engage in a tautology, in effect to speak of the value of value.
In the expression ‘value of labour’, the concept of value is not only completely extinguished, but inverted, so that it becomes its contrary. It is an expression as imaginary as the value of the earth. These imaginary expressions arise, nevertheless, from the relations of production themselves. They are categories for the forms of appearance of essential relations. That in their appearance things are often presented in an inverted way is something fairly familiar in every science, apart from political economy. (677)
In other words, the value of labor is a fetish concept that disguises the idea of the value of labor-power and thereby conveniently evades the crucial question as to how labor-power became a commodity.
The only way in which classical political economy could resolve the problem of what it was that fixed what it incorrectly called the value of labor was to appeal to the doctrine of supply and demand. This doctrine has reappeared several times in Capital, but Marx is at his most explicit here in rejecting its explanatory value. Even classical political economy
soon recognized that changes in the relation between demand and supply explained nothing, with regard to the price of labour or any other commodity, except those changes themselves, i.e. the oscillations of the market price above or below a certain mean. If demand and supply balance, the oscillation of prices ceases, all other circumstances remaining the same. But then demand and supply also cease to explain anything. The price of labour, at the moment when demand and supply are in equilibrium, is its natural price, determined independently of the relation of demand and supply. (678)
This independent determination Marx has already defined in his analysis of the buying and selling of labor-power. It is fixed by the value of the commodities needed to reproduce the worker at a given standard of living in a given society at a given time. Continuing to talk about the value of labor instead of the value of labor-power leads into all kinds of confusions. So Marx then tries to clarify matters by offering (once more!) a useful brief résumé of the theory of surplus-value on page 679.
But the laborer can be remunerated in different ways—by the hour, the day, the week or the piece. Chapter 20 is about time wages and how the time-wage system works. There is nothing very problematic here, except we must remind ourselves that the way in which this is being worked out in the market disguises the underlying social relation. Chapter 21 is about piece wages, the advantage of which for the capitalist is that workers can be forced to compete with one another in terms of individual productivity. Excessive competition between workers drives productivity up and wages down, quite possibly below the value of labor-power. On the other hand, competition between capitalists is likely to drive wages upward. So we end up once more with the idea that there is some equilibrium point where competition between capitalists and competition between workers is producing an actual wage in the market which adequately represents the value of labor-power.
The section on wages culminates in chapter 22, with an examination of national differences in wages. Marx here briefly departs from his tendency to analyze capitalism as if it were a closed system. There is an opening here to examine uneven geographical development in a globalizing system. But the treatment is too brief to go far. If the value of labor-power is fixed by the value of the basket of commodities needed to support the laborer at a given standard of living, and if that standard varies according to natural conditions, the state of class struggle and the degree of civilization in a country, then plainly the value of labor-power stands to vary geographically (from country to country, in this case) in significant ways. The history of class struggle in Germany is different from that in Britain or Spain, for example, and so there are national differences in wages (actually, there are often significant regional differences, too, but Marx does not consider that here). Similarly, variations in productivity in those industries that are producing wage goods in different parts of the world produce differentiations in the value of labor-power and wage rates. A low nominal wage in a highly productive country translates into a higher real wage, and vice versa, because workers command more goods with the wages they receive (this is what is now referred to as purchasing-power parity). So what happens to trade between countries under these conditions, and how will competition between the different countries work? Marx does not probe deeply into the question, since he mainly seems interested in how real wages and nominal wages differ primarily because of variations in productivity in the wage-goods industries in the different countries. The result will be contrasting dynamics between countries (for these were Marx’s units of comparison) in how capitalism develops and how surplus-value is being pursued strategically and extracted. Almost certainly this would lead, if Marx had taken the matter further, to a serious questioning of Ricardo’s doctrine of comparative advantage in foreign trade, but for some reason Marx chose not to pursue that line of argument further here. I have to say I find it hard to get excited about these chapters on wages, since the ideas are fairly obvious and the writing rather pedestrian.
PART VII: THE PROCESS OF ACCUMULATION OF CAPITAL

Part 7, however, is immensely interesting and insightful, for it is here that Marx takes up “The Process of Accumulation of Capital” as a whole. He here constructs what might best be called a “macro-analysis” of the dynamics of a capitalist mode of production. This is, unquestionably, the culminating argument of Volume I of Capital. A whole battery of earlier insights are brought together to create what we would now call a series of “models” of capitalist dynamics. It is vital, however, in reading part 7 to bear in mind the nature of the assumptions. Marx’s conclusions are not universal statements but contingent findings, based on and limited by his assumptions. We forget this at our peril. There are far too many commentaries on Marx’s work, both favorable and unfavorable, that pass over into serious misinterpretation because they neglect the impact of his assumptions. One of the most famous theses advanced here, for example, is that of the tendency toward the increasing immiseration of the proletariat and the production of ever greater class inequality. This thesis is contingent on Marx’s assumptions, and when those assumptions are relaxed or replaced, the thesis does not necessarily hold. I get extremely irritated with attempts to prove or disprove Marx’s findings in these chapters as if he were setting out his conclusions as universal truths rather than as contingent propositions.
Marx specifies the assumptions in the preface to part 7. He states that
the first condition of accumulation is that the capitalist must have contrived to sell his commodities, and to reconvert into capital the greater part of the money received from their sale. In the following pages, we shall assume that capital passes through its process of circulation in the normal way. The detailed analysis of the process will be found in Volume 2. (709)
The implication of “the normal way” is that capitalists have no problem selling their goods at their value in the market or recirculating the surplus-value they gain back into production. All commodities therefore trade at their value. There is no overproduction or underproduction; everything is traded in equilibrium. In particular, there is no problem in finding a market. There is never any lack of effective demand. Is this a reasonable assumption? The answer is, not at all, for we rule out one of the major aspects of crisis formation that, for example, dominated in the Great Depression of the 1930s and became central in Keynesian theories, i.e., the lack of effective demand. Marx abandoned these assumptions in later volumes, but in the next three chapters, he holds rigorously to them. Holding effective demand to one side permits Marx to identify aspects of the capitalist dynamic that might otherwise remain opaque.
The second assumption is that the division of the surplus-value into profit of enterprise (the rate of return on industrial capital), profit on merchant capital, interest, rent and taxes (Marx does not include the latter here) has no effect. In practice, capitalist producers have to share part of the surplus-value created and appropriated with capitalists who fulfill other functions. “Surplus-value is therefore split up into various parts. Its fragments fall to various categories of person, and take on various mutually independent forms, such as profit, interest, gains made through trade”—that’s merchant’s profit—“ground rent,” taxes, etc. “We shall be able to deal with these modified forms of surplus-value only in Volume 3” (709). Marx assumes, in effect, that there is a homogeneous capitalist class comprised of industrial capitalists alone. In Volume III of Capital, it becomes clear that the role of interest-bearing capital, finance capital, merchant capital and landed capital are all of considerable significance to understanding the overall dynamics of capitalism. But here all consideration of these features is laid aside. What we are left with is a highly simplified model of how capital accumulation works, and like any such model, it is only as good as its assumptions allow.
There is another tacit assumption which actually becomes explicit a bit later in a footnote.
Here we take no account of the export trade, by means of which a nation can change articles of luxury either into means of production or means of subsistence, and vice versa. In order to examine the object of our investigation in its integrity, free from all disturbing subsidiary circumstances, we must treat the whole world of trade as one nation, and assume that capitalist production is established everywhere and has taken possession of every branch of industry. (727)
Marx assumes a closed system within which capital circulates in a “normal” way. This is an important and obviously restrictive assumption. What we are left with is a stripped-down model of the dynamics of capital accumulation derived from the theory of absolute and relative surplus-value operating in a closed system. The model turns out, as we shall see, to be very revealing of certain aspects of capitalism.
Just to set the following chapters in their full context, it is useful to contrast them with what happens in the other volumes of Capital. Volume II confronts that which is held constant in Volume I: the difficulties that arise in finding markets and bringing them into a state of equilibrium such that the “normal” process of capital circulation can proceed. But Volume II tends to hold constant that which is treated as dynamic in Volume I, i.e., the extraction of absolute and relative surplus-value, rapid shifts in technologies and productivities, shifting determinations of the value of labor-power. Volume II imagines a world of constant technology and stable labor relations! It then poses the questions, how is capital going to circulate smoothly (given different turnover times, including problems that derive from the circulation of fixed capital of different lifetimes), and how can it always find a market for the surplus-value being produced? Since capital accumulation is always about expansion, how can capitalists find a market when the working class is being increasingly immiserated and the capitalists are reinvesting? There is, in fact, no mention of immiseration at the end of Volume II. The problem is to ensure “rational consumption” on the part of the working classes in order to help absorb the capital surpluses being produced. The model here would be Ford’s famous turn to a five-dollar eight-hour day for the workers, backed by an army of social workers to ensure that the workers consumed their wages “rationally” from the standpoint of capital. We in the US now live in a world where about 70 percent of the driving force in the economy depends on debt-fueled consumerism, which is perfectly understandable given the analysis of Volume II but not given that of Volume I.
There is, it turns out, a major contradiction between the equilibrium conditions defined in Volume I and those defined in Volume II. If things are going right according to the Volume I analysis, then they are likely to be going very badly from the standpoint of Volume II, and vice versa. The two distinctive models of the dynamics of capital accumulation do not, and cannot, concur. This prefaces the discussion of the inevitability of crises in Volume III, but my insertion of the phrase “debt-fueled” before “consumerism” signals that the terms of distribution (finance, credit and interest) may actually play a central rather than merely ancillary role in the dynamics of capitalism. Consumer power augmented by everybody (including governments) using their credit cards and going into debt up to the hilt has been central to the stabilization (such as it is) of global capitalism over the past half century. None of this will be encountered in the chapters to follow. But the highly simplified model of capital accumulation that Marx does construct and analyze is incredibly revealing, as well as deeply relevant to understanding the recent history of neoliberalism, which has been characterized by deindustrialization, chronic structural unemployment, spiraling job insecurities and surging social inequalities. We have, in short, been very much in the world of Volume I over the past thirty years. The problems of effective demand revealed in the Volume II analysis have been temporarily resolved through the excesses of the credit system, with predictably disastrous consequences.
CHAPTER 23: SIMPLE REPRODUCTION

The first chapter of part 7 models the qualities of a fictional capitalism characterized by simple reproduction. How does capital accumulation through the extraction of surplus-value get reproduced and perpetuated over time? To answer that question, we need to view capital accumulation as a “connected whole, and in the constant flux of its incessant renewal,” such that “every social process of production is at the same time a process of reproduction.” Furthermore, “if production has a capitalist form, so too will reproduction” (711).
Part of what the capitalist captures in terms of new wealth has to be put to reproducing the system. But this means that surplus-value has to recirculate back into simple reproduction. “This mere repetition, or continuity, imposes on the process certain new characteristics, or rather, causes the disappearance of some apparent characteristics possessed by the process in isolation” (712). The analysis so far has been concerned solely with the production of surplus-value as a one-shot event. But things look rather different when examined as a continuous process going on over time.
What flows back to the worker in the shape of wages is a portion of the product he himself continuously reproduces. The capitalist, it is true, pays him the value of the commodity [that is, the value of labor-power] in money, but this money is merely the transmuted form of the product of his labour. While he is converting a portion of the means of production into products, a portion of his former product is being turned into money. It is his labour of last week, or of last year, that pays for his labour-power this week or this year. The illusion created by the money-form vanishes immediately if, instead of taking a single capitalist and a single worker, we take the whole capitalist class and the whole working class. (712–13)
Class relations rather than individual contracts now move center stage in Marx’s thinking.
The capitalist class is constantly giving to the working class drafts, in the form of money, on a portion of the product produced by the latter and appropriated by the former. The workers give these drafts back just as constantly to the capitalists, and thereby withdraw from the latter their allotted share of their own product. The transaction is veiled by the commodity-form of the product and the money-form of the commodity. (713)
The image this conveys is that the working class as a whole is in a “company store” relation to the capitalist class. Workers receive money for the labor-power they sell to the capitalists and then spend that money to buy back a portion of the commodities they collectively produced. This company-store relation is veiled by the wages system and is not readily discernible when the analysis focuses only on the individual worker. The meaning of “variable capital” takes another twist. In effect, the body of the worker, from the standpoint of capital, is a mere transmission device for the circulation of a portion of capital. The worker is in a continuous version of the C-M-C process. But instead of seeing this as a simple linear relation, we now have to think of it as continuous and circular. A portion of the capital flows along as workers congeal value in commodities, receive their money wages, spend the money on commodities, reproduce themselves and come back to work to congeal more value in commodities the next day. Workers stay alive by circulating variable capital in this way.
This gives rise to some interesting observations. To begin with, variable capital “loses its character of a value advanced out of the capitalist’s funds … when we view the process of capitalist production in the flow of its constant renewal.” Capitalists pay their workers only after the work is done. In effect, therefore, workers advance the equivalent of the value of their labor-power to the capitalist. There is no guarantee that the worker will be paid (if, for example, capitalists declare bankruptcy in the meantime). In China in recent years, the nonpayment of wages owed has been very common, particularly in areas such as construction. But Marx is interested in reshaping our interpretation of capital accumulation in even more radical ways. He points out that the “process must have had a beginning of some kind. From our present standpoint it therefore seems likely that the capitalist, once upon a time, became possessed of money by some form of primitive accumulation” (714). This concept will anchor the discussion of the origins of capitalism in part 8. Here he simply asserts that there must have been some original moment when capitalists somehow or other got hold of enough assets (monetary and otherwise) to start on this process of capital accumulation. The question he poses here is, how and by whom is that original capital reproduced?
Marx gives an example: if a capitalist starts off with one thousand pounds and invests it in variable capital and constant capital to produce a surplus-value of two hundred pounds, then the capitalist appropriates the two hundred pounds as his or her own in addition to gaining back the original thousand pounds. But the original capital has been preserved by the workers’ productive consumption, and the surplus-value has been produced out of the workers’ surplus labor-time. Suppose the next year, the capitalist once again lays out one thousand pounds (having consumed the surplus away) to produce another two hundred pounds of surplus-value. After five years of this, the workers have produced one thousand pounds of surplus-value, which is equivalent to the capitalist’s original capital. Marx here makes the political argument that even if the capitalist had a right to that thousand pounds at the beginning, however he or she came by it, after five years of producing two hundred pounds of surplus-value every year, the capitalist has surely forfeited the right to the original capital. He or she has, according to Marx’s accounting method, consumed the original capital away. The thousand pounds now belongs by right to the workers, given the Lockean principle (not cited here, but clearly Marx has this in mind) that property rights accrue to those who create value by mixing their labor with the land. The workers are the ones who produced the surplus-value, and by rights it should belong to them.
The politics of this argument are important but go radically against the grain of deeply entrenched ways of thinking. We would all be surprised to be told that the original money we placed in a savings account at, say, 5 percent compound interest no longer belonged to us after a number of years. Capitalism appears to be capable of laying its own golden nest eggs, as far as we are concerned. But where that 5 percent comes from is a legitimate question, and it can only be, if Marx is right, through the mobilization and appropriation of surplus-value from someone, somewhere. It is discomforting to think that perhaps the 5 percent comes from the vicious exploitation of living labor in Guangdong province in China. Our legal superstructure is insistent on preserving original property rights and preserving also the right to use those rights to gain a profit. But those property rights in turn derive from the class power of capital to extract and maintain command over the surpluses, because labor-power has, by specific historical processes, become a commodity bought and sold in the labor market. The implication of what Marx is saying here is that in order to challenge capitalism, it is necessary to challenge not only the whole notion of rights, how people think about rights and how people think about property, but also the material processes whereby surpluses are both created and appropriated by capital. Then, indeed, after five years
not a single atom of the value of his old capital continues to exist … Therefore, entirely leaving aside all accumulation, the mere continuity of the production process, in other words simple reproduction, sooner or later, and necessarily, converts all capital into accumulated capital, or capitalized surplus-value. Even if that capital was, on its entry into the process of production, the personal property of the man who employs it, and was originally acquired by his own labour, it sooner or later becomes value appropriated without an equivalent, the unpaid labour of others. (715)
There happens to be an interesting example of a practical plan that reflects Marx’s way of thinking (whether it derived from Marx, I do not know). A Swedish labor economist called Rudolf Meidner, who played a major role in the construction of the highly successful Swedish welfare state in the 1960s and early 1970s, came up with what became known as the Meidner Plan. Confronting inflation, the powerful trade unions were urged to exercise collective wage restraint. In return, the extra profits (surplus-value) that would accrue to capital because of that restraint would be taxed away and placed in a worker-controlled social-investment fund that would purchase shares in capitalist corporations. The shares purchased were deemed untradeable, and over time (more than the five years of Marx’s example) control over the corporation would pass over to the social-investment fund. In other words, the capitalist class would quite literally be bought out (peacefully) over time and replaced by total worker control over investment decisions. The plan was greeted with horror by the capitalist class (who promptly awarded the so-called Nobel Prize in economics—it actually has nothing whatsoever to do with Nobel—to neoliberals like Friedrich Hayek and Milton Friedman and set up anti-union think tanks and mobilized fierce opposition in the media). The social-democratic government of the time got cold feet and never attempted to implement the plan. But when you think about it, the idea (much more complicated in its details, of course) is broadly consistent with Marx’s argument, at the same time as it offers a peaceful way to buy out capitalist class power. So why not think more about it?
When put together with the company-store relation of labor to capital, Marx’s argument leads to even deeper insights at the same time as it raises crucial (and in this instance, unfortunately, unanswered) questions. “Since, before [the laborer] enters the process, his own labour has already been alienated … from him”—that is, he has given over the use-value of labor-power to the capitalist—“appropriated by the capitalist, and incorporated with capital, it now, in the course of the process, constantly objectifies itself so that it becomes a product alien to him.” Neither the product nor the labor congealed in it belong to him.
Therefore, the worker himself constantly produces objective wealth, in the form of capital, an alien power that dominates and exploits him; and the capitalist just as constantly produces labour-power, in the form of a subjective source of wealth which is abstract, exists merely in the physical body of the worker, and is separated from its own means of objectification and realization; in short, the capitalist produces the worker as a wage-labourer. This incessant reproduction, this perpetuation of the worker, is the absolutely necessary condition for capitalist production. (716)
I find this an interesting and troubling formulation, worthy of serious reflection. “The worker himself constantly produces objective wealth, in the form of capital,” and that objective wealth becomes an alien power that now dominates the worker. The worker produces the instrument of his or her own domination! This is a theme that echoes and reverberates throughout Capital. It poses a general historical question of the penchant of human beings to produce all manner of instruments of their own domination. But in this case, the capitalist produces the subjective source of wealth, which is abstract, through the “physical body of the worker” which is “separated from its own means of objectification and realization.” The capitalist produces and reproduces the worker as the active but alienated subject capable of producing value. And this, please note, is the fundamental socially necessary condition for the survival and maintenance of a capitalist mode of production.
The worker engages in productive consumption and individual consumption (a distinction encountered earlier). Workers not only produce the equivalent of the value of variable capital, i.e., their own living, but they also transfer and thereby reproduce the value of constant capital. Through their labor, workers reproduce both capital and the laborer. The chapters on division of labor and machinery showed how the worker was necessarily transformed into an appendage of capital inside the labor process. But now we also come to see the worker as an “appendage of capital” in the marketplace and in the home. That is what the circulation of variable capital really means: capital circulates through the body of the worker and reproduces the worker as an active subject who reproduces capital. But the worker not only has to be reproduced as an individual person. “The maintenance and reproduction of the working class remains a necessary condition for the reproduction of capital” (719).
This raises a host of questions that Marx glosses over. The politics of class reproduction were, Marx holds, in his time brutal and simple. “The capitalist may safely leave” the daily grind of actual class reproduction to “the worker’s drives for self-preservation and propagation. All the capitalist cares for is to reduce the worker’s individual consumption to the necessary minimum” (718). But Marx is sliding over something important here that cries out for deeper analysis. The huge and fundamental question of the reproduction of the working class involves questions of propagation, self-preservation, social relations within the class and a host of other issues that Marx conveniently leaves to the workers themselves to sort out because that is what capital supposedly does. Actually, even in a state controlled by capitalists and landlords, matters of social reproduction are never left solely to the workers themselves, and certainly the conditions of class struggle and “the degree of civilization” in a country enter in here with at least the same force as they do with respect to questions of the working day, if not with even greater force. The earlier discussion of the educational clauses of the Factory Acts provided an example of state intervention in the politics of working-class reproduction, and the state has always been active in the fields of public health (given that cholera had the awkward habit of transcending class boundaries) and reproductive rights, population policies and the like. Issues of this sort need far more detailed consideration than Marx provides. But Marx’s general point is well taken. Simple reproduction is not a technical question. The crucial question is the reproduction of the class relation.
Capitalist production therefore reproduces in the course of its own process the separation between labour-power and the conditions of labour. It thereby reproduces and perpetuates the conditions under which the worker is exploited. It incessantly forces him to sell his labour-power in order to live, and enables the capitalist to purchase labour-power in order that he may enrich himself. It is no longer a mere accident that capitalist and worker confront each other in the market as buyer and seller. It is the alternating rhythm of the process itself which throws the worker back onto the market again and again as a seller of his labour-power and continually transforms his own product into a means by which another man can purchase him. In reality, the worker belongs to capital before he has sold himself to the capitalist. (723)
As a result, Marx concludes,
the capitalist process of production, therefore, seen as a total, connected process, i.e. a process of reproduction, produces not only commodities, not only surplus-value, but it also produces and reproduces the capital-relation itself; on the one hand the capitalist, on the other the wage-labourer. (724)
CHAPTER 24: THE TRANSFORMATION OF SURPLUS-VALUE INTO CAPITAL

For a variety of reasons, as we will shortly see, the idea of a capitalist mode of production in a stable, nongrowth state is improbable if not downright impossible. Chapter 24 examines how and why the surplus-value gained yesterday is converted into tomorrow’s new money capital. The resultant “production of capital on a progressively increasing scale” involves combining “additional labour-power, annually supplied by the working class in the shape of labour-powers of all ages, with the additional means of production.” For this to happen requires that capital must first produce the conditions for its own expansion.
Accumulation requires the transformation of a portion of the surplus product into capital, But we cannot, except by a miracle, transform into capital anything but such articles as can be employed in the labour process (i.e. means of production), and such further articles as are suitable for the sustenance of the worker (i.e. means of subsistence). Consequently, a part of the annual surplus labour must have been applied to the production of additional means of production and subsistence … In a word, surplus value can be transformed into capital only because the surplus product, whose value it is, already comprises the material components of a new quantity of capital. (726-7)
The production of luxuries or other useless products (such as military hardware and religious or state monuments) does not work no matter how profitable such production may be. The new means of subsistence and of production have to be produced and organized in advance. Then and only then “the cycle of simple reproduction alters its form and … changes into a spiral” (727). Another way of looking at it (given the analysis of the preceding chapter) is that “the working class creates by the surplus labour of one year the capital destined to employ additional labour in the following year. And this is what is called,” writes Marx with heavy irony, “creating capital out of capital.”
The laborer is, however, the active subject in this process. Marx continues, however, to assume that market processes “conform to the laws of commodity exchange, with the capitalist always buying labour-power and the worker always selling it at what we shall assume is its real value.” Again, I emphasize the importance of such assumptions in Marx’s analysis. “It is quite evident from this that the laws of appropriation or of private property, laws based on the production and circulation of commodities, become changed into their direct opposite through their own internal and inexorable dialectic.” The inversion of Locke’s principle of mixing labor with the land to create value as grounding the right to private property is clear.
The exchange of equivalents, the original operation with which we started, is now turned round in such a way that there is only an apparent exchange, since, firstly, the capital which is exchanged for labour-power is itself merely a portion of the product of the labour of others which has been appropriated without an equivalent. (729)
As a consequence, “the relation of exchange between capitalist and worker becomes a mere semblance belonging only to the process of circulation, it becomes a mere form, which is alien to the content of the transaction itself, and merely mystifies it” (729–30). Amplifying, Marx continues:
the constant sale and purchase of labour-power is the form; the content is the constant appropriation by the capitalist, without equivalent, of a portion of the labour of others which has already been objectified, and his repeated exchange of this labour for a greater quantity of the living labour of others. Originally the rights of property seemed to us to be grounded in a man’s own labour. Some such assumption was at least necessary, since only commodity-owners with equal rights confronted each other, and the sole means of appropriating the commodities of others was the alienation of a man’s own commodities, commodities which, however, could only be produced by labour. Now, however, property turns out to be the right, on the part of the capitalist, to appropriate the unpaid labour of others or its product, and the impossibility, on the part of the worker, of appropriating his own product. The separation of property from labour thus becomes the necessary consequence of a law that apparently originated in their identity. (730)
Marx has here returned (once more!) to the question of how equivalent exchange can produce a non-equivalent, i.e., surplus-value, and how the original notion of property rights gets inverted into being a right of appropriation of the labor of others. What then follows is a reprise, for what seems like the umpteenth time, of the theory of surplus-value (so if you are still unsure what it’s all about then read it carefully—pages 730–1). But Marx does go on to note that what can be derived from the standpoint of the individual doesn’t work out to be the same thing from the standpoint of class relations.
The matter looks quite different if we consider capitalist production in the uninterrupted flow of its renewal, and if, in place of the individual capitalist and the individual worker, we view them in their totality, as the capitalist class and the working class confronting each other. But in doing so we should be applying standards entirely foreign to commodity production. (732)
This is so because freedom, equality, property and Bentham prevail in the marketplace, rendering invisible the production of surplus-value in the labor process.
The same rights remain in force both at the outset, when the product belongs to its producer, who, exchanging equivalent for equivalent, can enrich himself only by his own labour, and in the period of capitalism, when social wealth becomes to an ever-increasing degree the property of those who are in a position to appropriate the unpaid labour of others over and over again … This result becomes inevitable from the moment there is a free sale, by the worker himself, of labour-power as a commodity. (733)
Bourgeois freedoms and rights mask exploitation and alienation. “To the extent that commodity production, in accordance with its own immanent laws, undergoes a further development into capitalist production, the property laws of commodity production must undergo a dialectical inversion so that they become laws of capitalist appropriation” (733–4). There is, to revert to the language of the preface to A Contribution to the Critique of Political Economy, a superstructural adjustment to legitimate and legalize the appropriation of surplus-value by appeal to concepts of the rights of private property. Hence Marx’s fundamental objection to any and all attempts to universalize bourgeois conceptions of right and justice. It merely provides the socially necessary legal, ideological and institutional cover for the production of capital on a progressively increasing scale.
Classical political economy, saddled with bourgeois conceptions of rights, produced all manner of “erroneous conceptions of reproduction on an increasing scale” (as the name of section 2 has it). To begin with, the relationship between capital accumulation and hoarding (saving) was left in a state of utter confusion. The classical political economists were, however, “quite right to maintain that the consumption of the surplus product by productive, instead of unproductive, workers is a characteristic feature of the process of accumulation” (736). But given Marx’s definition of “productive,” this means that yesterday’s surplus product has to be put to creating more surplus product and surplus-value today. The actual dynamics of this are tricky. Classical political economy focused exclusively on the extra labor and therefore extra variable capital (increase in wage outlays) that were called for. But as in the case of Senior’s last hour, which Marx so effectively mocked earlier, classical political economy tended to forget entirely about the necessity to procure new means of production (constant capital) with each round of accumulation (which entailed transformations in the relation to nature through raw-material extractions). This was the second “erroneous conception” that Marx had to rectify.
This brings us to the central question: when capitalists have surplus-value at their command, why don’t they just have a good time and consume it away? Some of the surplus-value is indeed consumed by the capitalists as revenue. The capitalist class consumes away a portion of the surplus in pursuing its pleasures. But part of it is reinvested as capital. Another question then arises: what governs the relationship between the capitalist consumption of revenues and the reinvestment of surplus-value as capital? Marx’s answer is worth quoting at length.
Except as capital personified, the capitalist has no historical value, and no right to that historical existence which, to use Lichnowsky’s amusing expression, ‘ain’t got no date’. It is only to this extent that the necessity of the capitalist’s own transitory existence is implied in the transitory necessity of the capitalist mode of production. But, in so far as he is capital personified, his motivating force is not the acquisition and enjoyment of use-values, but the acquisition and augmentation of exchange-values.
Capitalists, Marx avers, are necessarily interested in and therefore motivated by the accumulation of social power in money-form.
He is fanatically intent on the valorization of value; consequently he ruthlessly forces the human race to produce for production’s sake. In this way he spurs on the development of society’s productive forces, and the creation of those material conditions of production which alone can form the real basis of a higher form of society, a society in which the full and free development of every individual forms the ruling principle. Only as a personification of capital is the capitalist respectable. As such, he shares with the miser an absolute drive towards self-enrichment. But what appears in the miser as the mania of an individual is in the capitalist the effect of a social mechanism in which he is merely a cog. Moreover, the development of capitalist production makes it necessary constantly to increase the amount of capital laid out in a given industrial undertaking, and competition subordinates every individual capitalist to the immanent laws of capitalist production, as external and coercive laws. It compels him to keep extending his capital, so as to preserve it, and he can only extend it by means of progressive accumulation. (739)
The capitalist, according to Marx, has no real freedom, either. Poor capitalists are mere cogs in a mechanism, who have to reinvest because the coercive laws of competition force them into it. As capital personified, their psychology is so focused on the augmentation of exchange-value, on the accumulation of social power in limitless money-form, that money accumulation becomes the fetish focus of their deepest desires. Herein lies the similarity between the miser and the capitalist. They both want social power, but the social power of capitalists comes from constantly augmenting their wealth by releasing it into circulation, whereas the miser tries to hold on to it by not using it. And if capitalists individually show any sign of drifting away from their central mission, then the pesky coercive laws of competition (once more slid into the argument in a central role of policing the system) bring them back into line.
Faced with this reality, the bourgeois apologists create a noble fiction. The capitalists, they say, are creating capital and engaging their noble mission to create that “higher form of society” that even Marx concedes can be a product of their endeavours, through abstinence! I have to say, living in New York, I have never noticed the capitalist class abstaining too much. But Marx does suggest that capitalists face a Faustian dilemma. He even quotes Faust: “Two souls, alas, do dwell within his breast; The one is ever parting from the other” (741). They are forced by the coercive laws of competition to accumulate and reinvest on the one hand and are plagued by the desire to consume on the other. Coerced restraint with respect to the latter is then converted into an ideology of voluntary bourgeois virtue. Profit can even be interpreted as a return on virtue! Reinvestment, the story goes, is a virtue (it creates jobs, for example), and therefore deserves to be admired and rewarded. All those tax cuts for the ultrarich that George W. Bush set up during his presidency were construed as a reward for virtuous investors whose abstinence supposedly played a crucial role in job creation and economic growth. The fact that the rich soon acquired the habit of throwing ten-million-dollar parties for their kids’ graduations or their trophy wives’ birthdays hardly squared with this theory. Marx, however, once again heavily influenced by the story of Manchester capitalism, suggests that the struggle between the “two souls” dwelling in the capitalist’s breast underwent a gradual evolution. In the initial stages, capitalists indeed were forced to exercise restraint on consumption (hence the significance of Quaker ideology among some early capitalists in England). But as the spiral of accumulation on a progressively increasing scale got under way, so the restraints on consumption slackened. In Manchester, during “the last thirty years of the eighteenth century … ‘expense and luxury have made great progress,’” Marx reports, quoting an account from 1795 (742). Under such conditions, “production and reproduction on an increasing scale go on their way without any intervention from that peculiar saint, that knight of the woeful countenance, the ‘abstaining’ capitalist” (746).
Driven by the coercive laws of competition and the desire to augment their social power in limitless money-form, capitalists reinvest because this is, in the end, the only way they can stay in business and maintain their class position. This leads Marx to a central conclusion concerning the essence of a capitalist mode of production.
Accumulate, accumulate! That is Moses and the prophets! ‘Industry furnishes the material which saving accumulates.’ Therefore save, save, i.e. reconvert the greatest possible portion of surplus-value or surplus product into capital! Accumulation for the sake of accumulation, production for the sake of production: this was the formula in which classical economics expressed the historical mission of the bourgeoisie in the period of its domination. Not for one instant did it deceive itself over the nature of wealth’s birth-pangs. But what use is it to lament a historical necessity? If, in the eyes of classical economics, the proletarian is merely a machine for the production of surplus-value, the capitalist too is merely a machine for the transformation of this surplus-value into surplus capital. (742)
What this means quite simply is this: capitalism is always about growth. There can be no such thing as a capitalist social order that is not about growth and accumulation on a progressively increasing scale. “Accumulation for the sake of accumulation, production for the sake of production.” Just read the press reports on the state of the economy every day, and what are people talking about all the time? Growth! Where’s the growth? How are we going to grow? Slow growth defines a recession, and negative growth a depression. One or 2 percent growth (compounded) is not enough, we need at least 3, and only when we reach 4 percent is the economy deemed to be “healthy.” And look at China with its sustained 10 percent growth rates over many years: that is the real success story of our times compared with Japan, which after decades of stellar growth fell into the sick bay of global capitalism, with close to zero growth throughout the 1990s.
To this imperative attaches a fetish belief, a whole ideology, centered on the virtues of growth. Growth is inevitable, growth is good. Not to grow is to be in crisis. But endless growth means production for production’s sake, which also means consumption for consumption’s sake. Anything that gets in the way of growth is bad. Barriers and limits to growth have to be dissolved. Environmental problems? Too bad! The relation to nature must be transformed. Social and political problems? Too bad! Repress critics and send recalcitrants to jail. Geopolitical barriers? Break them down with violence if necessary. Everything has to dance to the tune of “accumulation for the sake of accumulation, production for the sake of production.”
This is, for Marx, one of the defining characteristics of capitalism. To be sure, he arrives at this conclusion on the basis of his assumptions. But these assumptions are consistent with the inherent vision internalized within classical political economy as to the “historical mission” of the bourgeoisie. And it defines a very important and powerful regulative principle. Has the history of capitalism been about compounding growth rates? Yes. Have capitalist crises come to be defined as lack of growth? Yes. Are policy makers throughout the capitalist world obsessed with stimulating and sustaining growth? Yes. And do you see anybody really questioning the growth principle, let alone doing anything about it? No. To question growth is irresponsible and unthinkable. Only cranks, misfits and weird utopians think that endless growth, no matter what the environmental, economic, social and political consequences, might be bad. To be sure, problems deriving from growth, such as global warming and environmental degradation, need to be addressed, but rarely is it said that the answer to the problem is to stop growth altogether (even though there is evidence that recessions relieve pressures on the environment). No, we have to find new technologies, new mental conceptions, new ways of living and producing, such that growth, endless compounding capital accumulation, can continue.
This has not been a regulative principle of other modes of production. To be sure, empires grew and social orders episodically expanded, but then they also just as often stabilized and in some instances stagnated and even faded away. One of the big criticisms of actually existing communisms in, for example, the former Soviet Union and Cuba, has been that they didn’t grow enough and so could not compete with the incredible consumerism and growth performance of the West, centered on the US. I do not say this in praise of the USSR but merely to point up how automatic our responses tend to be to nongrowth—stagnation is unforgivable. So now we have enough SUVs, Coca-Cola and bottled water around to satisfy accumulation for accumulation’s sake with all manner of disastrous environmental and health consequences (such as the epidemic of diabetes, which incidentally, continues to be rare in Cuba compared with the US). It bears thinking about that the endless three percent compound rate of growth that has characterized capitalism since the mid-eighteenth century might be singularly hard to maintain. When capitalism was constituted by an economic zone of about forty square miles around Manchester and a few other smaller locations, a three percent compound rate of growth was one thing, but now it covers Europe, North and South America and above all East Asia, with strengthening implantations in India, Indonesia, Russia and South Africa. Starting from this base, the consequences of a three percent compound rate of growth over the next fifty years are unimaginable. At the same time, it makes Marx’s suggestion in the Grundrisse that it is time for capital to be gone, and to make way for some more sensible mode of production, more imaginable if not absolutely imperative.
There are, it turns out, a variety of ways to gain surplus-value without producing anything. Reducing the value of labor-power by reducing the standard of living opens up one path. Indeed, Marx writes, quoting John Stuart Mill, “if labour could be had without purchase, wages might be dispensed with.” But then
if the workers could live on air, it would not be possible to buy them at any price. This zero cost of labour is therefore a limit in a mathematical sense, always beyond reach, although we can always approximate more and more nearly to it. The constant tendency of capital is to force the cost of labour back towards this absolute zero. (748)
And Marx notes some ways to do this, such as providing recipes to workers so they can feed themselves more cheaply. Later this sort of thing became part of the practice of, for example, the Russell Sage Foundation and of the practices of social workers as they sought to educate other workers to proper modes of consumption. But plainly, taking this path creates problems of effective demand, which Marx does not consider here since he has ruled it out by assuming that all commodities trade at their values. Saving on constant capital (including cutting down on waste) can also be helpful while capitalists are constantly on the lookout for “something provided by nature free of charge” (751). “It is once again the direct action of man on nature which becomes an immediate source of greater accumulation, without the intervention of any new capital” (752). Changing the productivity of social labor through other means (motivation and organization) is also free of charge, and using old machines beyond their lifetime helps, as does the mobilization of past assets (e.g., built environments) for new purposes. Finally, “science and technology give capital a power of expansion which is independent of the given magnitude of the capital actually functioning” (754). Accumulation can be expanded by all these different means without resort to the capitalization of surplus-value.
“It has been shown in the course of this inquiry,” Marx concludes at the beginning of section 5,
that capital is not a fixed magnitude, but a part of social wealth which is elastic, and constantly fluctuates with the division of surplus-value into revenue and additional capital. It has been seen further that, even with a given magnitude of functioning capital, the labour-power, science and land (which means, economically speaking, all the objects of labour furnished by nature without human intervention) incorporated in it form elastic powers of capital, allowing it, within certain limits, a field of action independent of its own magnitude. In this inquiry we have ignored all relations arising from the process of circulation [he is here reminding us of the initial assumptions about the market], which may produce very different degrees of efficiency in the same mass of capital … [and] we disregarded any more rational combination which could be effected directly and in a planned way with the means of production and the labour-power at present available.
Once again, Marx insists on the incredible flexibility and maneuverability of capital. “Classical political economy,” in contrast, “has always liked to conceive social capital as a fixed magnitude of a fixed degree of efficiency.” That poor man Jeremy Bentham, a “soberly pedantic and heavy-footed oracle of the ‘common sense’ of the nineteenth-century bourgeoisie,” had a particularly fixed vision of how capitalism constructed a labour fund (758).
Capital is not a fixed magnitude!! Always remember this, and appreciate that there is a great deal of flexibility and fluidity in the system. The left opposition to capitalism has too often underestimated this. If capitalists cannot accumulate this way, then they will do it another way. If they cannot use science and technology to their own advantage, they will raid nature or give recipes to the working class. There are innumerable strategies open to them, and they have a record of sophistication in their use. Capitalism may be monstrous, but it is not a rigid monster. Oppositional movements ignore its capacity for adaptation, flexibility and fluidity at their peril. Capital is not a thing, but a process. It is continually in motion, even as it itself internalizes the regulative principle of “accumulation for the sake of accumulation, production for the sake of production.”

CHAPTER 25: THE GENERAL LAW OF CAPITALIST ACCUMULATION

In chapter 25, Marx operationalizes a synoptic model of capitalist dynamics under the assumptions laid out at the beginning of part 7: accumulation is occurring in its normal way (there is never any problem in the market and everything trades at its value, with the exception in this chapter of labor-power); the system is closed (no trade with an outside); surplus-value is being produced through the exploitation of living labor in production; and the division of the surplus-value between interest, profit of merchant’s capital, rent and taxes has no impact. In this stripped-down model of the accumulation process, everything is contingent on these assumptions. When these assumptions are dropped, as they are in Volume II, the results look different.
A Commentary on the Value Composition of Capital

In this chapter, Marx focuses on one particular substantive issue. He wants to examine the implications of the accumulation of capital for the fate of the working class. This is why he allows the remuneration of labor-power to fluctuate above and below its value. To aid him in this task, he sets up a conceptual apparatus concerning what he calls “the composition of capital” (762). He uses three terms: technical composition, organic composition and value composition. These terms were, it seems, introduced fairly late into the argument, in part to reflect some of the work he was doing in Volume III on contradictions and crises. So the terms don’t do that much work in this chapter, and it is possible to understand his argument without them.
If you find this part of the discussion esoteric and perplexing (which it is), then pass straight on to the next section. But since these terms play a key role in Volume III and have been the subject of much argument and controversy in Marxian theory more generally, I think it important to examine them here.
The term “technical composition” simply describes the physical ability of a worker to transform a certain quantity of use-values into a commodity in a given period of time. It is the measure of physical productivity. It refers to the number of socks, tons of steel, loaves of bread, gallons of orange juice or bottles of beer produced by a worker per hour. New technologies transform these physical ratios, so that, for example, the number of socks produced per hour per worker increases from ten to twenty. The concept of technical composition is clear and unambiguous. Problems arise in differentiating between the organic and value compositions, both of which are value ratios. The value composition is the ratio of the value of the means of production consumed in production to the value of the variable capital advanced. Conventionally, we represent this as c/v, the amount of constant capital divided by the variable capital. The organic composition, which is also measured as a value ratio of c/v, is defined as changes in the value composition that arise because of physical changes in productivity.
Why the difference? The implication is that changes in value composition can occur other than those related to physical changes in productivity. Since changes of this nontechnological sort were listed at the end of the preceding chapter, this interpretation is more than merely plausible. But note that these changes, such as gifts of nature, economizing on waste, or depressing the physical standard of living of workers, can affect the value of both the constant and the variable capital laid out, such that the c/v ratio can either increase or decrease as a result. There is another possible interpretation that Marx does not to my knowledge explicitly develop, but we could infer it. This interpretation depends on where the changes in physical productivity are occurring. If I change the physical productivity of sock making by employing new machinery, then the ratio c/v (let’s call this the organic composition of capital) typically increases within my firm because of my actions. But this ratio will also likely change without my doing anything because the value of the constant and variable capital I purchase (at its value, given Marx’s assumptions) is fixed by the changing physical productivity in the industries producing the wage goods that fix the value of labor-power and the other industries producing the means of production that I purchase (constant-capital inputs). In this instance, the ratio c/v (let’s call this the value composition of capital) will rise or fall depending on the relative pace of changes in physical productivity in these two different sectors of the economy (even though physical productivity within my firm has not changed). This interpretation focuses on the difference between what is possible for the individual capitalist to do about the c/v ratio and what happens to the c/v ratio in the market outside individual capitalist control. It is hard to sustain this interpretation here, given that Marx in this chapter is working at the aggregate level of relations between the capitalist and working classes. But yet it is also plausible given the theory of relative surplus-value, which emphasizes that it is the individual capitalist’s search, operating under the coercive laws of competition, for the ephemeral form of relative surplus-value that truly drives the technological dynamism that produces relative surplus-value of the aggregate sort.
The reason all this is so important is that in Volume III of Capital, Marx takes up the question of why there might be a tendency for the rate of profit to fall. Ricardo had explained this in Malthusian terms, that in the end diminishing returns on the land would so increase the price of natural resources that profits were bound to decline to zero. In other words, the problem resides in the relation to nature (when faced with a falling rate of profit problem, Marx elsewhere quipped, Ricardo “flees from economics to seek refuge in organic chemistry”1). Marx dismisses this claim and argues instead that it is the internal dynamics of technological change within capitalism, the search for relative surplus-value, that increases the organic (value?) composition of capital, c/v, which in the long run will lead to a falling rate of profit (s/[c + v]) under the assumption of a limit on the rate of exploitation (s/v). Put differently, labor-saving innovations remove the active value producer from the labor process and so make it more difficult (other things being equal) to produce surplus-value. The argument is ingenious and has the undoubted virtue of (correctly in my view) internalizing the dynamics of crisis formation within the framework of capitalist social relations and the development of its productive forces. Unfortunately, the argument is incomplete and problematic because, given the second line of argument advanced above, there is no definite reason why the ratio c/v should increase in the way Marx suggests it would.
In this chapter, Marx argues forthrightly in favor of a law of rising value composition of capital. He begins by pointing out that from the standpoint of the whole capitalist class, the changing value composition of capital has both direct and indirect aspects in relation to production. We are talking about not only machines and factories but also railways, roads and all manner of physical infrastructures (built environments) that provide the necessary preconditions for capitalist production and realization to proceed. If these preconditions are to be fulfilled, there has to be an astonishing increase in the ratio of the total stock of constant (and increasingly fixed) capital in relationship to the number of laborers employed. (Marx fails to register here a point he makes elsewhere: that if past investments in, say, the built environment have already been amortized, then they operate as a “free good”—much like gifts of nature—for capitalist production to proceed. That is, unless a pesky landlord class gets in the way and starts extracting rent from them.) The movement from relatively simple handicraft production to more complex and integrated processes of production in itself entails a historical tendency for the ratio of c/v to increase with time. This leads Marx to assert that the
law of the progressive growth of the constant part of capital in comparison with the variable part is confirmed at every step … by the comparative analysis of the prices of commodities, whether we compare different economic epochs or different nations in the same epoch. The relative magnitude of the part of the price which represents the value of the means of production, or the constant part of the capital, is in direct proportion to the progress of accumulation, whereas the relative magnitude of the other part of the price, which represents the variable part of the capital, or the payment made for labour, is in inverse proportion to the progress of accumulation. (773–4)
There is, he clearly proposes here, a “law” of rising value composition of capital over time, and it is this law that plays such a crucial role in the theory of the falling rate of profit in Volume III. But Marx does recognize that there can be a decrease in the value (as opposed to the physical presence) of constant capital because of technological change. Indeed, he suggests that the reason the c/v ratio has not increased more than it has “is simple: with the increasing productivity of labour, the mass of the means of production consumed by labour increases, but their value in comparison with their mass diminishes.” As a result of rising productivity in the production of means of production,
their value therefore rises absolutely, but not in proportion to the increase in their mass. The increase of the difference between constant and variable capital is therefore much less than that of the difference between the mass of the means of production into which the constant capital, and the mass of the labour-power into which the variable capital, is converted. (774)
The supposed “law” of a rising value composition of capital is subject to modification, but not in a way that controverts its fundamental direction. The accumulation of capital and the search for relative surplus-value “give to each other, that change in the technical composition of capital by which the variable component becomes smaller and smaller as compared with the constant component” (776).
But what Marx needs to do to consolidate his argument is to disaggregate the economy into sectors producing wage goods and means of production, respectively, and then examine relative rates of change in physical productivity in both sectors. He does this at the end of Volume II (written after the drafts of Volume III that have come down to us), but his main concern there is to examine the problem of how the market can keep the two sectors in equilibrium (if at all). He therefore assumes away the technological dynamism that lies at the heart of the Volume I analysis and is so vital to the Volume III analysis of falling profits. The concept of value composition is not mentioned. He does open up the probability of crises of disproportionality (too many wage goods in relation to means of production, or vice versa) and even the possibility of generalized crises of underconsumption (lack of effective demand) but does nothing to illuminate the issue of falling profit rates due to technological changes. What subsequent theoretical work has shown, however, is that there is a pattern of technological change between the two sectors (wage goods and means of production) that can keep the c/v ratio steady in perpetuity, but that no mechanisms exist to ensure such an outcome. Hence the likelihood of frequent crises of disproportionality and occasional generalized crises deriving from the instabilities generated out of technological changes is considerable.
Plainly, we cannot resolve all these issues here. My own view (which many will disagree with) is that Marx’s intuition that patterns of technological change are destabilizing to the point of producing crises is correct but that his explication of rising value compositions and falling profits is not. However, the main line of argument that unfolds in this chapter is readily understandable without deploying the value-composition concept.
The First Model of Capital Accumulation

If capitalists take part of the surplus-value they appropriated yesterday and invest it in more production today, then this requires more labor-power, assuming for the moment that there is no technological change. So the first obvious effect of the accumulation of capital under these conditions is increased demand for labor-power. “Accumulation of capital is therefore multiplication of the proletariat” (764). Where are the extra laborers going to come from, and what are the implications of increasing the demand? At some point, increasing demand will lead to an increase in wages. The “spiral” of accumulation therefore entails more capital being generated, more laborers being employed and at some point higher wages, such that labor-power is either sold above its value (an exception to the assumption that all commodities trade at their value) or that the value of labor-power rises as laborers gain a higher standard of living. But this only means “that the length and weight of the golden chain the wage-labourer has already forged for himself [is] loosened somewhat” (769).
At the best of times an increase in wages means only a quantitative reduction in the amount of unpaid labour the worker has to supply. This reduction can never go so far as to threaten the system itself. Apart from violent conflicts over the rate of wages … a rise in the price of labour resulting from accumulation of capital implies the following alternatives: … Either the price of labour keeps on rising, because its rise does not interfere with the progress of accumulation. (769–70)
That is, capitalists can afford some increase in the price of labor, because the mass of capital they can appropriate continues to increase as they employ more laborers. Remember, capitalists are primarily interested in the mass of profit, and the mass depends, as we saw in chapter 17, on the number of laborers employed, the rate of exploitation and the intensity. In the face of a diminishing rate of exploitation, increasing the number of laborers employed can increase the mass of capital gained by the capitalist by a substantial amount. In this scenario, there is, therefore, no conflict between rising wages and capital accumulation. “The other alternative” is that
accumulation slackens as a result of the rise in the price of labour, because the stimulus of gain is blunted. The rate of accumulation lessens; but this means that the primary cause of that lessening itself vanishes, i.e. the disproportion between capital and exploitable labour-power. The mechanism of the capitalist production process removes the very obstacles it temporarily creates. (770)
Marx’s model here is quite simple. Accumulation of capital, assuming constant productivity, increases demand for labor. Whether or not this leads to a rise in wages depends on the available population. But as more and more of the available population are brought into employment, wages will go up, which diminishes the rate of exploitation. But the mass of surplus-value can continue to rise because more laborers are employed. If at some point, for whatever reason, the mass of surplus-value begins to diminish, then the demand for labor tails off, the pressure on wages slackens and the rate of exploitation recovers. Over time, therefore, we would likely see countervailing oscillations in wage and profit rates. Wages rise, accumulation slackens, wages fall back, profits and accumulation revive. Marx here describes an automatic adjustment system between the demand and supply of labor and the dynamics of accumulation.
There is, Marx suggests, historical evidence for processes of this sort. In eighteenth-century England there was a tendency, made much of by a contemporary commentator called Eden, for wages to rise because of the rapid expansion of capital accumulation. The working classes were becoming better off alongside a capitalist class that was plainly doing very well. The temptation, to which Eden succumbed, was to declare therefore that capital accumulation was good for the workers as well. But all it does, says Marx, is to lengthen “the golden chain” that ties labor to capital. Besides, this idea had earlier been vigorously contradicted in the famous tract of Mandeville, The Fable of the Bees. Mandeville had produced a scurrilous polemic against the “drones” that exist in English society and in so doing established that such a society had a desperate need for poor people, the poorer the better, because they would then demand less in the way of goods and services, leaving more for the rich. If we didn’t have the poor, then the rich could not be rich. This pillorying of the conditions in England in the eighteenth century upset Adam Smith and the humanists, who could not accept the proposition that the poor shall always be with us and that the poor serve such a vital function for the rich. Smith’s response was to attempt to show that everybody, including the poorest, stood in the end to be better off if the market mechanism was mobilized effectively to increase national wealth. The significance of Mandeville for Marx is the idea that the accumulation of capital requires the prior existence of not only an available population but an available population that is sufficiently impoverished, is sufficiently ignorant, is sufficiently oppressed and desperate, that it can be recruited as low-wage labor into the capitalist system at the drop of the proverbial hat.
The Second Model of Capital Accumulation

The second model of accumulation analyzes what happens when the increasing productivity of social labor becomes “the most powerful lever of accumulation” (772). The impacts of technological and organizational changes on productivity need to be placed in a central position in relation to the dynamics of accumulation. This leads Marx to elaborate at some length on the “law” of increasing value composition of capital in the manner already outlined. But while “the progress of accumulation lessens the relative magnitude of the variable part of capital … this by no means thereby excludes the possibility of a rise in its absolute magnitude,” because, as we have seen in the first model, more laborers can be employed to counteract the falling rate of surplus-value (774).
The deployment of cooperation, new divisions of labor and the application of machinery, science and technology as ways to increase labor productivity depends, in the first instance, on there having been sufficient initial or “primitive” accumulation of money wealth to set the whole process in motion. Marx has introduced this term, “primitive accumulation,” before, but again prefers to delay any detailed consideration of it until part 8. “How it itself originates we need not investigate as yet” (775). But once accumulation gets under way, the progress of increasing productivity also depends on processes of concentration and centralization of capital. Only in this way can all possible economies of scale be realized. Wealth increasingly concentrates in a few hands, he says, because at each round of accumulation the capitalist acquires an increasing mass of capital in the form of money power. Growth occurs at a compound rate, and the concentration of wealth and power accelerates, though in a way that is limited by the rate of surplus-value and the number of laborers employed. This process of concentration may also be partially offset, however, by the opening up of new small businesses in new lines of production.
Therefore not only are accumulation and the concentration accompanying it scattered over many points, but the increase of each functioning capital is thwarted by the formation of new capitals and the subdivision of old. Accumulation, therefore, presents itself on the one hand as increasing concentration of the means of production, and of the command over labour; and on the other hand as repulsion of many individual capitals from one another. (776–7)
The “fragmentation of the total social capital into many individual capitals, or the repulsion of its fractions from each other,” must also be taken into account. This is typical Marx: there are countervailing tendencies at work: concentration on the one hand, subdivision and fragmentation on the other. Where is the balance between them? Who knows! The balance between concentration and decentralization is almost certainly subject to perpetual flux (countering any teleological interpretation of the evolution of machinery and large-scale industry).
Centralization, on the other hand, arrives at concentration of capital by a different path—takeovers, mergers, the ruthless destruction of competitors. There may be, Marx suggests, laws of the centralization of capital. But he admits he is not in a position to develop these laws here, though he evidently suspects that they may yet be uncovered (which would be consistent with the teleological view!). There is, however, a definite tendency toward centralization, undoubtedly fueled by a “new force [that] comes into existence with the development of capitalist production: the credit system” (777). While he is not yet in a position to introduce the credit system here (it would violate his initial assumption that the division of surplus-value between interest, rent, profit on merchant capital does not matter), he cannot resist some preparatory remarks:
In its first stages, this (credit) system furtively creeps in as the humble assistant of accumulation, drawing into the hands of individual or associated capitalists by invisible threads the money resources, which lie scattered in larger or smaller amounts over the surface of society; but it soon becomes a new and terrible weapon in the battle of competition and is finally transformed into an enormous social mechanism for the centralization of capitals. (777-8)
The picture is compelling and in Marx’s time drew much from the theories of Saint Simon on the power of associated capitals and the practices of Second Empire bankers such as the Péreire brothers in France. It also resonates in our contemporary world. Set up micro-credit and micro-finance institutions to capture what is called “the wealth at the bottom of the pyramid” and then suck out all that wealth to support ailing international financial institutions (all with the help of the World Bank and the IMF) and use that wealth on Wall Street to pay the asset and merger game … “Commensurately with the development of capitalist production and accumulation,” Marx acutely observes, “there also takes place a development of the two most powerful levers of centralization—competition and credit” (778–9). Rapid centralization overtakes the slower processes of concentration through compound growth as the main vehicle for achieving the enormous financial scale required to implement entirely new rounds of productivity increase. Centralization can radically improve and increase the scale of production. We wouldn’t be able to undertake many of the mega-projects of physical infrastructures (e.g., railways and ports) and urbanization (fixed and constant capital) without centralization (or, as he discusses elsewhere, without involving the state).
Adequate instruments of centralization are, therefore, absolutely critical to the dynamics of accumulation. But this poses the threat of monopoly power and contradicts the vision, so dear to classical political economy as well as to contemporary neoliberal theorists, of a decentralized market economy characterized by highly dispersed and individualistic decision making such that no one can corner or dominate the market. What Marx suggests here is that even if the market economy begins with small-scale, highly competitive firms, it is almost certainly going to be rapidly transformed through centralization of capital and end up in a state of oligopoly or monopoly. The result of competition, he says elsewhere, is always monopoly. Processes therefore exist internal to the capitalist dynamic that are inherently disruptive to the theory of how perfect markets work. The problem is that markets and the struggle for relative surplus-value cannot coexist for long without centralization kicking in and disrupting decentralized decision making in freely functioning markets. While Marx does not explicitly make this point here, it is, surely, one of the implications of his argument. But if the analysis of concentration is anything to go by, increasing centralization cannot entirely be a one-way process lacking any countervailing influences and forces. Unfortunately, Marx does not make this point here, but elsewhere he will talk about the way in which centralization can sometimes be countered by decentralization. Therefore, what we have to look at is the relationship between concentration, deconcentration, centralization and decentralization. But what he’s introducing in here is the idea of a market dynamic of the accumulation process in which these forces have to be integrated into the argument and not set aside as some kind of accident of history. This, though, takes him beyond his remit in this chapter, which is about the condition of the working class.
A rising productivity of labor (a rising value composition of capital) has implications for the demand for labor.
Since the demand for labour is determined not by the extent of the total capital but by its variable constituent alone, that demand falls progressively with the growth of the total capital, instead of rising in proportion to it, as was previously assumed. It falls relatively to the magnitude of the total capital, and at an accelerated rate, as this magnitude increases. With the growth of the total capital, its variable constituent, the labour incorporated in it, does admittedly increase, but in a constantly diminishing proportion. (781–2)
This implies that capitalist accumulation “constantly produces, and produces indeed in direct relation with its own energy and extent, a relatively redundant working population, i.e. a population which is superfluous to capital’s average requirements for its own valorization, and is therefore a surplus population” (782). It does this by that processes we now call downsizing.
The working population therefore produces both the accumulation of capital and the means by which it is itself made relatively superfluous; and it does this to an extent which is always increasing. This is a law of population peculiar to the capitalist mode of production. (783–4)
Once again, the theme of the production of the conditions of our own domination emerges as a supreme irony.
Mention of a “law of population” puts Marx on a collision course with Malthus, who, judging by earlier footnotes, is far from being Marx’s favorite theorist and whose universal theory of population and overpopulation called for refutation. “Every particular historical mode of production,” Marx writes, “has its own special laws of population, which are historically valid within that particular sphere. An abstract law of population exists only for plants and animals, and even then only in the absence of any historical intervention by man” (784). Marx’s objection to Malthus is that he naturalizes unemployment and the creation of poverty by turning them into the simple relationship between population increase and pressure on resources. Marx does not hold that population growth is irrelevant or even neutral with respect to capital accumulation; indeed, there are many passages elsewhere in which he depicts strong population growth as a necessary precondition for sustained accumulation. His fundamental objection is to the thesis that poverty is produced by a working class that reproduces itself too numerously (thereby blaming the victim). Marx’s concern is to show how capitalism produces poverty no matter what the state or rate of population growth. He proves Mandeville was right, that the poor are and always will be with us under a capitalist mode of production but, contra Mandeville, Marx shows how and why this is so.
Capitalism produces poverty by creating a relative surplus of laborers through the use of technologies that throw laborers out of work. A permanent pool of unemployed laborers is socially necessary for accumulation to continue to expand.
But if a surplus population of workers is a necessary product of accumulation or of the development of wealth on a capitalist basis, this surplus population also becomes, conversely, the lever of capitalist accumulation, indeed it becomes a condition for the existence of the capitalist mode of production. It forms a disposable industrial reserve army, which belongs to capital just as absolutely as if the latter had bred it at its own cost.
It is not, therefore, the technology itself that is the main lever of accumulation, but the pool of surplus laborers to which it gives rise. “Independently of the limits of the actual increase of population, it creates a mass of human material always ready for exploitation by capital in the interests of capital’s own changing valorization requirements” (784).
Typically, the reserve army is drawn into production and then thrown out in alternating bursts, creating a cyclical motion in the labor market. “The varying phases of the industrial cycle recruit the surplus population, and become one of the most energetic agencies for its reproduction” (785). Marx describes
the simple process that constantly ‘sets free’ a part of the working class; by methods which lessen the number of workers employed in proportion to the increased production. Modern industry’s whole form of motion therefore depends on the constant transformation of a part of the working population into unemployed or semi-employed ‘hands’.
“Even political economy sees that the production of a relative surplus population—i.e. a population surplus in relation to capital’s average requirements for valorization—is a necessary condition for modern industry.” (786) Malthus, for example, “recognizes that a surplus population is a necessity of modern industry” but he fails to see that “capitalist production can by no means content itself with the quantity of disposable labour-power which the natural increase of population yields. It requires for its unrestricted activity an industrial reserve army which is independent of these natural limits” (787–8).
The ramifications of this process spread far and wide to influence the deskilling of large segments of the labor force and processes of deindustrialization through technological change that have become all too familiar to us over the past thirty years or so. The existence of this relative surplus population typically results in the overwork of those who are employed since they can be threatened with layoffs unless they work overtime and agree to increase the intensity of their labor. Since capital in our time doesn’t like to bear the indirect costs of full-time employees (healthcare benefits and pensions), the preference to push the employed to work overtime, whether they want it or not, increases even as the pool of unemployed labor also increases. Agreeing to overtime sometimes becomes a condition of employment. This has become a serious problem in Europe in recent years. The result is overwork and excessive exploitation of those who are employed.
The over-work of the employed part of the working class swells the ranks of its reserve, while conversely the greater pressure that the reserve by its competition exerts on the employed workers forces them to submit to over-work and subjects them to the dictates of capital.
This becomes a remarkable “means of enriching the individual capitalists” (789). The impact on wages is also significant. “Taking them as a whole, the general movements of wages are exclusively regulated by the expansion and contraction of the industrial reserve army.” Wage movements are driven by capital accumulation. This contradicts the standard view that the pace of accumulation of capital is regulated by fluctuations in wage rates driven either by population growth or, in contemporary rhetoric, by excessively greedy trade unions. The “dogma of the economists” was that “higher wages stimulate the working population to more rapid multiplication, and this goes on until the labour-market becomes over-supplied, and hence capital becomes insufficient in relation to the supply of labour” (790).
Marx’s model suggests that whenever capital accumulation runs into problems of labor supply, it throws people out of work by resorting to technological or organizational innovations, the effect of which is either to bring wages down below value or to increase the length of working day and the intensity of labor for those who remain employed.
The industrial reserve army, during the periods of stagnation and average prosperity, weighs down the active army of workers; during the periods of over-production and feverish activity, it puts a curb on their pretensions. The relative surplus population is therefore the background against which the law of the demand and supply of labour does its work. It confines the field of action of this law to the limits absolutely convenient to capital’s drive to exploit and dominate the workers. (792)
Hence it is that “the mechanism of capitalist production takes care that the absolute increase of capital is not accompanied by a corresponding rise in the general demand for labour” (793). This provokes “great exploits of economic apologetics” on behalf of the bourgeoisie to justify such practices when they so clearly work to the detriment of the working classes (792). The only thing the apologists can do is to view “the misery, the sufferings, the possible death of the displaced workers during the transitional period when they are banished into the industrial reserve army,” as a necessary short-term sacrifice for the greater long-term good of all that can come from progressive capital accumulation. But the reality is far more sinister.
The demand for labour is not identical with increase of capital, nor is supply of labour identical with increase of the working class. It is not a case of two independent forces working on each other. Les dés sont pipés. Capital acts on both sides at once. (793)
That is, capital creates the demand for labor when it reinvests, but it can also manage the supply of labor through reinvestments in labor-saving technologies that produce unemployment. This ability to operate on both sides of the demand and supply equation totally contradicts the way in which markets are supposed to work.
As happened in the case of machinery, workers soon
learn the secret of why it happens that the more they work, the more alien wealth they produce, and that the more the productivity of their labour increases, the more does their very function as a means for the valorization of capital become precarious; as soon as they discover that the degree of intensity of the competition amongst themselves depends wholly on the pressure of the relative surplus population; as soon as, by setting up trade unions [this is, surprisingly, the only time you’ll see this term mentioned in Capital ], etc., they try to organize planned cooperation between the employed and the unemployed in order to obviate or to weaken the ruinous effects of this natural law of capitalist production on their class, so soon does capital and its sycophant, political economy, cry out at the infringement of the ‘eternal’ and so to speak ‘sacred’ law of supply and demand. (793)
In a situation where the rules of market exchange are subverted by capital’s ability to regulate both the supply and demand for labor-power, attempts by workers to organize on their side to protect their collective interests are fiercely condemned for infringing on the rules of the market!
Marx has constructed two models of accumulation, with and without technological change. Capitalists have a choice: accumulate with an existing technology and enter the world of model 1 (difficult to do in the face of the coercive laws of competition) or invest in technological change and enter the world of model 2. The question in the second model is, what regulates the pace of technological change? The theory of relative surplus-value showed that the pace of that change is impelled onward by the coercive laws of competition as capitalists compete for the ephemeral form of relative surplus-value that accrues to those working at higher productivity. The limit is therefore partially set by the intensity of competition (a point which Marx does not emphasize). But there is also an outer limit. Marx had earlier established that the rationale for adopting new machine technologies entailed a trade-off between the value laid out for the machine and the value of the labor-power saved by using it. Though Marx does not make the point explicitly, this means that technological innovation would continue up until the point where wage rates fall low enough (as they did in England in the nineteenth century relative to the US) to make buying the machine no longer worthwhile. This point would likely be when the working class is reduced to a condition of utter misery.
The Relative Surplus Population

In section 4 of this chapter, Marx examines the condition of the relative surplus population. He identifies three distinct strata: floating, latent, stagnant (794). By “floating” he means people who are already proletarianized, who are already full-time wage workers, who are temporarily thrown out of work for some reason, who survive somehow through a period of unemployment, before being reabsorbed back into employment as conditions for accumulation improve. In contemporary terms, the floating are roughly equivalent to the pool of unemployed, as recorded in the unemployment statistics, plus those classified as underemployed or as “discouraged workers.” The latent are people who have not yet been proletarianized. In Marx’s time, this particularly referred to peasant populations not yet absorbed into the wage-labor system. The destruction of peasant or indigenous subsistence agricultural systems and the proletarianization of the rural world have pushed massive numbers into the wage-labor force. This continues to be the case up until our own times (witness China, Mexico and India in recent decades). The mobilization of women and children into the wage-labor force through the disruption of domestic systems has likewise long played a role up until today (turning women into the backbone of wage labor in many parts of the developing world). The latent category can also include petty-bourgeois independent producers and artisans who get displaced by large-scale capital and were thus forced to enter the labor market. The cannibalization of family farms in the United States over the past fifty years has released their labor-power from its former confinements. You could say the same of independent producers and people who once ran the corner stores now displaced by the supermarkets. The latent is, therefore, a huge and diverse category of people comprising petty-bourgeois producers of various kinds, women and children, peasants and the like. In our time, it also encompasses groups who had escaped proletarianization only to be brought back into the fold. Medical doctors used to think they were not part of the proletariat, but an insidious process of proletarianization of the medical workforce is not too hard to identify. The proletarianization of higher education has likewise proceeded apace as the corporatist and neoliberal model of the university has become more entrenched. What Marx draws our attention to here are possible shifts in the dynamics of proletarianization and the various ways in which a latent reserve of labor-power can be mobilized. This will obviously vary a great deal from one situation to another. Furthermore, whereas the floating population is roughly confined to the areas of capitalist organization, the latent reserve has a very different geographical spread. It is potentially available everywhere, and the geopolitics of access to it through imperialist and colonial practices can play a very significant role.
The third stratum is the stagnant. This refers to that part of the population that is very irregularly employed and particularly hard to mobilize. The lowest sediment of the stagnant Marx describes as being “in the sphere of pauperism,” including “vagabonds, criminals, prostitutes, in short the actual lumpenproletariat,” for whom he has very little affection. Also among them there are “those [paupers] able to work,” as well as “orphans and pauper children. These are candidates for the industrial reserve army, and in times of great prosperity … they are enrolled in the army of active workers both speedily and in large numbers.” But then there are “the demoralized, the ragged, and those unable to work, chiefly people who succumb to their incapacity for adaptation.” These populate what Marx calls “the hospital of the active labour-army,” and they are almost impossible to mobilize into the wage-labor force (797). This is what William Julius Wilson refers to as an “underclass” (a term I don’t really like).
The final and lengthy section 5 of this chapter describes in gruesome detail the situation as it then existed for those embedded in the industrial reserve army (both floating and latent). While Marx focuses on Britain (and the condition of its rural labor reserve in particular), he pays close attention to the role of urbanization and, with respect to the Irish immigrants into England, identifies something important about how these mobilizations of latent workforces so often utilize differences of ethnicity and religion (in this case), which by extension can encompass all manner of racial, gender, cultural, religious and other differences in the divide-and-rule politics deployed by the capitalist class. We could easily supply parallel materials for our own times. The long history of Puerto Rican labor in the United States neatly parallels that of the Irish in Britain in the nineteenth century. We could also easily write out descriptions of conditions in Mexico, Guatemala, China, Bangladesh, Indonesia and South Africa that would be every bit as distressing as the conditions that Marx describes in section 5.
Marx’s second model of accumulation depends primarily on the floating reserves created through technologically induced unemployment. The systemic way in which this floating population is managed (how unemployed workers stay alive and in good enough health to come back into the labor force, for example) is obviously a matter of considerable interest. But there is also a strategic question as to whether it is more advantageous for capitalism to work with floating or with latent reserves (the stagnant might be very hard to mobilize and even harder to work with). The free manipulation of floating reserves poses a number of difficulties. Strong labor organization that procures a modicum of job security can check unemployment. New technologies and new production systems may be challenged by the workers themselves before they become widespread. And the political consequences that result from the production of unemployment when it does occur can be serious under certain circumstances. In the 1950s and 1960s, for example, there was a general reluctance on the part of the bourgeois corporate class throughout much of the capitalist world to create unemployment, in part for fear of social unrest. The preference was to find latent reserves. There were two ways you could do that. You could take capital abroad or import workers. In Sweden in the 1960s and 1970s, unemployment was low, and there was almost no floating reserve at all. In the face of strong union power, lots of social legislation and a powerfully entrenched social-democratic political apparatus, the import of labor from Portugal, Yugoslavia and Central Europe became crucial to the generation of surplus-value. Shortages of labor in the French automobile industries led to state-supported in-migration of Maghrebians, while the labor surplus in Turkey fueled German industry during these years. The changes in immigration laws in the US in the 1960s were also significant in helping to mobilize latent labor-power reserves. The labor surplus in Mexico is crucial to the functioning of firms in the United States, making the current furore over migration, both legal and illegal, a difficult issue (lack of a labor surplus has led to the loss of crops at harvest time in the US West, for example).
We’ve got a situation today where there is considerable unemployment and a lot of latent labor. It is interesting to think about these categories in relation to the specific political history of labor control within capitalism. The floating population also raises the question of how the reserve is to be maintained in a healthy enough state to compete with the employed. The creation of social-welfare structures has been one answer, but this is less significant now given the trend toward neoliberalization. The right-wing argument is that unemployment arises when laborers put too high a reserve price on their labor. Laborers create unemployment by refusing to work below a certain minimum wage! This typically happens when welfare is too generous. Ergo, the best way to get rid of unemployment is to reduce welfare to zero. But that makes it hard for the floating population to remain a labor reserve. The same problem bedevils immigration policy. Every attempt to regulate immigration in the United States runs up against the corporate need for adequate access to surplus-labor supplies. Industries varying from agribusiness to Microsoft agitate against restrictive immigration policies.
The management of the labor supply becomes crucial. The capitalist class interest is to manage the labor supply in such a way as to create and perpetuate a reserve army (some combination of floating and latent) to keep wages down, threaten the employed laborers with being laid off, disrupt labor organization and increase the intensity of labor for those employed. Since the 1970s, this strategy seems to have succeeded reasonably well in the United States, since real wages have remained essentially flat (with a brief uptick in the 1990s) while profit rates have generally risen. This is the first era in US history in which workers have not benefited from significant increases in productivity. All the benefits from the pursuit of relative surplus-value have accrued to the capitalist class to produce immense concentrations of wealth and surging inequality.
The Liberal Utopian Dream Deconstructed

We saw in Part IV, when analysing the production of relative surplus-value, that within the capitalist system all methods for raising the social productivity of labour are put into effect at the cost of the individual worker; that all means for the development of production undergo a dialectical inversion so that they become means of domination and exploitation of the producers; they distort the worker into a fragment of a man, they degrade him to the level of an appendage of a machine, they destroy the actual content of his labour by turning it into a torment; they alienate … from him the intellectual potentialities of the labour process in the same proportion as science is incorporated in it as an independent power; they deform the conditions under which he works, subject him during the labour process to a despotism the more hateful for its meanness; they transform his life-time into working-time, and drag his wife and child beneath the wheels of the juggernaut of capital. But all methods for the production of surplus-value are at the same time methods of accumulation, and every extension of accumulation becomes, conversely, a means for the development of those methods. It follows therefore that in proportion as capital accumulates, the situation of the worker, be his payment high or low, must grow worse. Finally, the law which always holds the relative surplus population or industrial reserve army in equilibrium with the extent and energy of accumulation rivets the worker to capital more firmly than the wedges of Hephaestus held Prometheus to the rock. It makes an accumulation of misery a necessary condition, corresponding to the accumulation of wealth. Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery, the torment of labour, slavery, ignorance, brutalization and moral degradation at the opposite pole, i.e. on the side of the class that produces its own product as capital. (798–9)
This is the famous concluding thesis about the increasing immiseration of the proletariat as a socially necessary consequence and condition of capitalist accumulation. A typical response to this thesis is to say that it is simply wrong, that many workers of the world are far better off today than they were one hundred years ago and that while it may be true that there are still some terrible work conditions in the factories of China and the sweatshops of Hong Kong, these are typical transitional problems en route to the creation of better material living standards that even in those countries are beginning to be evidenced. So this is one of those statements that is taken, sometimes by Marxists as well as by critics, to be one of Marx’s firm predictions that can simply be tested by appeal to the historical record. And insofar as the historical record does not support it wholeheartedly, this is then taken to mean that Marx’s analysis is surely wrong.
So I here need to forcefully remind you of the assumptions that govern these chapters and emphasize once again that conclusions of this sort are not absolute but contingent, broadly dependent on the limiting assumptions laid out at the beginning. This is the conclusion to Volume I of Capital, in which the focus is exclusively on the dynamics of production. The analysis proceeds purely from that perspective. What we will find at the end of Volume II, written from the standpoint of the realization of capital in the market, is something entirely different. There Marx will concentrate on the problems of effective demand (who has the money power to buy the expanding volume of products?). Part of the solution to this problem has to lie in what he there depicts as “rational consumption” on the part of the working class. He means two things by this. First, the working class must have sufficient purchasing power available to itself to be able to consume; second, the working class will have acquired consumption habits congenial to the absorption of the surplus product that capitalism perpetually generates. So at the end of Volume II, Marx cites the ways in which bourgeois philanthropy concentrates on teaching the working classes “proper” consumption habits (much as what happened when Ford mobilized an army of social workers to make sure those who were benefiting from the five-dollar eight-hour day he instituted in his factories spent their money wisely and not on drink, drugs and women). So what we get at the end of Volume II is a completely different story. Plainly, the working class cannot perform its socially necessary role as a consumer-demand center for capitalist products if the Volume I story is all there is.
So what, then, is the purpose and point of the Volume I story? It says that if the world were to operate in this way, then the outcome would be increasing immiseration of the workers. If we ask whether we see elements of truth in this conclusion, then the answer is surely “yes” if we go to the factories of Indonesia, Bangladesh, Vietnam and Guatemala. In these places, latent reserves of labor are being mobilized under conditions of the utmost brutality. Indeed, you will see all the “agony of toil” that Marx describes. You do not have to look far to find detailed reports of the appalling conditions of labor in many of the world’s production centers (NGO and UN reports are full of it, and even the mainstream press has published some searing accounts). Furthermore, it is one of the signal facts of the past thirty years or so of neoliberal practices and policies that income inequalities have soared and billionaires have erupted all over the place (India, Mexico, China, Russia), making the picture of an accumulation of wealth at one pole and of misery at the other a very compelling metaphor for describing the conditions of contemporary global capitalism.
So it is hard to read the Volume I story without recognizing that it depicts a certain, albeit partial, truth, particularly when compared with the situation in the advanced capitalist countries of the 1950s and 1960s, when labor organization was relatively strong, social-democratic tendencies were dominant and state interventions, both in production and with respect to the distribution of wealth, were more widely accepted. In those times, the issues of rational consumption were more salient: how do we ensure that the working class purchases automobiles? Well, we build cities and suburbs in such a way that the automobile becomes a necessity rather than a luxury, which means that workers have to be paid enough to be able to afford automobiles and suburban housing and all that goes with this lifestyle. During these times, the Volume II analysis made a lot of sense, and the Volume I conclusions seemed a bit far-fetched.
Much of this has been reversed by the neoliberal turn that set in during the 1970s. There has been a massive expansion of the proletariat worldwide as some two billion people have been dispossessed of their earlier economic base and brought into the proletariat either through the destruction of rural ways of life and peasant economies (as in Latin America and South Asia) or through direct government action (as in China and East Asia more generally). The predictable result of this influx has been that the working classes in the core traditional centers of capital accumulation have not improved their lot. Astonishing increases in wealth have flowed to the top 1 percent (and even more, proportionately, to the top 0.1 percent) of the population. The pursuit of the neoliberal project has led us back into a world in which the Volume I analysis is more and more relevant.
This was a conscious project on the part of the ruling classes. The “Volcker shock,” which raised United States interest rates dramatically beginning in 1979, produced surging unemployment; this, when coupled with President Reagan’s attack on organized labor (beginning with taking on the air-traffic controllers’ union in the strike of 1981), was clearly intended to discipline labor. The British economist Alan Budd, reflecting on his experience of being Margaret Thatcher’s chief economic adviser, later confessed as to how ashamed he felt around his neighbors, because “the 1980s policies of attacking inflation by squeezing the economy and public spending were a cover to bash the workers. Raising unemployment was a very desirable way of reducing the strength of the working class. What was engineered—in Marxist terms—was a crisis of capitalism, which re-created a reserve army of labor, and has allowed the capitalists to make high profits ever since.”2 Like Reagan, Thatcher attacked union power politically in a violent suppression of the miner’s strike in the 1980s. Again, the aim was to discipline labor to secure profits and endless accumulation. The terrifying thing about Marx’s analysis is that such an outcome is entirely predictable and that it could be so easily articulated in Marxist terms.
What Marx has done in Volume I of Capital is to take the words and theories of the classical political economists seriously and ask what kind of world would emerge if they got to implement their utopian liberal vision of perfectly functioning markets, personal liberty, private property rights and free trade. Step by step, he explores what would happen in a world constructed in this image. Adam Smith had purported to show that national wealth would grow and that everyone would or could be better off in a world of decentralized and freely functioning markets (though Smith himself did not absolve the state from responsibilities when it came to the distribution of that wealth along more equitable lines). What Marx shows is that a world constructed along pure laissez-faire lines would in itself produce an increasing accumulation of wealth at one pole and a burgeoning accumulation of misery at the other. So who would want to construct the world according to the rules of this utopian vision? And the answer is stunningly obvious: the wealthy members of the capitalist class! So who preaches to us the virtues of this utopian free-market vision, and who has put us on our contemporary neoliberal path? Surprise, surprise! It was the wealthy who used their money power to persuade all of us that the market is always right and that Marxian theory is nonsense.
The neoliberal project (as I show in A Brief History of Neoliberalism3) has been directed toward the increasing accumulation of wealth and the increasing appropriation of surplus-value on the part of the upper echelons of the capitalist class. And in pursuing that objective, the capitalist class has taken the typical path as outlined in the models of capital accumulation set out in Volume I. Bring wages down and create unemployment by technological changes that displace workers, centralize capitalist power, attack workers’ organizations as interfering with the market coordination of supply and demand (when, as we have seen, capital works on both sides of the market), outsource and offshore, mobilize latent populations around the world and depress welfare levels as far as possible. This is what neoliberal “globalization” has really been about. The socially necessary conditions have been created, very much in accord with the Volume I analysis, for the immense accumulation of wealth at one pole at the expense of everyone else. The problem, of course, is that this kind of neoliberal capitalism can survive only “by simultaneously undermining the original sources of all wealth—the soil and the worker” (638).
But this is not the only outcome consistent with Marx’s analysis. Marx points in this chapter to the inevitability of the increasing concentration and centralization of capital under conditions of free-market utopianism. Interestingly, this has also been a marked feature of the past thirty years of neoliberalization (look at energy, pharmaceuticals, the media and above all at the increasing centralization of financial power). Excessive freedoms of the market always produce a trend toward more oligopoly and even monopoly (a fact that is recognized in antitrust legislation and some state monitoring—these days largely ineffective—of mergers and monopolies). Not only does wealth accumulate, it centralizes in the hands of an increasingly powerful capitalist class! But this also poses a problem. What happens when the conditions for harmony defined in the Volume II analysis turn so contradictory—precisely because of the polarization of wealth—as to generate a shuddering crisis of the sort that broke out in 2008? Perhaps it is no accident that the only period in US history when wealth distribution was as lopsided as it is today was the 1920s and that we are now seeing a rerun of the 1929 collapse in 2008.
It is, I think, immense testimony to the strength of Marx’s analysis and the power of his method that he can get us to see clearly aspects of the historical dynamic that so often remain hidden, while he simultaneously confronts the simmering contradictions and powerful ideological constructions that produce and legitimate the kinds of results he predicts. How many Nassau Seniors are there in our economics departments! Thus it is appropriate to defend his conditional statements, recognizing that while they are not the whole story, they are still a vital and all too easily recognizable aspect of what’s unfolding within capitalism today. He has indeed spelled out “the absolute general law of capitalist accumulation” in no uncertain terms, even as he also recognizes that “like all other laws, it is modified in its working by many circumstances, the analysis of which does not concern us here” (798). The general law is a brilliant exposition of where free-market and liberal utopianism will take us if implemented, and to the degree that the neoliberal ideological turn has taken these shibboleths, dressed them up in new guises and indeed sought to implement them, it has actually taken us in the direction that Marx predicts, replete with contradictions. We can, I think, take insight though absolutely no comfort, and acquire significant diagnostic power, from a careful reading of Marx’s text and a deep appreciation of his method.

chapter 11 primitive accumulation

There is a marked shift in tone, content and method in part 8 of Capital. To begin with, it goes against the central presumption of the rest of the book, established back in chapter 2, where Marx accepts Adam Smith’s theoretical world of atomistic market exchange in which freedom, equality, property and Bentham rule in such a way that all commodity exchanges occur in a noncoercive environment of properly functioning liberal institutions. Smith knew perfectly well that this is not how the world actually is, but he accepted it as a convenient and compelling fiction on which to build a normative political economic theory. Marx, as we have seen, takes this all on board in order to deconstruct its utopianism.
By this strategem, Marx was able to show, as we saw in the last chapter, that the closer we get to a regime of liberal market action, the more we will find ourselves confronting two significant consequences. The minor consequence is that the decentralized, fragmented and atomistic structure that would prevent any single power cornering and manipulating the market gives way to increasingly centralized capitalist power. Competition always tends to produce monopoly, and the fiercer the competition, the faster the tendency toward centralization. The major consequence is the production of immense concentrations of wealth at one pole (particularly on the part of the centralizing capitalists) and increasing misery, toil and degradation for the working class at the other pole.
The neoliberal project of the past thirty years, grounded in liberal utopianism, has successfully conformed to both of Marx’s predicted trends. Of course, there is a good deal of divergence, geographical as well as sectoral, in the details, but the degree of centralization of capital that has occurred in various spheres has been striking, and there is general acknowledgement that the immense concentrations of wealth occurring at the very top of the wealth and income scale have never been as great as they are now, while conditions among the working classes of the world have either stagnated or deteriorated. In the United States, for example, the proportion of the national income and wealth held by the top 1 percent of the population has doubled over the past twenty years, and for the top 0.1 percent it has tripled. The ratio of income between CEOs and their median salaried workers, which stood at 30:1 back in 1970, has soared to more than 350:1 on average these past few years. Wherever neoliberalization has been rampant (as in Mexico and India since 1990 or so), billionaires have suddenly emerged on the Forbes list of the wealthiest individuals in the world. Carlos Slim of Mexico is now ranked as one of the wealthiest people in the world, and he rose to that position on the back of the wave of neoliberalization that occurred in Mexico in the early nineties.
Marx arrived at these counterintuitive conclusions through deconstructing the classical political economists’ propositions on their own terms. But he also used their powerful abstractions critically, to probe creatively into the actual dynamics of capitalism and so reveal the origins of struggles over the length of the working day, the struggles surrounding the conditions of life of the industrial reserve army and the like. The analysis of Volume I can be read as a sophisticated and damning account of why “there is nothing more unequal than the equal treatment of unequals.” The ideology of freedom of exchange and liberty of contract gulls us all. This grounds the moral superiority and hegemony of bourgeois political theory and underpins its legitimacy and supposed humanism. But when people enter this free and egalitarian world of market exchange with different resource endowments and different assets, then even minor inequalities, let alone the major divide of class position, get magnified and compounded over time into huge inequalities of influence, wealth and power. When coupled with increasing centralization, this makes for Marx’s devastating reversal of the Smithian vision of “the benefit of all” that derives from the hidden hand of market exchange. This enlightens us mightily as to the class content of what, for example, the past thirty years of market-based neoliberal globalization have really been about. The upshot for Marx is a fierce critique of the theses of individual liberty and freedom that ground liberal and neoliberal theory. These ideals are, in Marx’s view, as misleading, fictional and fraudulent as they are seductive and beguiling. Laborers, he early on observed, are free only in the double sense of being able to sell their labor-power to whomsoever they chose at the same time as they have to sell that labor-power in order to live because they have been freed and liberated from any and all control over the means of production!
What part 8 of Capital does is to take up the question of how this second kind of “freedom” was secured. Here we are forced to confront the thievery, predation, violence and abusive use of power that lay at the historical origins of capitalism as it freed up labor-power as a commodity and displaced an earlier mode of production. The assumptions that have dominated the argument in the first seven parts of Capital are cast aside with brutal consequences.
Capitalism depends fundamentally, as we have seen, on a commodity capable of producing more value than it itself has, and that commodity is labor-power. “Why this free worker,” Marx observed early on in Capital,
confronts him in the sphere of circulation is a question which does not interest the owner of money, for he finds the labour-market in existence as a particular branch of the commodity-market. And for the present it interests us just as little. We confine ourselves to the fact theoretically, as he does practically. One thing, however, is clear: nature does not produce on the one hand owners of money or commodities, and on the other hand men possessing nothing but their own labour-power. This relation has no basis in natural history, nor does it have a social basis common to all periods of human history. It is clearly the result of a past historical development, the product of many economic revolutions, of the extinction of a whole series of older formations of social production. (273)
Primitive accumulation is about the historical origins of this wage labor, as well as about the accumulation of the necessary assets in the hands of the capitalist class to employ them.
Part 8 therefore addresses the central question of how labor-power became a commodity (or, more generally, how the working class was formed). The standard bourgeois story devised by Locke and Smith was that
long, long ago there were two sorts of people; one, the diligent, intelligent and above all frugal élite; the other, lazy rascals, spending their substance, and more, in riotous living … the former sort accumulated wealth, and the latter sort finally had nothing to sell except their own skins. And from this original sin dates the poverty of the great majority who, despite all their labour, have up to now nothing to sell but themselves, and the wealth of the few that increases constantly, although they have long ceased to work. (873)
This standard story depicts the transition from feudalism to capitalism as gradual and peaceful. But “in actual history,” Marx argues, it was anything but:
It is a notorious fact that conquest, enslavement, robbery, murder, in short, force, play the greatest part. In the tender annals of political economy, the idyllic reigns from time immemorial. Right and ‘labour’ were from the beginning of time the sole means of enrichment, ‘this year’ of course always excepted. (874)
This is so, because the process
which creates the capital-relation can be nothing other than the process which divorces the worker from the ownership of the conditions of his own labour; it is a process which operates two transformations, whereby the social means of subsistence and production are turned into capital, and the immediate producers are turned into wage-labourers. So-called primitive accumulation, therefore, is nothing else than the historical process of divorcing the producer from the means of production. It appears as ‘primitive’ because it forms the pre-history of capital, and of the mode of production corresponding to capital. (874–5)
As a matter of historical fact, the history of primitive accumulation “is anything but idyllic” (874). It “is written in the annals of mankind in letters of blood and fire” (875).
Marx’s account, radically at odds with that of Smith and Locke, poses some interesting questions. First, are merchant’s capital and finance capital and usury simply antediluvian forms, or do they still have a very active role, independent of production capital, industrial capital and the like? Marx had also earlier observed that “we shall find that both merchants’ capital and interest-bearing capital are derivative forms,” at the same time as “it will become clear why, historically, these two forms appear before the modern primary form of capital” (267). The implication is that the transition from feudalism to capitalism occurred in stages such that merchants’ capital and usury pioneered the way for the rise of production/industrial capital. The role these earlier forms of capital played in the dissolution of the feudal order is therefore open to investigation.
Second, does this mean that once capitalism has gone through primitive accumulation, once the prehistory is over and a mature capitalist society has emerged, that the violent processes he here describes become insignificant and no longer necessary to how capitalism works? This is a question to which I will return. But bear it in mind as we go forward.
In Marx’s version of primitive accumulation, all the rules of market exchange earlier laid out (in chapter 2) are abandoned. There is no reciprocity, no equality. Yes, the accumulation of money is there, markets of a sort are there, but the real process is something else. It is about the violent dispossession of a whole class of people from control over the means of production, at first through illegal acts, but ultimately, as in the enclosure legislation in Britain, through actions of the state. Adam Smith, of course, did not want the state to be construed as an active agent in the victimization of a population, so he certainly could not tell a story of primitive accumulation in which state violence played a crucial role. If the origins of capital accumulation lie with the state apparatus and state power, then why now advocate laissez-faire policies as a primary means to augment national and individual well-being? Consequently, Smith, along with most other classical political economists, preferred to ignore the role of the state in primitive accumulation. There were exceptions. James Steuart, Marx notes, certainly understood that state violence was absolutely central to proletarianization but took the position that it was a necessary evil. Michael Perelman’s book The Invention of Capitalism1 provides an excellent account of how original or primitive accumulation was handled within classical political economy.
Marx’s primary concern in part 8 is to unravel the history of primitive accumulation from the sixteenth century onward and to investigate how these processes were set in motion. He readily admits, of course, that
the history of this expropriation assumes different aspects in different countries, and runs through its various phases in different orders of succession, and at different historical epochs. Only in England, which we therefore take as our example, has it the classic form. (876)
Does “classic” mean that it was a template for the transition to capitalism that everybody around the world had to follow? Marx later on denied this interpretation and stated that he viewed Britain as but one, albeit special and pioneering, example. Again, these are controversial issues to which we will have to return. How we think them through has relevance to another important but largely occluded question: is it necessary to go through primitive accumulation and the long history of capitalism in order to arrive at socialism?
CHAPTERS 27–33: PRIMITIVE ACCUMULATION

The chapters of part 8 are relatively short and arranged in a sequence that has clear implications. I shall consider them briefly, pointing out some significant elements. Chapter 27 deals with the expropriation of the agricultural population, as well as the equally important process of the dissolution of the bands of feudal retainers. The appropriation of the land was the primary means to dispossess the peasantry, but release of the retainers owed as much to the way in which money power began to be exercised within and over the feudal order (e.g., by merchant capital and usury). “The new nobility was the child of its time, for which money was the power of all powers” (879). In the Grundrisse, Marx is rather more explicit. He there writes of how money dissolves the traditional community, and in dissolving the traditional community, money becomes the community. So we move from a world in which “community” is defined in terms of structures of interpersonal social relations to a world where the community of money prevails. Money used as social power leads to the creation of large landed estates, large sheep-farming enterprises and the like, at the same time as commodity exchange proliferates (an idea made much of in the early chapters on money and exchange in general). The traditional community does not yield without a struggle, and in the initial stages, at least, state power attempts to preserve what E. P. Thompson later called “the moral economy” of the peasantry against raw money power.
But state power gradually yields for two reasons. First, the state depends on and thereby becomes vulnerable to money power. Secondly, money power can be created and mobilized in ways that state legislation has difficulty stopping. Under Henry VII, acts were passed trying to hold back the process of monetization and proletarianization. But the rising power of incipient capitalism demanded “the reverse of this: a degraded and almost servile condition of the mass of the people, their transformation into mercenaries, and the transformation of their means of labour into capital.” The “forcible expropriation of the people received a new and terrible impulse in the sixteenth century,” and after that, the resistance of the traditional social order starts to crumble (883). Instead of the illegalities of money power taking a subversive lead, the state allies with money power and starts to actively support processes of proletarianization. This trend consolidates, Marx suggests, with the Glorious Revolution of 1688, which
brought into power, along with William of Orange, the landed and capitalist profit-grubbers. They inaugurated the new era by practising on a colossal scale the thefts of state lands which had hitherto been managed more modestly. These estates were given away, sold at ridiculous prices, or even annexed to private estates by direct seizure … The Crown lands thus fraudulently appropriated, together with the stolen Church estates, … form the basis of the present princely domains of the English oligarchy. (884)
On this basis, new and more powerful class alliances form. “The new landed aristocracy was the natural ally of the new bankocracy, of newly hatched high finance, and of the large manufacturers, at that time dependent on protective duties.” In other words, there is a formation of a bourgeoisie made up of landed capitalists, merchant capitalists, finance capitalists and manufacturing capitalists in broad alliance. They bend the state apparatus to their collective will. As a result, “the law itself now becomes the instrument by which the people’s land is stolen, although the big farmers made use of their little independent methods as well.”
So there is a systematic theft of communal property which goes on during this period, spearheaded by a grand movement of enclosure of the commons. The “forcible usurpation, generally accompanied by the turning of arable into pasture land, begins at the end of the fifteenth century and extends into the sixteenth” (885). These circumstances, incidentally, spawned a significant literature of nostalgia for the loss of the old order. This was the world of Oliver Goldsmith and Gray’s elegy, lamenting the destruction of a supposed “Merrie England.” Marx chooses to comment on a later example, the spectacular case of the Highland clearances in Scotland, which dispossessed the crofters of their land in wave after wave until the later nineteenth century. He revels in the hypocrisy of the Duchess of Sutherland, who, while simultaneously expelling people from the land in the Highlands through a quasi-legal process, “entertained Mrs Beecher Stowe, authoress of Uncle Tom’s Cabin, with great magnificence in London to show her sympathy for the Negro slaves of the American republic” (892).
Summarizing, Marx writes:
The spoliation of the Church’s property, the fraudulent alienation of the state domains, the theft of the common lands, the usurpation of feudal and clan property and its transformation into modern private property under circumstances of ruthless terrorism, all these things were just so many idyllic methods of primitive accumulation. They conquered the field for capitalist agriculture, incorporated the soil into capital [a very interesting phrase], and created for the urban industries the necessary supplies of free and rightless proletarians. (895)
The question of what all these people kicked off the land are going to do is taken up in chapter 28. Often there was no employment for them, so they became, in the eyes of the state at least, vagabonds, beggars, thieves and robbers. The state apparatus responded in ways that continue to this day: it criminalized and incarcerated them, depicted them as rogues and visited the utmost violence on them. “Thus were the agricultural folk first forcibly expropriated from the soil, driven from their homes, turned into vagabonds, and then whipped, branded and tortured by grotesquely terroristic laws into accepting the discipline necessary for the system of wage-labour.” The violence of the socialization of workers into the disciplinary apparatus of capital is at first transparent. But with the passing of time, “the silent compulsion of economic relations sets the seal on the domination of the capitalist over the worker.” Once the proletariat is formed, Marx here seems to be saying, then the silent compulsion of economic relations does its job and the overt violence can fade into the background, because people have been socialized into their situation as wage laborers, as bearers of the commodity labor-power. But “the rising bourgeoisie” continues to need “the power of the state” to regulate wages, to prevent any kind of collective organization of the worker (anti-union legislation and what at the time were called the Combination Laws, banning workers’ associations or even assemblies) (899). This was a crucial support, Marx points out, to the consolidation of the liberal regime (founded on private property rights).
During the very first storms of the revolution, the French bourgeoisie dared to take away from the workers the right of association they had just acquired. By a decree of 14 June 1791, they declared that every combination by the workers was ‘an assault on liberty and the declaration of the rights of man’. (903)
Bourgeois legality is used in this very specific way to inhibit the potential collective powers of labor.
Chapter 29 examines the genesis of the capitalist farmer. Marx here tells a very simple tale of how bailiffs became sharecroppers became tenant farmers and then came to pay ground (money) rent to landlords. This process of monetization and commodification underpinned an “agricultural revolution” on the land, which permitted capital to command the soil in certain ways. Capital circulated through the soil, through nature, in exactly the same way that it came to circulate through the body of the laborer as variable capital. The impact of this agricultural revolution, he says in chapter 30, was double-edged. Not only did it set free a lot of labor, it also set free means of subsistence formerly consumed on the land directly. It commoditized the food supply. The market for goods and commodities grew, in part because fewer people could subsist on their own. The result was an expansion of market exchange and an increase in the size of the market. Meanwhile, capital was destroying many of the subsidiary artisanal and household trades not only in India but also in Britain. This resulted in the creation of a stronger and larger domestic market. The growth of the internal market in Britain from the sixteenth century onward was, in Marx’s view, an important element in the development of capitalism.
This leads us to consider, in chapter 31, the genesis of the industrial capitalist who takes over the leading role from merchant’s capital, usurer’s capital, the bankocracy (finance capital) and landed capital. This takeover from the very beginning was tightly integrated with colonialism, the slave trade and what happened in Africa and in the United States. Under feudalism, there were many barriers to turning the growing quantity of money capital into industrial capital. “The feudal organization of the countryside and the guild organization of the towns” inhibited industrial development based on wage labor, but “these fetters vanished with the dissolution of the feudal bands of retainers, and the expropriation and partial eviction of the rural population.” But, Marx presciently notes,
the new manufactures were established at sea-ports, or at points in the countryside which were beyond the control of the old municipalities and their guilds. Hence, in England, the bitter struggle of the corporate towns against these new seed-beds of industry. (915)
Industrial capitalism developed in Britain on what we would now call greenfield sites. The corporate towns like Norwich and Bristol were highly organized, and it was politically difficult to take them over and break the power of the guilds. On greenfield sites in the countryside, there was no regulatory apparatus to stop you—no town bourgeoisie, no guild organization. So most of the industrialization that occurred in Britain occurred on former village sites like Manchester (all the cotton towns were originally just small villages). Leeds and Birmingham, again, began as small trading villages. This is different from some patterns of industrialization that have occurred elsewhere, although it is still the case that capital likes to move to greenfield sites whenever it can. When the Japanese auto industry moved into Britain in the 1980s, it avoided highly unionized parts of the country and moved to areas open for new development, where the companies could start from scratch and build whatever they wanted (with the assistance of the Thatcher anti-union government, of course). In the United States, the same tendency exists. Finding spaces where regulation and union organization are lacking continues to be a significant aspect of the geographical and locational dynamic of capitalism.
The roles of the colonial system and the slave trade cannot be ignored, either, since it was by these means that the bourgeoisie both circumvented and overturned feudal powers. There is a strong body of opinion that regards the slave plantations of the West Indies in the early eighteenth century as a pioneering stage in the organization of large-scale labor operations of the sort that reappeared later in the factory systems of Britain. “These methods depend in part on brute force, for instance the colonial system” (915). All manner of tactics were used to extract wealth from colonized populations. “Between 1769 and 1770,” for example, “the English created a famine by buying up all the rice and refusing to sell it again, except at fabulous prices” (917). But all such methods
employ the power of the state, the concentrated and organized force of society, to hasten, as in a hothouse, the process of transformation of the feudal mode of production into the capitalist mode, and to shorten the transition. Force is the midwife of every old society which is pregnant with a new one. It is itself an economic power. (915–16)
But we cannot understand this crucial role of the state as an organizing force, and as promoter of the colonial system, without acknowledging the significance of both the national debt and the public credit system as means whereby money power can start to control the power of the state. The merger between money power and state power from the sixteenth century onward is signaled by the rise of a “modern system of taxation” and an international credit system (921). The “bankocrats, financiers, rentiers, brokers, stock-jobbers, etc.” who populate this system then come to play significant power roles (920). The colonial system allowed “the treasures captured outside Europe by undisguised looting, enslavement and murder” to flow “back to the mother-country” and be “turned into capital there” while “the public debt became one of the most powerful levers of primitive accumulation” (918–19).
Colonial system, public debts, heavy taxes, protection, commercial wars, etc., these offshoots of the period of manufacture swell to gigantic proportions during the period of infancy of large-scale industry. The birth of the latter is celebrated by a vast, Herod-like slaughter of the innocents. (922)
This “slaughter” arose out of the need to find and mobilize sufficient labor-power in areas remote from the existing towns. Marx quotes John Fielden: “The small and nimble fingers of little children being by very far the most in request, the custom instantly sprang up of procuring apprentices (!) from the different parish workhouses of London, Birmingham, and elsewhere” and shipping them north to rural Lancashire (923). Marx continues himself: “While the cotton industry introduced child-slavery into England, in the United States it gave the impulse for the transformation of the earlier, more or less patriarchal slavery into a system of commercial exploitation,” thereby giving a stimulus to the slave trade, which fell under the increasing dominance of the British (925). “Liverpool grew fat on the basis of the slave trade. This was its method of primitive accumulation” (924).
It took immense effort to
unleash the ‘eternal natural laws’ of the capitalist mode of production, to complete the process of separation between the workers and the conditions of their labour, to transform, at one pole, the social means of production and subsistence into capital, and at the opposite pole, the mass of the population into wage-labourers, into the free ‘labouring poor’, that artificial product of modern history. (925)
If money “comes into the world with a congenital blood-stain on one cheek,” Marx concludes, then “capital comes dripping from head to toe, from every pore, with blood and dirt” (926).
The processes of expropriation, Marx argues in chapter 32, are as drawn out as they are brutal and painful. Feudalism did not dissolve without a struggle. “New forces and new passions spring up in the bosom of society, forces and passions which feel themselves to be fettered by that society.” Feudalism
has to be annihilated; it is annihilated. Its annihilation, the transformation of the individualized and scattered means of production into socially concentrated means of production, the transformation, therefore, of the dwarf-like property of the many into the giant property of the few, and the expropriation of the great mass of the people from the soil, from the means of subsistence and from the instruments of labour, this terrible and arduously accomplished expropriation of the mass of the people forms the pre-history of capital.
This prehistory “comprises a whole series of forcible methods” that amount to a system of “merciless barbarism” (928). But once set in motion, the processes of capitalist development assume their own distinctive logic, including that of centralization.
One capitalist always strikes down many others. Hand in hand with this centralization, or this expropriation of many capitalists by a few, other developments take place on an ever-increasing scale, such as the growth of the co-operative form of the labour process, the conscious technical application of science, the planned exploitation of the soil.
These proceed apace as the world market forms to impart an “international character of the capitalist regime.” From this there also grows the revolt of the working class:
a class constantly increasing in numbers, and trained, united and organized by the very mechanism of the capitalist process of production. The monopoly of capital becomes a fetter upon the mode of production which has flourished alongside and under it. The centralization of the means of production and the socialization of labour reach a point at which they become incompatible with their capitalist integument. This integument is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated. (929)
There is, after all, a huge difference between “the expropriation of the great mass of the people” by a few usurpers and the expropriation of a few usurpers by the great mass of the people.
This call to the barricades of revolution is the rhetoric of the Communist Manifesto brought back to bear on the politics of Capital. It is a political and polemical statement that should, surely, provide the culminating chapter to an astonishing work of deep analysis that is animated by a revolutionary spirit.
Which brings us to the last chapter, a curious chapter that deflates the messianic rhetoric and tone of the preceding chapter by offering a series of reflections on the theory of colonization. Furthermore, it is not really about the actual colonial experience and the prospects for anticolonial revolutionary struggles (the expropriation of the colonial masters by the mass of the colonized people). It is about the theories of colonization set out by a man called Wakefield, who hardly rates among the greatest political economists of all time and who wrote his book about colonization when in Newgate Prison for attempting to abduct the daughter of a wealthy family. While in Newgate, Wakefield found himself in the company of prisoners about to be transported to Australia, and this evidently set him thinking about the role of Australia in the general scheme of things. He had little idea as to what was really going on in Australia, but he saw something that Marx considered of great import because it amounted to a devastating rebuttal of Adam Smith. Wakefield simply recognized that you can take all the capital in the world to Australia—money, instruments of labor, materials of all kinds—but if you can’t find any “free” (in the double sense!) laborers to work for you, you cannot be a capitalist.
Wakefield, in short, “discovered that capital is not a thing, but a social relation between persons which is mediated through things” (932). It would be difficult to find laborers in Australia; at the time they had easy access to the land and so could support themselves as independent producers. The only way to ensure a labor supply, and thereby preserve the prospects for capitalism, was for the state to step in and put a reserve price on the land. That reserve price had to be high enough to make sure that everybody who arrived in Australia had to work as wage laborers until they could save enough capital to gain access to land. Wakefield considered that the land system in the United States (the Homestead Act) was too open and too free, and this set the price of labor too high (which, as we earlier saw, led to the faster adoption of labor-saving innovations). The United States, Wakefield correctly predicted, would have to dive back into the brutal tactics of the prehistory of capitalism if capitalism were to survive there. The struggle between “free labor” on the frontier and the increasing control of land policy by corporate (particularly railroad) interests, as well as the retention of immigrant populations as wage laborers in the city, was a vital aspect of accumulation.
“The only thing that interests us,” writes Marx,
is the secret discovered in the New World by the political economy of the Old World, and loudly proclaimed by it: that the capitalist mode of production and accumulation, and therefore capitalist private property as well, have for their fundamental condition the annihilation of that private property which rests on the labour of the individual himself; in other words, the expropriation of the worker. (940)
Let the government set an artificial price on the virgin soil, a price independent of the law of supply and demand, a price that compels the immigrant to work a long time for wages before he can earn enough money to buy land and turn himself into an independent farmer. (938)
This, Marx says, is the “great secret” of Wakefield’s plans for colonization, but it also reveals the great secret of primitive accumulation. These plans did carry considerable influence in the British Parliament and did affect colonial land policy. “The English government for years practised this method of ‘primitive accumulation’ prescribed by Mr Wakefield expressly for use in the colonies” (939).
Marx uses this colonial theory to rebut Adam Smith’s theory of original or primitive accumulation. But there is something else going on here that may have deep relevance to the whole argument and structure of Capital as a book. In the preface to the second edition, Marx takes up his relationship to Hegel, noting, “I criticized the mystificatory side of the Hegelian dialectic nearly thirty years ago” (102). Almost certainly, he is referring to his lengthy Critique of Hegel’s Philosophy of Right. There, Marx starts his critique at paragraph 250 of Hegel’s exposition. But the content of the preceding paragraphs is somewhat surprising. Without any prior warning or theorization, Hegel launches into a discussion of the internal contradictions of capitalism. He notes the “dependence and distress of the class tied” to a certain kind of work, processes that lead to generalized impoverishment and the creation of a rabble of paupers which, at the same time, “brings with it, at the other end of the social scale, conditions which greatly facilitate the concentration of disproportionate wealth in a few hands.” The language is very similar to that in chapter 25 of Capital, where Marx talks about the accumulation of wealth at one pole and of misery, toil and degradation at the other pole, occupied by the working class. “It hence becomes apparent,” Hegel observes, “that despite an excess of wealth civil society is not rich enough … to check excessive poverty and the creation of a penurious rabble” and
this inner dialectic of civil society thus drives it—or at any rate drives a specific civil society—to push beyond its own limits and seek markets, and so its necessary means of subsistence, in other lands which are either deficient in the goods it has over-produced, or else generally backward in industry.
A “mature civil society” is thus driven to colonizing activity “by which it supplies to a part of its population a return to life on the family basis in a new land and so also supplies itself with a new demand and field for its industry.”2
Why might be called an “inner dialectic” produces greater and greater levels of social inequality. Furthermore, as Hegel says in one of his paragraph addendums, “against nature man can claim no right, but once society is established, poverty immediately takes the form of a wrong done to one class by another.”3 This inner dialectic founded on class struggle leads civil societies to seek relief in an “outer dialectic” of colonial and imperialist activity. Whether Hegel believes that this will resolve the inner problem is not clear. But Marx is quite clear that it cannot. The penultimate chapter of Capital, which contemplates the expropriation of the expropriators as the ultimate outcome of the inner dialectic, cannot be countered by colonial practices that merely re-create the social relations of capitalism on a wider scale. There can be no colonial solution to the internal class contradictions of capitalism, and by the same token no ultimate spatial fix to the internal contradictions. What we now call globalization is simply, as we are again and again reminded, a temporary fix that “solves” problems in the here-and-now by projecting them onto a larger and grander geographical terrain.
COMMENTARY

There are a variety of issues posed by Marx’s account of primitive accumulation that call for commentary. To begin with, it is important to recognize and appreciate the innovative and pioneering character of Marx’s account. Nobody had really done this before in such a systematic and ordered way. But as so often happens in an innovative account, it’s a bit exaggerated, and it glosses over a host of issues. Historians and economic historians have since done a vast amount of research on the transition from feudalism to capitalism. The consensus would probably be that the story Marx tells is partially true in some places. There were indeed plenty of moments and incidents of extreme violence in this historical geography. And the role of the colonial system, including the evolution of colonial land, labor and taxation policies, is undeniable. But there have also been instances of primitive accumulation that were relatively peaceable. Populations were not so much forced off the land as attracted off the land by employment possibilities and the prospects of a better life offered by urbanization and industrialization. The voluntary move to cities from appalling and precarious conditions of rural life, because urban wages were fairly high, has not been uncommon (even without those processes of forcible dispossession from the land that Marx refers to and for which there is plenty of historical evidence). The story of primitive accumulation is, therefore, far more nuanced and complicated in its details than the one that Marx tells. And there were important aspects to the dynamic that Marx ignores. For example, the gender dimension is now recognized as being highly significant, since primitive accumulation frequently entailed a radical disempowerment of women, their reduction to the status of property and chattel and the reenforcement of patriarchal social relations.
But Marx did sketch the broad outlines of the industrial and agricultural revolutions, of the processes of proletarianization, commodification and monetization that were necessary for capitalism to come into being. His account set a baseline for all future discussions and for this reason alone was a creative intervention. It also dramatically reminds us of the originary violence and the fierce struggles that brought capitalism into being, an originary violence that the bourgeoisie subsequently sought to deny and forget, even as we live with its trace to this day.
Throughout Capital, but also in many of his other writings, Marx tends to relegate processes of primitive accumulation to the prehistory of capitalism. Once that prehistory is done with, then the “silent compulsion of economic relations” takes over. Marx’s political project in Capital is to alert us as to how these silent compulsions operate on us, often without our noticing, hidden behind the fetishistic masks that surround us at every turn. It shows us how, as I earlier argued, there is nothing more unequal than the equal treatment of unequals; how the equality presupposed in the market exchange of things deludes us into a belief in the equality of persons; how bourgeois doctrines of rights of private property and the profit rate make it seem as if we are all endowed with human rights; how illusions of personal liberty and freedom (and how and why we act on those illusions and even fight for them politically) arise out of market freedoms and free trade.
But there is, in my view, a real problem with the idea that primitive accumulation occurred once upon a time, and that once over, it ceased to be of real significance. In recent times, several commentators, including myself, have suggested that we need to take the continuity of primitive accumulation throughout the historical geography of capitalism seriously. Rosa Luxemburg put that question firmly on the agenda nearly a century ago. She insisted that we think of capitalism as being based on two different forms of exploitation.
One concerns the commodity market and the place where surplus value is produced—the factory, the mine, the agricultural estate. Regarded in this light, accumulation is a purely economic process, with its most important phase a transaction between the capitalist and wage labourer … Here, in form at any rate, peace, property and equality prevail, and the keen dialectics of scientific analysis [and this was, she argued, Marx’s signal achievement in Capital] were required to reveal how the right of ownership changes in the course of accumulation into appropriation of other people’s property, how commodity exchange turns into exploitation and equality becomes class-rule.
This is indeed what Marx so brilliantly reveals in the first seven parts of Capital. “The other aspect of the accumulation of capital,” she writes,
concerns the relations between capitalism and the non-capitalist modes of production which start making their appearance on the international stage. Its predominant methods are colonial policy, an international loan system—a policy of spheres of interest—and war. Force, fraud, oppression, looting are openly displayed without any attempt at concealment, and it requires an effort to discover within this tangle of political violence and contests of power the stern laws of the economic process.4
There is, she maintains, an “organic connection” between these two systems of exploitation and accumulation. The long history of capitalism centers on this dynamic relation between continuous primitive accumulation on the one hand and the dynamics of accumulation through the system of expanded reproduction described in Capital on the other. Marx was therefore wrong, she argues, to confine primitive accumulation to some antediluvian point, some prehistory of capitalism. Capitalism would long ago have ceased to exist had it not engaged in fresh rounds of primitive accumulation, chiefly through the violence of imperialism.
Intuitively, there is much to suggest that Luxemburg was right in principle, even if one does not have to follow her all the way to her specific conclusions. To begin with the specific processes of primitive accumulation that Marx describes—the dispossession of rural and peasant populations; colonial, neocolonial and imperialist politics of exploitation; the use of state powers to reallocate assets to a capitalist class; the enclosure of the commons; the privatization of state lands and assets; an international system of finance and credit; to say nothing of the burgeoning national debts and even the shadowy continuation of slavery through the trafficking of people (women in particular)—all these features are still with us and in some instances seem not to have faded into the background but, as in the case of the credit system, the enclosure of the commons and privatization, to have become ever more prominent.
The continuity becomes even more emphatic when we shift our gaze from the “classic” case of Britain to the historical geography of capitalism on the world stage. Luxemburg cited the so-called Opium Wars against China as an example of the processes she had in mind. One of the largest foreign markets for British goods was India, and the Indians could partly pay for those goods by supplying raw materials to Britain (as Marx points out in Capital). But this was not enough. So Indian opium was increasingly marketed in China in exchange for silver that could then be used to pay for the British goods. When the Chinese sought to control foreign trade in general and the opium trade in particular, the British fleet sailed up the Yangtze and destroyed the whole of the Chinese fleet in a short encounter to force open the Treaty ports. Only by these sorts of imperialist means, Luxemburg suggested, could the long-term accumulation and realization of capital be secured. According to Luxemburg’s work, the continuity of primitive accumulation took place mainly on the periphery, in areas outside regions where the capitalist mode of production dominated. Colonial and imperialist practices were crucial in all this. But as we come closer to the present, the role of the periphery changes (particularly with decolonization), and the practices of primitive accumulation not only shift and proliferate in form but also become more prominent in the core regions dominated by capital.
Consider, for example, the case of contemporary China. China had been through its own developmental process under Mao with minimal relations to the outside. But in 1978, Deng Xiaoping started to open China up to the outside and to revolutionize China’s economy. Agricultural reforms not only generated the equivalent of an agricultural revolution in production but also released an enormous quantity of labor, as well as surplus product, from off the land. There is no question that something equivalent to what Marx describes as primitive accumulation has been going on in China over the past thirty years. And to the degree that the opening of China has helped stabilize global capitalism in recent times, Luxemburg would probably look at it and say that this fresh round of primitive accumulation there has been fundamental to the survival of capitalism. In this case, however, events were not powered by foreign imperialist practices but set in motion by the Chinese state and its ruling Communist Party taking a quasi-capitalist road to the augmentation of national wealth. This entailed the creation of a vast low-wage urban proletariat out of an agrarian population, the initially controlled movement in of foreign capital to selected regions and cities to employ that proletariat, and the development of a network of global trading relations to market and realize the value of the commodities, even as the internal market started to boom. It is also interesting to note the role of greenfield sites in China. Just as Manchester went from a small town to a massive industrial center in a few decades, so did Shenzhen after 1980. The developmental pattern is not too different from that described by Marx, except that the levels of originary violence were muted (some would say they were effectively disguised) and that the power of the state and party has been critical throughout. In the light of this example, and the crucial role that China has played in the continuous expansion of a capitalist system dedicated to “accumulation for the sake of accumulation, production for the sake of production,” it is difficult to avoid the conclusions that (a) something akin to primitive accumulation is alive and well within the dynamics of contemporary capitalism and (b) its continued existence may well be fundamental to the survival of capitalism.
But this proposition holds pretty much everywhere. The violence of extraction of natural resources (throughout Africa in particular) continues, and the expropriation of peasant populations in Latin America and throughout South and East Asia is still with us. None of this has disappeared, and in some instances it has intensified, resulting in fierce conflicts over, for example, the expulsion of peasant populations from the land in India in order to make way for “special economic zones” on greenfield sites where industry can set up activity on a privileged terrain. The killing of peasants resisting expulsions in West Bengal at Nandigram to make way for industrial development is as “classic” an example of primitive accumulation as could ever be found in seventeenth-century Britain. Furthermore, when Marx points to the national debt and the nascent credit system as vital aspects in the history of primitive accumulation, he is talking about something that has grown inordinately since then to act as a kind of central nervous system to regulate the flows of capital. The predatory tactics of Wall Street and of financial institutions (credit-card companies) are indicators of primitive accumulation by other means. So none of the predatory practices that Marx identified have gone away, and in some instances they have even flourished to a degree unimaginable in Marx’s own times.
But in our times, the techniques for enriching the ruling classes and diminishing the standard of living of labor through something akin to primitive accumulation have proliferated and multiplied. For instance, United Airlines goes bankrupt, then gets the bankruptcy court to agree that it has to rid itself of all its pension obligations in order to continue as a viable business. All United Airlines employees suddenly find themselves with no pension and dependent on a state insurance fund that pays out at a very much lower rate. Retired airline employees are forced back into the proletariat. There are interviews with former United Airlines employees who said, “Well, you know, I’m sixty-seven and I thought I was going to be living happily on my retirement income of eighty thousand dollars a year, and now I’m only getting thirty-five thousand. So I have to go back and find myself a job to survive.” And the big, interesting question is, where did the equivalent of all that money go? It is perhaps no coincidence that at a time when many working people were being dispossessed of their pension, healthcare and other welfare rights across the United States, the rate of remuneration of Wall Street executives and CEOs more generally was soaring into the stratosphere.
Consider, to take another example, the wave of privatization that has swept across the capitalist world since the 1970s or so. The privatization of water, education and healthcare in many of the countries that once provided them as public goods has dramatically changed how capitalism works (creating all manner of new markets, for example). The privatization of state enterprises (almost invariably at a price that allowed the capitalists to gain immense profits in very short order) has also relinquished public control over growth and investment decisions. This is, in effect, a particular form of enclosure of the commons, in many instances orchestrated by the state (as was the earlier round). The result has been a taking away of assets and rights from the common people. And at the same time as there is a taking away, there are these immense concentrations of wealth occurring at the other end of the scale.
In both The New Imperialism5 and A Brief History of Neoliberalism, I argued that class power was being increasingly consolidated right now through processes of this sort. Since it seems a bit odd to call them primitive or original, I prefer to call these processes accumulation by dispossession. I argued that while some of this went on in the 1950s and 1960s, particularly through the tactics of the colonialism and imperialism and in the predatory raiding of natural resources, there wasn’t that much accumulation by dispossession going on within the core regions of capitalism, particularly those with strong social-democratic state apparatuses. Neoliberalization, after the mid-1970s, has changed all that. Accumulation by dispossession has been more and more internalized within the core regions of capitalism even as it has widened and deepened throughout the global system. We should not regard primitive accumulation (of the sort that might reasonably be considered to be the case in China) or accumulation by dispossession (as it has occurred through the wave of privatization in the core regions) as simply being about the prehistory of capitalism. It is ongoing and in recent times has been revived as an increasingly significant element in the way global capitalism is working to consolidate class power. And it can encompass everything—from the taking away of rights of access to land and livelihoods to the retrenchment of rights (to pensions, education and healthcare, for example) hard-won in the past through fierce class struggles by working-class movements. Chico Mendes, the leader of the rubber tappers in Amazonia, was murdered for defending a way of life against the cattle ranchers, the soybean producers and the loggers who sought to capitalize the land. The peasants of Nandigram were killed for resisting land takeover for capitalist development. The Landless Workers’ Movement in Brazil (the MST) and the Zapatistas have both fought to defend their right to autonomy and self-determination in environments rich in resources and either coveted or locked away by capital. But then think of how the newly minted private-equity funds have been taking public companies private in the United States, stripping them of assets and firing as many employees as they could, before taking the restructured companies back on the market and selling them at a vast profit (for which the CEO of the private-equity fund receives an astronomical bonus).
There are innumerable examples of struggles against all these diverse forms of accumulation by dispossession. Struggles against biopiracy and the attempt to patent genetic materials and codes, struggles against the use of eminent domain to make way for capitalist developers, against gentrification and the production of homelessness in New York and London, the predatory way in which the credit system works to force family farmers off their land to make way for agribusiness in the United States … the list is endless. A vast array of practices exists through which accumulation by dispossession is still occurring that, on the surface at least, have nothing directly to do with the exploitation of living labor in the workplace to produce surplus-value in the way Marx describes in Capital.
Yet there are commonalities as well as complementarities between the two processes, as Luxemburg correctly, in my view, suggests by pointing to the “organic relation” between them. The extraction of surplus-value is, after all, a specific form of accumulation by dispossession, since it is nothing more or less than the alienation, appropriation and dispossession of the laborer’s capacity to produce value in the labor process. Furthermore, in order for this form of accumulation to continue to grow, ways have to be found to mobilize latent populations as laborers and open up more land and resources as means of production for capitalist development. As has happened in the cases of India and China, for example, the creation of “special economic zones” by expelling peasant producers from the land is a necessary precursor to the continuity of capitalist development, just as the clearance of so-called slums of urban dwellers is necessary for developer capital to expand its urban operations. This taking of lands by the state through eminent domain, or some legal equivalent, has been a widespread phenomenon in recent times. Developers and construction interests in Seoul in the 1990s were desperate for access to urban land and set out to dispossess whole populations who had migrated to the city in the 1950s and built their own housing on land to which they had no title. The construction companies hired gangs of big, heavy wrestler thugs to go into the neighborhoods and smash people’s houses to smithereens with sledgehammers, including all their possessions. During the 1990s you could walk around totally devastated Seoul neighborhoods, punctuated with islands of intense popular resistance.
While Marx tends to the view that expanded reproduction is the mechanism whereby surplus-value is accumulated and produced, it cannot continue without first realizing the necessary conditions of dispossession, which in its own right also redistributes assets directly into the hands of the capitalist class. I hold, along with Luxemburg, that accumulation by dispossession cannot be ignored, that the taking away of pension rights, of rights to the commons, of rights to Social Security (a common property resource for the entire US population), the increasing commodification of education, to say nothing of expulsions from the land and the despoliation of the environment, are all significant to how we understand the aggregate dynamic of capitalism. Furthermore, the conversion of a common property resource like education into a commodity, the conversion of universities into neoliberal corporatist institutions (with massive consequences for what is taught and how), has significant ideological and political consequences at the same time as it is both a sign and a symbol of a capitalist dynamic that leaves no stone unturned in its struggle to expand the sphere of profit making and profit taking.
In the history of primitive accumulation that Marx describes, there were all manner of violent struggles against the forcible evictions and the dispossessions. There were widespread movements in Britain—the Levellers and the Diggers, for example—that violently resisted. In the seventeenth and eighteenth centuries it would not be an exaggeration to say that the primary forms of class struggle were those resisting dispossession rather than those resisting workplace exploitation. In many parts of the world, the same thing could be said today. This raises the question of which form of class struggle constitutes or is going to constitute the core of a revolutionary movement against capitalism in a given place and time. If global capitalism in aggregate since the 1970s has not been very successful at generating growth, then the further consolidation of class power has required a much stronger turn toward accumulation by dispossession. It is probably this that has filled the coffers of the upper classes to the point of overflowing. The resurgence of the mechanisms of accumulation by dispossession has been particularly marked in the expanding role of the credit system and financial appropriations, the latest wave of which has resulted in several million people in the United States losing their homes through foreclosures. Much of this loss of assets is concentrated in poorer neighborhoods, with particularly serious implications for women and for African-American populations in older cities like Cleveland and Baltimore. Meanwhile, the Wall Street investment bankers who grew immensely rich on this business in the halcyon years even get huge bonuses when they lose their jobs because of the financial difficulties. The redistributive impact of loss of housing assets for millions of people and the huge gains on Wall Street appear as a very stark contemporary case of predation and legalized robbery typical of accumulation by dispossession.
Political struggles against accumulation by dispossession, I argue, are just as important as more traditional proletarian movements. But these traditional movements and their associated political parties tend to pay little attention to struggles over dispossession, often regarding them as secondary and not particularly proletarian in content since they focus on consumption, environment, asset values and the like. The participants in the World Social Forum, on the other hand, are far more preoccupied with resisting accumulation by dispossession and quite often take an antagonistic stance toward class-based workers’-movement politics on the grounds that such movements do not take the concerns of World Social Forum participants seriously. In Brazil, for example, the Landless Workers’ Movement (the MST), an organization primarily concerned with accumulation by dispossession, has a somewhat tense relationship with the urban-based Workers’ Party (the PT), led by Lula and with a more workerist ideology. The question of closer alliances between the two is therefore worthy of consideration both practically and theoretically. If Luxemburg is right, as I believe she is, to say that there is an organic relation between these two forms of accumulation, then we ought to be prepared to envision an organic relation between the two forms of resistance. An opposition force made up of the “dispossessed,” no matter whether they are dispossessed in the labor process or dispossessed of their livelihoods, their assets or their rights, would require a reenvisioning of collective politics along rather different lines. I think Marx was in error in confining these forms of struggle to the prehistory of capitalism. Gramsci certainly understood the importance of building class alliances across these two different terrains, as did Mao. The idea that that the politics of primitive accumulation and by extension accumulation by dispossession belong exclusively to the prehistory of capitalism is surely wrong. But that, of course, is something you will have to decide for yourself.