david harvey capital 2 intro

My aim, as with the Companion to Volume I of Capital, is “to get you to read this book.” I wish I could add “in Marx’s own terms” but, as I shall shortly show, it is particularly difficult in this case to understand what those terms might be. But, first, I need to persuade you of the importance of undertaking a careful study of Volume II and treating it on a par with Volume I. The case for so doing is, in my view, unassailable.
In the Grundrisse (e.g. 407), Marx unequivocally asserts that capital can be understood only as a “unity of production and realization” of value and surplus-value. By this, he means that if you cannot sell in the market what has been produced in the labor process then the labor embodied through production has no value. Volume I of Capital concentrates its attention on the processes and dynamics of the production of value and surplus-value, laying to one side any difficulties that might arise out of the conditions of their realization. Marx assumes, in effect, that a market always exists and all commodities produced can be sold at their value. Volume II takes exactly the opposite tack: what turn out to be the fraught and often unstable processes of realization of surplus-value are put under the microscope while assuming there are no difficulties in the realm of surplus-value production. If, as is unfortunately generally the case, the much-studied Volume I is overemphasized while Volume II is neglected and treated as secondary, then, at best, we can get only half of the story of Marx’s understanding of capital’s political economy. In fact, the implications of the failure to take Volume II seriously are far worse: we fail to understand fully what is said in the first volume because its findings need to be placed in a dialectical relation to those of Volume II if they are to be properly understood.
The unity of production and realization, like that of the commodity, is a contradictory unity: it internalizes an opposition between two radically different tendencies. To ignore its contradictory character would be like trying to theorize capital without mentioning labor, or gender by talking about men and forgetting about women. It is out of the contradictory relations between production and realization that crises frequently arise. Ricardo and his school, Marx notes, “never understood the really modern crises, in which this contradiction of capital discharges itself in great thunderstorms which increasingly threaten [the accumulation of capital] as the foundation of society and of production itself” (Grundrisse, 411).
Marx clearly warned us of all this in the first chapter of Volume I. In the analysis of commodity production, he initially lays aside questions of use-value as if they do not matter, as if the discovery of “the manifold uses of things is the work of history” and therefore outside of the purview of political economy. But he then goes on to conclude that “nothing can be a value without being an object of utility. If the thing is useless, so is the labour contained in it; the labour does not count as labour, and therefore creates no value” (C1, 131). No realization, then no value—and certainly no surplus-value. Volume II studies those conditions that might lead to the value and surplus-value created potentially in production not being realized in monetary form through exchange in the market.
The idea of a deep contradiction between the conditions for the production and realization of surplus-value is so important that I think it wise to provide an initial indication of how it might work in practice. In Volume I, Marx focuses on the implications for the laborer of the ruthless pursuit of surplus-value by capital. The culmination of this enquiry in chapter 25 on “The General Law of Capitalist Accumulation” concludes that the lot of the laborer is bound to grow worse, that “the accumulation of wealth at one pole” is “at the same time accumulation of misery, the torment of labour, slavery, ignorance, brutalization and moral degradation at the other pole, i.e. on the side of the class that produces its own product as capital” (C1, 799). This idea of the increasing impoverishment and immiseration of the working classes has entered with a vengeance into the folklore of the Marxist interpretation of capital. But it is a contingent proposition. It presumes that there are absolutely no problems arising in the realization of value and surplus-value in the market, and that the manner in which surplus-value is distributed between rents, interest, profit on merchants’ capital, taxes, and profits on direct production have no relevance.
In Volume II, however, we find the following statement, which is radically at odds with the Volume I formulation:
Contradiction in the capitalist mode of production. The workers are important for the market as buyers of commodities. But as sellers of their commodity—labour power—capitalist society has the tendency to restrict them to their minimum price. Further contradiction: the periods in which capitalist production exerts all its forces regularly show themselves in periods of over-production; because the limit to the application of the productive powers is not simply the production of value, but also its realization. However, the sale of commodities, the realization of commodity capital, and thus of surplus-value as well, is restricted not by the consumer needs of society in general, but by the consumer needs of a society in which the great majority are always poor and must always remain poor. (391)
Lack of aggregate effective demand in the market, in short, can act as a serious barrier to the continuity of capital accumulation, and working-class consumption is a significant component of that effective demand. By the end of Volume II, therefore, Marx is talking (albeit somewhat reluctantly) about how working-class demand, along with the manipulation of working-class wants, needs and desires, becomes critical for the achievement of that form of “rational consumption” that will support continuous capital accumulation.
Capitalism as a social formation is perpetually caught in this contradiction. It can either maximize the conditions for the production of surplus-value, and thereby threaten the capacity to realize surplus-value in the market; or keep effective demand strong in the market by empowering workers, and thereby threaten the ability to create surplus-value in production. In other words, if the economy does well according to the Volume I prescriptions, it is likely to be in trouble from the standpoint of Volume II, and vice versa. For example, capital in the advanced capitalist countries tended toward a demand management stance consistent with the Volume II propositions (emphasizing the conditions for realization of value) between 1945 and the mid-1970s but, in the process, increasingly ran into problems (particularly those of a well-organized and politically powerful working-class movement) in the production of surplus-value. After the mid-1970s, it therefore shifted (after a fierce battle with labor) toward a supply-side stance more consistent with Volume I. This emphasized cultivating the conditions for surplus-value production (through reducing real wages, crushing working-class organization and generally disempowering workers). The neoliberal counterrevolution, as we now call it, from the mid-1970s onwards resolved the preeminent problems of surplus-value production, but it did so at the expense of creating problems of realization, particularly from the early 1990s onwards. How these problems in aggregate effective demand were papered over by the extension of credit is a complicated history that culminated in the crash of 2008. This general story is, of course, a gross oversimplification, but it provides a neat illustration of how the contradictory unity of production and realization has been manifest historically. It has also been manifest in shifts in bourgeois economic theory. For example, Keynesian demand management dominated economic thinking in the 1960s, whereas monetarist supply-side theories came to dominate after 1980 or so. It is important to situate these histories in terms of the underlying contradictory unity of production and realization as represented by the first two volumes of Capital.
There is, however, one way that the contradiction between production and realization might be attenuated or even effectively managed, and that is by resort to credit. This is so because there is nothing in principle that prevents credit being supplied to sustain in equal measure both production and realization of values and surplus-values. The clearest example of this is when financiers lend to developers to build speculative tract housing while lending mortgage finance to consumers to purchase that housing. The problem, of course, is that this practice can all too easily produce speculative bubbles of the sort that led into the spectacular crash of 2007–08, primarily in the housing markets of the United States but also in Spain and Ireland. The long history of booms, bubbles and crashes in construction testifies to the importance of phenomena of this sort in capital’s history. But the interventions of the credit system have plainly also been constructive in certain ways and played a positive role in sustaining capital accumulation through difficult times.
Partly for this reason, I decided to incorporate those parts of Volume III that deal with merchant and finance capital along with the credit system into this Volume II reading. Theoretically, this maneuver makes sense because Volume II opens with a study of three integrated circuits of capital—those of money, production and the commodity. But Marx treats of these circuits and their inner relations in purely technical terms, without considering the class agents that arise specifically charged with managing the disposal of capital in the different forms of money, production and commodity. The producers are very prominent in Volume I, of course, but the distinctive roles of the merchants and the financiers are only taken up in Volume III. What we find there is a history of how credit is the fount of all manner of insanity and speculative craziness, which then raises the obvious question as to why capital tolerates such excrescences, particularly since they underpin massive destructions of value of the sort we have recently witnessed. The answer to this conundrum actually lies in Volume II, though Marx does not specifically mention it. In fact, Marx systematically excludes credit from his analysis throughout the whole of Volume II (an exclusion that many readers, including me, find annoying and frustrating). But what we see from Volume II is that, without a credit system, capitalists would be forced into hoarding more and more capital to cover problems of fixed-capital circulation, differential turnover, working and circulation times, and the like. When capital is hoarded it becomes inactive and dead. If more and more capital ends up in that state, then this will act as a serious drag upon the dynamics of accumulation, to the point where the circulation of capital will likely gum up and ultimately grind to a halt. The credit system is, therefore, vital to release all this hoarded and inactive money capital. It helps return it into active use. But it does so at a cost. The Pandora’s box of speculative credit activity has to be opened, and all sorts of unsavory things pop out. Marx does not explicitly point all of this out, but it is a clear implication that flows from the analysis of a creditless economy laid out in Volume II.
The final reason I have for incorporating some of Volume III into the context of Volume II is that it helps highlight the holistic nature of Marx’s political-economic enquiry. By situating the Volume II reading in relation to the other two volumes of Capital, we better appreciate the contents and meaning of this volume in relation to Marx’s overall project. But we also establish a clearer basis for understanding the nature of Marx’s general project. It has long been my view, for example, that we should not cite passages from this or that volume as if they are pure and untrammeled truths, but always treat even firmly stated propositions (such as the increasing impoverishment of the workers in Volume I) as contingent statements that exist in relation to the total vision that Marx was seeking to represent. The truths that Volume II has to tell are vital to our overall understanding in themselves, of course. But they are always situated truths in relation to the evolving framework of Marx’s ongoing project.
With respect to the actual text of Volume II, I approach the challenge of devising an adequate reading of it with a mix of excitement and trepidation. Excitement because, for me (and I know I am not alone in this), some of Marx’s most interesting and innovative ideas and insights are to be derived from a close reading of it. Constructed from the standpoint of circulation of capital in its different forms (the circulations of money, commodities and productive activities) rather than from the standpoint of production, it proposes a radically different model of how capital works to that set out in Volume I. It is, to use my favorite metaphor, capital seen through a different window on the world. From the two windows of the two volumes we see quite different patterns of relations and activities. Yet the view from each window is objectively described and truthfully portrayed. A general theory of what Marx calls “the laws of motion of capital,” I have always thought, would have to come from triangulating between the two perspectives—a task that has never been satisfactorily accomplished, in part because Volume II is incomplete and its vision blurred. Volume II is also, for a variety of reasons, the least-read and least-considered of the three volumes of Capital.
I am personally indebted to Volume II in many ways. This is because it deals with how capital circulation constructs its own world of space and time. It helps explain why the history of capitalism has been characterized by speed-up and the reduction of cost and time barriers to spatial movement. It sets these trends against the background of the ongoing reproduction and expansion of the class relations that lie at the very heart of what capital is about. It has provided a more secure theoretical foundation for me to understand the political economy of urbanization and the dynamics of uneven geographical development. I have therefore drawn much inspiration from it in my own work. In The Condition of Postmoder-nity, for example, I coined and to some extent popularized the phrase “time-space compression” to capture the successive ways in which capital has knitted together a world of circulation of money, commodities, people, information and ideas in ever tighter, more complex and concentrated ways. This idea came from my reading of Volume II.
My trepidation arises because this volume is a rather boring book (and that may be an understatement). It lacks the literary style, the sparkle and the humor, the irony and devastating put-downs that help make Volume I such a readable tome. There are no bloodsucking vampires and table-turnings in Volume II, hardly any references at all to the immense cast of literary characters—Shakespeare, Cervantes, Goethe, Balzac, to say nothing of learned references to the Greeks and Enlightenment philosophers—that strut the stage in Volume I. The translator, David Fernbach, doubtless fearing he might be blamed for the uninspired qualities of the writing, points out the enormous stylistic differences between the first and the later volumes of Capital. Volume I “is palpably presented to the public as a work of science that is also a work of world literature,” whereas the content of Volume II follows “much more in the wake of the less purple passages of Volume I.” Those of you familiar with the first volume will know what he means. For most of Volume II, Marx seems content to assume the persona of the dry and dusty accountant of so many days or hours producing a commodity, and so many more days and hours getting it to market for sale. The subject matter, writes Fernbach, “is to a far greater extent technical, even dry.” The book is above all “renowned for the arid deserts between its oases,” and this “has caused many a non-specialist reader to turn back in defeat” (80). The amazingly important insights of the book are, to put it bluntly, buried in turgid prose and tedious arithmetic calculations.
The problem is not only one of written style. Volume II also lacks the compelling and clear narrative (some would call it dialectical) structure that is so persuasive in Volume I. This is, to some degree, explained by the incomplete and often inconclusive nature of the work. The threads that bind the volume into a whole are there, but it takes a lot of work to excavate them, and in some instances they are plainly frayed, if not broken. The only way the reader can make sense of the whole is to pick up the most prominent threads and try to weave them into some configuration that makes sense. It takes imagination and patience to do that, and even then it is hard to be sure that what one comes up with is what Marx really had in mind. It is therefore sometimes said of commentaries on Volume II that they reveal more about the commentators than about Marx. This is surely to some degree true in my case. The problem is that there is no other way to read this volume productively.
Beneath this general difficulty lies also the question of how Engels created the texts of both Volumes II and III that have come down to us. Recent scholarship on Marx’s original notebooks and drafts seems to indicate that Engels’s interventions were substantial, and sometimes more than a little questionable. Some even go so far as to suggest that we should attribute the authorship of these volumes to Engels rather than to Marx. The raw and unedited notebooks and drafts have already been published in German and, as Marx scholars probe more deeply into them, there may be some very substantial reinterpretations in the offing. I cannot anticipate what these might be, but I think it only right to inform readers of such a possibility. Meanwhile, I can only proceed with the text as we currently have it.
Volume II is written at a high level of abstraction, and thus lacks the grounded qualities of Volume I. When Marx takes up the theory of absolute surplus-value in Volume I, for example, he illustrates it with a long history of struggle over the length of the working day. The relevance of the concept to daily life and politics is clear (remember Mary Ann Walkley, who died of overwork?). He does not usually bother with such examples in Volume II, and when he does—when he consults the railway manuals for ideas on how to handle maintenance, repair and replacement of fixed-capital items such as rail ties and rolling stock—it is only to find more appropriate abstractions on the basis of accountancy information. We are therefore left to imagine what a long illustrative chapter on, say, changing turnover times, equivalent to that on the working day in Volume I, might look like. It is not that Marx lacked for illustrative materials: circulation times (the time from production to market) were changing dramatically with the coming of the railroads and the telegraph. We can easily insert our own examples of such time-space reconfigurations today (such as the impact of the internet and cell phones). But, with chapter after chapter lacking any attempt to illustrate abstract and technical findings with materials drawn from daily life (let alone from the historical-geographical evolution of capitalism), it is very easy to become turned off.
Even worse is the lack of politics. Engels, as Ernest Mandel points out in his introduction to the Penguin edition, feared that “the second volume will provoke great disappointment, because it is purely scientific and does not contain much material for agitation” (11). This is, again, something of an understatement. The moral outrage that courses through Volume I and animates it at every turn is missing. Class struggle disappears, as do active class relations. The devastating ironic passages of Volume I are not to be found. There is no call for revolution. Marx seems interested only in the nuts and bolts of how capital circulates. He sheaths his acerbic critical sword (except when it comes to Ricardo’s and Adam Smith’s “errors”) and for the most part gives us passive descriptions.
While the potentiality for disruptions and crises is perpetually being probed, the catalysts that turn such potentialities into realities are largely absent. It sometimes seems as if a self-perpetuating capitalist system can accumulate forever, with just a few hiccups and minor disruptions here and there. Rosa Luxemburg bitterly complained that the abstracted reproduction schemas developed at the end of Volume II showed on paper that “accumulation, production, realization and exchange run smoothly with clockwork precision,” adding ironically (given the way that Marx calculated, not always correctly, tedious arithmetic examples of expanding accumulation from one year to the next) that “no doubt this particular kind of ‘accumulation’ can continue ad infinitum, just as long, that is to say, as ink and paper do not run out.”
I do not mention all this to put readers off before they start, but to forewarn everyone of some of the difficulties and challenges that lie ahead. There are good reasons why this is by far the least read of the three volumes of Capital. The warning that Marx posted in one of his introductions to Volume I needs reiteration, but with redoubled force: “There is no royal road to science, and only those who do not dread the fatiguing climb of its steep paths have a chance of gaining its luminous summits” (C1, 104). Sticking with Volume II, I can assure you, is not only essential but well worth it in the long run. The view from some of the luminous summits is as unexpected as it is problematic and enlightening.
Because of the evident difficulties, I have taken certain liberties in presenting this text to first-time readers. I have added in tangible examples (contemporary if possible) to illustrate the principles that Marx is uncovering. I have added some comments on political implications and possibilities. I have also imported materials from elsewhere, particularly from the Grundrisse, to support and elaborate on some of the key ideas that are here incompletely presented. Even more dramatically, I elected, as already noted, to bring all of the materials from Volume III concerning merchants’ capital and money, finance and banking capital into contact with the purely technical presentation on the circulation of money and commodity capitals laid out in Volume II. These far more lively (if incomplete and often frustrating) materials from Volume III deal with the roles of merchants and financiers as agents in the rise of a capitalist mode of production. They also help explain why it is so important to disaggregate the circulation of capital, as is done in Volume II, into its components of money, commodity and productive activity. By combining the activities and behaviors of the social agents—the merchants, the financiers and the bankers—with the technical aspects of capital accumulation, we gain a far richer understanding of how capital works.
It is also in Volume III that Marx comes the closest to analyzing actual crises—those of 1848 and 1857. Looking at how Marx did this is helpful in wrestling with what happened in the crisis that unfolded in global capitalism after 2007, and makes this reading far more relevant to contemporary circumstances. I do not claim that Marx provides answers to the conundrum of how to explain our recent difficulties. But there are some instructive parallels between Marx’s time and ours. For example, his commentary on how the “mistaken” Bank Act of 1844 in Britain intensified and prolonged the commercial and financial crises of 1848 and 1857 bears an eerie resemblance to the unfortunate role of the European Central Bank in deepening and prolonging the crisis in Europe after 2008.
The necessity to go beyond the text of Volume II in order to understand it is mandated by its incomplete form. It is simply impossible to get much out of the book without speculating on its possibilities. I do not claim that my speculations and interpretations are right, or that I have privileged insights that others lack. But I do hope to demonstrate that the book becomes so much more interesting and exciting when approached in this way. If you remain constrained by the dry and technical manner of its presentation, you will emerge pretty desiccated by the experience. A more expansive and speculative reading allows you to import your own political fire into a text that on the surface seems to provide very little material for political activism.
Volume II is about the motion of capital, the “metamorphoses” that it undergoes as it moves through the different states of money, production, and commodities in a continuous stream. Whereas the labor process and the production of surplus-value dominate the argument in Volume I, these are viewed in Volume II as mere moments en route not only to the realization of surplus-value as capital in the marketplace but also to the perpetual renewal through capital circulation of the powers of domination of capital over social labor. The temporality (and to a lesser degree spatiality) of circulation is brought sharply into focus. The continuity of capital circulation, presupposed in Volume I, becomes a major preoccupation. We deal with questions of turnover time and of speed-up, with the complexities that arise because more and more capital circulates as fixed capital—not only the machines and the factories, but the whole complex of transport networks, built environments and physical infrastructures.
The circulation process of capital is here presented as the lifeblood that courses through the body politic of capitalism in the desperate quest to reproduce the capital-labor class relation. The potential barriers, blockages and imbalances within these processes of circulation form a field of contradictions which cry out for analysis. They also provide potential foci for political agitation. Anticapitalist politics have to grapple with the findings (tentative though they may be) of Volume II if they are to succeed. Though there is plenty of potential red meat for the political agitator buried in these pages, many of the findings do not sit easily with some of the political presuppositions that the Marxist left (heavily influenced by Volume I) has traditionally embraced. Problems are posed—such as the future of money and credit—that are not easy to resolve through classic forms of class struggle that focus on the workplace. Volume II defines what has to be reconstituted or replaced in the sphere of circulation if we are not all to starve when the revolution comes.
Marx opens Volume II by stating that the subject of his enquiry is rooted in the chapter on money in Volume I. This is discouraging, since the money chapter, being long, tedious and challenging, is where many people give up on that volume. I therefore advised first-time readers when reading Volume I to push on through this chapter as best they could to get to the more interesting materials on the other side. But here, in Volume II, we are invited to linger and expand upon this chapter at length. It is easier to do so once you recall the definition of capital, given in chapter 4 of Volume I, as a process and not a thing. The basic process is a continuous flow of value transiting through different states (entailing changes of form, or “metamorphoses” as Marx calls them):


If you are curious to know what kind of process this really is, then Volume II provides insights—such as the drive toward speed-up and the deepening tension between fixed and circulating capital—that are both revealing and surprising.
In pursuing his enquiries, Marx is never shy of making dramatic simplifying assumptions. These allow him, he frequently argues, to explore the dynamics of capital circulation and accumulation in their “pure state.” Thus, on the very first page of Volume II, we read:
In order to grasp these forms in their pure state, we must first of all abstract from all aspects that have nothing to do with the change and constitution of the forms as such. We shall therefore assume here, both that commodities are sold at their values, and that the circumstances in which this takes place do not change. We shall also ignore any changes of value that may occur in the course of the cyclical process.
The assumption that commodities exchange at their values (we abstract from the daily volatility of market prices) is familiar from Volume I, and we can, I think, presume that the “circumstances” to which Marx refers are those of perfectly functioning, legally defined and competitive market exchange set out in chapter 2 of Volume I. The “pure state” also assumes a closed system. There is no trade with some “outside”—unless otherwise specified—while capital is completely dominant within a closed system. The real kicker comes in the last sentence. “Changes of value” arise out of the changing productivity of labor. This is achieved through the technological and organizational changes outlined in the theory of relative surplus-value that dominates much of the text of Volume I. In Volume II, Marx excludes the theory of relative surplus-value from his purview and builds a model of an economy in a static technological and organizational state. At the outset of chapter 20, for example, he forcefully reiterates the assumption: “As far as revolutions in value are concerned, they change nothing …” (469). So the theory we are about to explore is one in which the technological and organizational dynamism that so dominates the argument in Volume I (and which constitutes such a revolutionary force in The Communist Manifesto) is held to one side in order to explore some other crucial aspects of the laws of motion of capital.
So what is it, then, that Marx is after in Volume II? Once surplus-value is produced (a process we understand very well from Volume I), then how does it get realized and then continue to circulate as accumulating capital? And, as it circulates, what particular forms of capital does it necessarily engender? Marx was obviously aware that the class configurations of merchants, bankers and financiers, and landlords existed in some relation to the industrial capitalist who, in Volume I, is depicted as the direct and sole appropriator of the surplus-value produced by wage labor. He also knew that these other forms of capital preexisted the rise of capitalist production and the factory system, and that they therefore played critical historical roles in the construction of a capitalist mode of production. Marx refuses, however, to conceptualize them as “mere residuals” of the transition from feudalism to capitalism. What he wants to know is how and why these other forms of capital are socially necessary to the survival of a capitalist mode of production in a “pure state,” and in what ways they might become the locus of contradictions and crises.
The idea of “capital in a pure state” is important for Marx. It is always possible, when faced with a crisis, to say that the crisis is due to some impurity or malfunction of a “pure” and therefore perfect capitalist mode of production. We have heard that a lot from neoliberals in the last few years: the problem is not, they say, any deep contradiction within the neoliberal model of market capitalism itself but a failure to follow neoliberal dictates properly. Their solution is to drive capital back even further toward its pure state through a politics of austerity and an increasing emasculation of state powers. What Marx seeks to show is that crises are inherent in, necessary and endemic to the survival of a capitalist mode of production in all its purity. Not only can no amount of regulatory tinkering set that matter aright, but the closer the economy converges on its pure state, the deeper the crisis will likely become (which is where Europe with its austerity politics seemed so clearly to be headed in 2012).
What Volume II also shows, however, is that independent and autonomously forming crisis tendencies always exist within the circulatory system. For conventional Marxists this is not always welcome news. It poses the problem of how to wage class struggle against, say, the merchants, the bankers, currency traders and the like, and to understand the many activities in which they engage (insurance, hedging, betting on derivatives, collateralized debt obligations, credit default swaps, and so on). We need to establish what the contradictions are and figure out what the impacts of independent and autonomously forming commercial and financial crises might be. We also need a better understanding of the role of financial giants, like the infamous “vampire squid” known as Goldman Sachs, along with Citibank, RBS, HSBC, Deutsche Bank, and so on, and likewise to unpack the role of merchant capitalists such as Walmart, Ikea and Carrefour in the political economy of our own times.
Marx imposes draconian restrictions and exclusions on what is or is not admissible in the theoretical world he is constructing throughout all of Capital. This is particularly evident in Volume II.1 Where do these restrictions come from, and how can they be justified? The credit system and the circulation of interest-bearing capital are frequently mentioned, for example, only to be shunted aside, usually with the comment that a consideration of such a form of circulation “does not belong here.” But why not? An examination of fixed-capital circulation or of differential turnover times in the absence of a credit system does not seem on the surface to make much sense. So why does Marx systematically exclude credit from consideration throughout Volume II, all the while admitting that everything changes when the credit system intervenes?
It is hard to answer this question without probing into the deeply fraught relationship between Marx’s “scientific” political-economic writings (Capital, the Grundrisse and Theories of Surplus Value) on the one hand and his historical writings (such as the Eighteenth Brumaire of Louis Bonaparte and The Civil War in France) on the other. Marx points to this tension on the very first page of Capital. Having defined the commodity as a unity of use- and exchange-values, he shunts the question of use-value aside (only, as we have seen, to resurrect it shortly thereafter) saying that “to study the uses of things is the work of history.” From this and many other statements, we can reasonably conclude that Marx clearly understood political economy and history as two distinctive fields of enquiry. This raises the general question of how to understand the significance of the political economy. This is a particularly pertinent question to be asked of Volume II. Answering it, I believe, helps us to understand the exclusions that characterize Volume II.
The political-economic writings are, of course, by no means devoid of historical content. The capitalist mode of production, which is their theoretical object of enquiry, is presented as an historical construct that arose out of feudalism, and which has the potential if not the necessity to evolve into some other social order, called “socialism” or “communism.” The historical writings and the journalistic commentaries, on the other hand, make scant reference to political-economic theory and the laws of motion of capital—though they do, of course, document the turbulence of actual class struggles. The one exception is The Communist Manifesto, written in 1848, in which many of the themes later explored in Capital are easily discerned. We are, however, left to impute the political-economic content in the early historical works such as the Eighteenth Brumaire, which analyzes the aftermath of the economic crisis and revolutionary movements of 1847–48 in France. It takes considerable effort to exhume the economic content of The Civil War in France, which centers on the Paris Commune of 1871.2 The focus is almost exclusively on fluid and often seemingly accidental political dynamics. Key concepts in Marx’s political economy—the production of an industrial reserve army, the falling rate of profit, the theory of relative surplus-value, and the like—rate no mention even in historical texts written after the first volume of Capital was already published.
The difference between these two literatures would not be so troubling were it not for a seemingly unbridgeable divide between the fluid, accidental and voluntaristic tone of the historical and political writings, on the one hand, and the rigorously scientific and lawlike political economy on the other. There seem to be two Marxisms—the deterministic and the voluntaristic—that are never destined to meet, except through a rather arid debate, fuelled largely by Engels and turned into dogma by Stalin, on whether the transition to communism was a scientific question and whether dialectical materialism constitutes a theory of history.
In the introduction to the English version of the Grundrisse, Marx outlines the principles that guide his political-economic enquiries. These help explain the rules of engagement that Marx observed in constructing his theoretical edifice, while shedding light on where the gap between history and theory comes from. I have concluded that he rigorously (and if one wanted to be critical, as to some degree I am, one would say “rigidly”) stuck by these principles in writing all of Capital (and there is no better place to examine this practice than in Volume II). This framework permitted him to transcend the particularities of his own times (such as the details of the crisis of 1857–58 that inspired his preparatory writings in the Grundrisse) and to produce a tentative though incomplete alternative theory of the laws of motion of capital. These laws animate, he held, the dynamics of all historical and geographical situations in which the capitalist mode of production predominates. But the achievement of this general theory came at a cost. The general framework Marx sets out constitutes a straitjacket that limits the applicability of these laws and leaves us a lot of work to do to understand particular historical movements and conjunctures.3
Marx sought a political economy that would be truly scientific. This science would, he hoped, have a power analogous to that of the knowledge structures of physics and chemistry. The law of value and surplus-value operates, Marx held, like a law of nature, albeit of capitalism’s historical nature. Several times he compares value to the force of gravity. A better analogy would be the laws of fluid dynamics, which underpin all theorizing about the dynamics of atmospheres and oceans, and innumerable other phenomena where fluids of any sort are in motion. These laws cannot be mechanically applied to fields such as weather forecasting or climate change without all manner of modifications, and even then there are plenty of excesses that remain inexplicable. Marx’s laws of motion of capital are very much of this sort. They do not and cannot explain all aspects of the prevailing economic climate let alone predict tomorrow’s economic weather. This does not mean that Marx’s political economy is irrelevant. No one in the physical sciences would dismiss the laws of fluid dynamics just because they do not provide exact predictions of tomorrow’s weather.
Marx’s general method goes something like this. He assumes that the legions of political economists and commentators who have written on the topic since the seventeenth century have made honest and good-faith attempts to understand the complicated economic world that was emerging around them. There were, of course, “vulgar” economists, who sought to justify the class privileges into which they were often born—but this was not true of William Petty, James Steuart, Adam Smith, David Ricardo, and so on. But even the vulgar economists, by the crassness of their arguments, revealed something very important about the inner nature of capital (as Marx shows in his amusing dissection of “Senior’s Last Hour” in Volume I of Capital). By exploring critically (with the aid of dialectics) their formulations and the inner contradictions in their arguments, Marx aimed, as he declared in his Preface to Capital, to construct an alternative account of the laws of motion of capital.
Marx established his new political-economic science through a critique of classical political economy rather than through direct historical, anthropological and statistical enquiry and induction. This critique, most explicitly attempted in Theories of Surplus Value but also permanently present in Capital and the Grundrisse, accords a good deal of authority (some would argue far too much, and there are quite a few instances where I agree with that criticism) to the collective understandings of bourgeois political economy and bourgeois representations (as with, for example, the reports of the factory inspectors in England, the country where industrial capitalism was, according to Marx, most advanced). So how does he construe the general approach of the bourgeois political economists? And how did classical political economy frame its subject?4
“Production,” he says in the Grundrisse,
appears as the point of departure, consumption as the conclusion, distribution and exchange as the middle. … Thus production, distribution, exchange and consumption form a regular syllogism; production is the generality, distribution and exchange the particularity, and consumption the singularity in which the whole is joined together. … Production is determined by the general natural laws, distribution by social accident. … exchange stands between the two as formal social movement; and the concluding act, consumption, which is conceived not only as a terminal point but also as an end in itself, actually belongs outside of economics except insofar as it reacts in turn upon the point of departure and initiates the whole process anew. (Grundrisse, 108–9)
This statement is foundational for understanding Marx’s approach in Capital. Notice, then, the distinctions here invoked between generalities (production), which are deterministic and lawlike; particularities (exchange and distribution), which are accidental and conjunctural (for example, outcomes of social struggles that depend on the balance of forces deployed); and singularities (consumption), which I take to be unpredictable and potentially chaotic. Note also that the singularities of consumption belong largely “outside of economics” (and, presumably, within the realm of history as suggested on the first page of Capital). The general framework suggested here is laid out in Figure 1.
While this syllogism “is admittedly a coherence,” it is, says Marx, “a shallow one.” So he rejects it in favor of a dialectical conception of how production, distribution, exchange and consumption might be brought together within the totality of relations comprising a capitalist mode of production. After many pages discussing the inner and dialectical relations between, for example, production and consumption, and then production and distribution, and finally production and exchange, he reaches his conclusion. Production, distribution, exchange and consumption “form the members of a totality, distinctions within a unity. … Mutual interaction takes place between the different moments. This is the case with every organic whole” (Grundrisse, 99–100). The organic whole (totality) of a capitalist mode of production that Marx has in mind is not purely Hegelian (though it may well derive from revolutionizing Hegel’s conceptions rather than simply turning them right-side-up). Its structure is ecosystemic, comprising relations within what Gramsci and Lefebvre call an “ensemble” or Deleuze an “assemblage” of moments. “Nothing simpler for a Hegelian than to posit production and consumption as identical,” complains Marx. “And this has been done not only by socialist belletrists but by prosaic economists themselves, e.g. Say” (Grundrisse, 93–4).
One would expect that Marx would choose this dialectical and organic formulation to construct his alternative theory. But, from his practice in Capital, it becomes clear that he sticks to the shallow syllogistic framework given by classical political economy even as he uses organic thinking and dialectical-relational analysis to build his critique and explore alternatives. He sticks throughout as closely as he can to the bourgeois conception of a lawlike level of generality—of production—and excludes the “accidental” and social particularities of distribution and exchange (until he gets to discuss them in the latter part of Volume III), and even more so the chaotic singularities of consumption, from his political-economic enquiries. Thus both Volumes I and II presume that it does not matter how the surplus-value might be divided between interest, rent, profit on merchants’ capital, profit of production and taxes. He also assumes that all commodities, with the exception of labor, are traded at their value (consumer desires are always manifest in ways that allow value to be realized in a trouble-free manner). There is, therefore, no theory of consumerism in Marx’s Capital (an unfortunate gap given that consumption now accounts for some 70 percent of economic activity in the United States—compared to some 30 percent in China, which was probably closer to the general level in Marx’s time).
Even more interestingly, Volume I is extremely weak in its discussion of the particularity of the distributive share that accrues to labor as wages. The question of what determines the value of labor-power is dealt with in two pages. It comprises a long list of all sorts of factors (everything from climate to the state of class struggle and the degree of civilization in a country) before declaring that labor-power is not a commodity like any other because it incorporates a moral element, but that in a given society at a given time its value is known. The analysis then proceeds on the presumption that the value of labor-power is fixed (which we know it never is). The later chapters on wages are pathetically thin. There is no attempt to come up with a theory of wage determination. All Marx does is to repeat the theory of surplus-value for the umpteenth time and add the insight that the practices of paying wages by the hour or by the piece mask even further what surplus-value might be about. He also records that there is a problem of trade between nations when the cost of reproduction, and therefore the value of labor-power, differs.
In Volume II, Marx likewise analyzes the commodity and money circuits of capital without any mention of distribution—interest on money capital and profit on commercial capital—and excludes any analysis of the credit system even though he freely concedes innumerable times that credit is a necessity and that everything looks different when it is taken into account. Again and again, we find exclusions of this sort from the analysis. The exclusions are almost always justified on the grounds that they do not lie within the field of generality with which Marx is exclusively concerned. This practice is found right throughout Capital. “It is outside the scope of our plan,” Marx writes in his opening to what would seem a crucial chapter on “Credit and Fictitious Capital” in Volume III, “to give a detailed analysis of the credit system and the instruments it creates (credit money, etc.). Only a few points will be emphasized here, which are necessary to characterize the capitalist mode of production in general” (emphasis added).
I should add a caveat here. The exclusions are occasionally transcended (as in the case of the value of labor-power about which Marx has to say something). Marx typically handles such situations by a brief description of the problem (for example, the relation to nature or the consumer desires of workers), and adds a few assertions as to its significance before returning to the generality of production. He rarely devotes more than a few paragraphs (and sometimes only a sentence or two) to such issues.
So why does he stick with the bourgeois structure of knowledge so rigidly when he has already laid out an alternative dialectical, relational and organic way to understand how capital works? I really do not have a good answer to this question. All I know for sure is that this is clearly what he does (the textual evidence is overwhelming). My best hypothesis is that, if Marx’s fundamental aim was to subject classical political economy to critique on its own terms, then he had to accept the general nature of those terms in order to identify their inner contradictions and deconstruct their absences. So, if bourgeois theorists presupposed a non-coercive free market, then he had to as well (as he does in the second chapter of Volume I). If the distinctions between generalities, particularities and singularities were foundational to the bourgeois mode of thought, then he had to work on that foundation too. This is the only answer I can give, but it is not fully satisfactory, because he abandons some bourgeois terms but not others. He will have no truck in Volume I with questions of supply and demand or of utility, for example (and we will shortly see why). He never bothers to explain the rationale for his choices. But it is overwhelmingly obvious that these are the choices he makes throughout.
The three levels of generality, particularity and singularity are not the whole story. There is a fourth level—that of universality—which concerns the metabolic relation to nature. Marx objected strongly to the habit of the classical political economists of presenting production “as encased in eternal natural laws independent of history.” Marx rejects this “naturalization” of the political economy of capitalism. He takes every opportunity he can to attack this naturalistic view of things (including the Ricardian/Malthusian view that the profit rate was bound to fall because of natural scarcities and rising rents). The generalities of the capitalist mode of production cannot, he insists, be explained by appeal to the universalities of natural law.
While Marx accepts that “capitalist production” is the lawlike generality that he wants to understand, he refuses the idea that it is natural in the sense that the natural sciences would understand that term. Capitalism is lawlike but the laws (including those of private property relations) are a product of human action. These laws should be distinguished from those that derive from our embeddedness in a world governed by natural laws (such as those of physics, chemistry and Darwinian evolution). These latter laws are considered immutable: we cannot live outside of them. In Volume I of Capital, Marx writes: “Labour … as the creator of use values, as useful labour, is a condition of human existence which is independent of all forms of society.” It is “an eternal and natural necessity which mediates the metabolism between man and nature and therefore human life itself” (C1, 133). The labor process “is the universal condition for the metabolic interaction between man and nature, the everlasting nature-imposed condition of human existence, and therefore it is independent of every form of that existence, or rather it is common to all forms of society in which human beings live” (C1, 290). We can only do as nature does.
The focus of Marx’s scientific enquiry is to uncover how the general laws of capitalist political economy came to be, how they actually function, and why and how they might be changed. And he wants to do this without invoking the universality that describes our ever-evolving metabolic relation to nature.
Marx takes these distinctions between universality, generality, particularity and singularity from bourgeois political economy even as he injects into them relational and dialectical meanings and critical strategies drawn from Spinoza and Hegel. He threatens, in the Grundrisse, to make them his own by embedding them in the concept of an organic totality. The problem would then be to understand how these different “moments”—the universal metabolic relation to nature, the general production of surplus-value, the particularities of its distribution and exchange relations and the singularities of consumption—interrelate. He then has to show how to isolate the lawlike character of production from everything else, and why it is so important to do so.
Marx’s political economy operates primarily at the level of the lawlike generality of production. But why prioritize production? Marx holds that “production predominates not only over itself, in the antithetical definition of production, but over the other moments as well. The process always returns to production to begin anew” (Grundrisse, 99). What does this strange wording mean? It would be wrong to interpret the production that “predominates” over itself as the material production of goods and services, as the concrete labor process, or even as the production of commodities. This is, unfortunately, a very common misreading. It leads to that erroneous interpretation of Marx as saying that social relations, ideas, human desires, and so on, are all determined by physical material practices. This is an erroneous productivist and physicalist reading of Marx, and it is not what Marx’s historical materialism is about.
The production that “predominates” within a capitalist mode of production is the production of surplus-value, and surplus-value is a social and not a physical, material relation. It is, after all, the production of surplus-value that is the fundamental focus of Volume I of Capital. The mobilization by capital of material labor processes is geared to the production of surplus-value. What Marx means when he says that production predominates over itself in the “antithetical definition of production” is that concrete material labor processes that are surplus-value producing are all that matter. Material production processes that do not produce surplus-value are valueless. In Marx’s grander scheme of things, of course, this means that the emancipatory possibilities available to human beings through the sensual physicality of the labor process are perverted and dominated by the social necessity to produce surplus-value for others. The result is universal alienation of human beings from their own potential capacities and creative powers. Some of the most powerful passages in the Grundrisse and Capital hammer home this point.
The production of surplus-value through the circulation of capital is, in short, the pivot upon which the lawlike character of a capitalist mode of production turns: no surplus-value, no capital. This was the fundamental break that Marx made with classical political economy. Marx continues: “That exchange and consumption cannot be predominant is self-evident. Likewise, distribution as distribution of products; while as distribution of the agents of production it is a moment of production. A definite production thus determines a definite consumption, distribution and exchange as well as definite relations between these different moments. Admittedly, however, in its one-sided form, production is itself determined by the other moments” (Grundrisse, 99). “One-sided” refers to the material labor process rather than to the social production of surplus-value. So what does “determine” mean here?
The “law” of a capitalist mode of production actually takes the following form: all manner of contingent and accidental structures of distribution and exchange and a grand diversity of consumption regimes are possible in principle, provided that they do not unduly restrict or destroy the capacity to produce surplus-value on an ever-expanding scale. A relatively egalitarian social-democratic structure of distribution in, say, Scandinavia can coexist with a brutal, unequal and authoritarian neoliberal regime of distribution in, say, Chile in the 1980s, provided that surplus-value is produced in both places. There is no unique pattern of distribution, system of exchange or specific cultural regime of consumption that can be derived from the general laws for the production of surplus-value. But—and this is a big “but”—the possibilities are not infinite. If any one of the moments, including the relation to nature, assumes a configuration that unduly restricts or undermines the capacity to produce surplus-value, then either capital ceases to exist or all-round adaptations within the totality of relations must occur. This is what “determines” means.
Such adaptations can occur incrementally, most often either through competition, state interventions or uneven geographical developments, in which configurations achieved in one space of the global economy out-compete others in producing surplus-value (much as the Chinese are now doing and the Japanese and Germans did in the 1980s). Changes can also occur through violent shakeouts: hence the significance of both localized and global crises and even wars (please note: I am not saying all wars and armed struggles occur solely for this reason).
Distribution, exchange and consumption reciprocally affect each other. But they also affect the production of surplus-value. This is so, Marx concedes, for a very simple reason: “Ground rent, wages, interest and profit figure under distribution while land, labour and capital figure under production as agents of production.” Capital itself, Marx points out, “is posited doubly, (1) as agent of production, (2) as source of income, as a determinant of specific forms of distribution. … The category of wages, similarly, is the same as that which is examined under a different heading as wage labour, the characteristic which labour here possesses as an agent of production appears as a characteristic of distribution.” So, while Marx sidelines the distributive aspects (the particularities of actual wage and profit rates, as well as interest rates, rents, taxes, profits on merchant capital) as contingent and accidental, and as therefore not lawlike (though this does not exclude empirical or historical generalizations), he foregrounds the crucial roles of land, wage labor, capital, money and exchange in the lawlike production of surplus-value. As a result, the factors of production loom large while the agents and rewards that attach to them are excluded from the picture (as is the case most obviously in Volume II). This leads many students to ask: Where is the agency in all of this political-economic theory? The answer is that Marx is merely following classical political economy. In his historical writings he does not have to do so.
So, let us look a little more closely at how he handles the particularities and the singularities that are so rigorously (rigidly?) excluded from his general theory.
THE PARTICULARITIES OF EXCHANGE

In the second chapter of the first volume of Capital, Marx assumes that “men are henceforth related to each other in their social process of production in a purely atomistic way. Their own relations of production therefore assume a material shape which is independent of their control and their conscious individual action.” Marx here accepts the Smithian vision of a “hidden hand” of a perfectly functioning competitive market. The laws of motion of capital that Marx constructs also rest upon this fiction. The result, as we know, is Marx’s compelling theoretical critique of free-market utopianism. The inevitable outcome, says Marx, is wealthier capitalists at one pole and ever more impoverished workers at the other. Such a system could not possibly produce, therefore, a result that would redound to the benefit of all, as Smith presumed.
This utopian vision of a perfectly functioning market never was and never could be realized. But what happens when exchange does not conform to this utopian vision? There are two areas in particular that call for attention.
Supply and Demand

When first reading Marx, many students ask: What happened to supply and demand? The answer Marx gives is: “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 labor, for example, “at the moment when demand and supply are in equilibrium, is its natural price, determined independently of the relation of demand and supply.” Marx deals, for the most part, exclusively in the so-called “natural” or equilibrium prices presumed in classical political economy. The reason that shoes cost more on average than shirts has nothing to do with differentials in demand for shoes relative to shirts. It is determined by labor content (both past and present). Supply and demand and price fluctuations are vital for bringing the economy into equilibrium, but they have nothing to say about where that equilibrium might lie.
But we know, both theoretically and in practice, that supply and demand do not always come into equilibrium. There are many systemic reasons, such as asymmetries of information and of power, and politically managed currency exchange rates (such as that practiced by the Chinese), that distort prices and dictate a path of development that is very different from that which Marx, drawing on Smith, theoretically allowed. Marx, for the most part, rules these distortions out by assumption. But there are instances when he has to allow them into the picture because of their systemic relevance. In the case of the price of labor, for example,
capital acts on both sides at once. If its accumulation on the one hand increases the demand for labour, it increases on the other the supply of workers by “setting them free” [through technologically induced unemployment] while at the same time the pressure of the unemployed compels those who are employed to furnish more labour, and therefore makes the supply of labour to a certain extent independent of the supply of workers. The movement of the law of supply and demand of labour on this basis completes the despotism of capital.
But as soon as workers figure this out, and form institutions and organize through trade unions to protect their interests, then “capital and its sycophant, political economy, cry out at the infringement of the ‘eternal’ and so to speak ‘sacred’ law of supply and demand” (C1, 793–4).
But, in both Volume II and Volume III, we encounter an even more damning reason why this equilibrium assumption cannot hold. It is both inevitable and necessary that the relation between supply and demand not be in equilibrium if capital is to survive. This is so because the total demand set in motion by capital is c + v (this is what capital lays out on wages and purchase of means of production) and the total supply is c + v + s (this is the total value produced). Capital’s interest is to maximize the surplus-value, which increases the gap between demand and supply. So where does the extra (effective) demand come from to buy the surplus-value? Marx’s very interesting answer is given in chapter 9, below.
The Coercive Laws of Competition

“The coercive laws of competition” play a vital role throughout Capital. “Competition,” Marx argues in the Grundrisse (730; 752), “is the mode generally in which capital secures the victory of its mode of production.” It “executes the inner laws of capital; makes them into compulsory laws towards the individual capital, but it does not invent them. It realizes them” (emphasis added). Like supply and demand, competition is treated as a mere executor and enforcer of inner laws of motion of capital that are established by other forces.
With respect to absolute surplus-value and the extension of the working day, for example, the spread of the appalling practices he describes does not depend in any way on the good or ill will of the individual capitalist. “Under free competition, the immanent laws of capitalist production confront the individual capitalist as a coercive force external to him” (C1, 381). With respect to relative surplus-value, innovations in productivity are similarly impelled forward by competition for market advantage. “While it is not our intention here,” he says,
to consider the way in which the immanent laws of capitalist production manifest themselves in the external movement of the individual capitals, assert themselves as the coercive laws of competition, and therefore enter into the consciousness of the individual capitalist as the motives which drive him forward, this much is clear: a scientific analysis of competition is possible only if we can grasp the inner nature of capital, just as the apparent motions of the heavenly bodies are intelligible only to someone who is acquainted with their real motions, which are not perceptible to the senses. Nevertheless, for the understanding of the production of relative surplus-value … there is a motive for each individual capitalist to cheapen his commodities by increasing the productivity of labour. (C1, 433)
In considering the impulsions that force individual capitalists to reinvest a part of their surplus-value in expansion, he invokes similar processes:
The development of capitalist production makes it necessary constantly to increase the amount of capital laid out in a given industrial undertaking, the competition subordinates every capitalist to the immanent laws of capitalist production, as external 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. (C1,739)
Pressures to equalize the rate of profit, so essential to the argument that leads into the theory of a falling profit rate, similarly presume the operation of the coercive laws of competition.
But what happens when the enforcing power of competition is, for some systemic reason, ineffective? There is, Marx concedes, always a tendency for monopoly to be the final outcome of competition. But monopoly, oligopoly and the centralization of capital can also arise for other reasons. When barriers to entry into a particular line of production are high because of the massive amounts of capital initially required (as in building railroads), then “the laws of centralization of capital,” with the help of the credit system, must take over. In fact, in any line of production where there are pronounced economies of scale, then something like an oligopolistic situation may result. To all this I add my own particular caveat: that, in a world of high transport costs, local industries, even those of small scale, are protected from competition. Falling transport costs from the mid-1960s onwards (with containerization being one of the unsung heroes of the process) changed the geography of competition remarkably.
Two important points then follow. When monopolistic and oligopolistic organization dominates, the laws of motion of capital (and even value itself) look very different. This was reflected in the theories of (state) monopoly capitalism that were articulated during the 1960s by Baran and Sweezy and the French Communist Party. The dynamics outlined by Lenin when he associated imperialism and monopoly capitalism into a specific configuration likewise depart significantly from the laws which Marx lays out in Capital.5 This is an instance where the laws of motion are themselves clearly in motion.
Phases of monopolization are, however, often followed by phases where the restoration of the power of the coercive laws of competition surges to the forefront of political concern. This happened towards the end of the 1970s throughout much of the capitalist world. It was, after all, central to the neoliberal agenda. Competition can be, as capitalists frequently complain, “ruinous,” but monopoly can all too easily produce, as Baran and Sweezy argued, “stagflation.” Capitalist state policies frequently attempt to regulate the balance between monopoly and competition either one way (through nationalization of the “commanding heights” of the economy) or another (by anti-merger and monopoly legislation or by surrendering, willingly or unwillingly, to privatization and global competition).
In the cases of both supply and demand and competition, then, questions arise as to the power of the enforcers to do their work. Laws mean nothing, after all, without effective enforcement. Whenever this issue comes up in Capital, as when the “laws of centralization of capital” are broached in Volume I, Marx characteristically turns away and says, “these laws cannot be developed here,” even as he argues that centralization constitutes, with the aid of the credit system and joint stock companies, “new and powerful levers of social accumulation” (C1, 780). This does not diminish the relevance of Marx’s focus on the laws as dictated by decentralized competition. But it does play an important role when it comes to figuring out how well those laws are being enforced in actual situations and why those laws may be changing. The ever-unresolved tension between decentralized competition and centralized monopoly power can even, under certain circumstances, become a trigger for crisis formation.
THE PARTICULARITIES OF DISTRIBUTION

Matters get even more interesting when it comes to the relations between the particularities of distribution and the general laws of motion of capital. While Marx concedes that distributions must be integrated into those laws whenever they affect production directly, this occurs only under special circumstances (most particularly, of course, with respect to the relative shares of wages and profits in Volume I). He excludes any consideration of how the surplus-value might be distributed between rent, interest, profit on commercial capital and taxes in Volume I. In Volume II, he avoids credit and interest even though he refers to their importance innumerable times (rent and profit on merchants’ capital are likewise excluded). The circulation of commodity capital is also highlighted, but there is barely a mention of profit on commercial capital. This is why I find it so interesting, in teaching Volume II, to import all of the materials about merchants’ capital (understood by Marx as both commercial and money-dealing capital) from Volume III into the purely technical presentations of Volume II on the circulation of money and commodity capitals (the circuit of production capital having been covered in Volume I). Not only does it attach a notion of class agency to the technical relations, but it opens up the revolutionary perspective that Engels feared was so lacking.
Volume II demonstrates, for example, the existence of a potential gap between where surplus-value is produced (in the labor process) and where it might be realized in circulation. If commercial (commodity) capital is powerful enough—as in the case of, say, Walmart—then much of the surplus-value produced may be realized by the merchants. The money capitalists can also take a huge cut, as can the landlords and the taxman, leaving the direct producers with the slenderest of profit margins (this is one of the reasons that any attempt to measure falling profit rates by looking only at money profits in the production sector alone is so hazardous). Organized labor can seem to procure a larger share of the value produced through struggles at the point of production, only to have that share recuperated by the capitalist class as a whole by the money-gouging retailers, the debt-peddling bankers and financiers, the landlords and, of course, the taxman, who often seems to specialize in taxing the poor to return surplus-value to the corporations and to the capitalists in the form of lucrative tax breaks and subsidies.
Throughout Capital Marx states that both merchants’ capital and interest-bearing capital are “antediluvian” forms of capital that preceded the rise of a capitalist mode of production. He takes pretty much the same position with respect to landed property. The problem is then to understand how these prior means of extracting surpluses are rendered subservient to the rules of the capitalist mode of production. Usury, which played such an important role in undermining feudalism, had to be revolutionized so that it became interest-bearing capital operating within freely functioning money markets. Merchants, who once made their money buying cheap (or by robbery and stealing) and selling dear, can appropriate only that share of the surplus-value that accrues to them by virtue of the services they render to surplus-value production and realization. Rents on land and resources are fixed in relation to superior surplus-value production conditions; and rent levels can guide resource and land uses in ways that might optimize surplus-value production. This is broadly how Marx approaches these aspects of distribution. The rules of a capitalist mode of production supposedly discipline the distributional arrangements and the distributional shares (or, as Marx puts it in the Grundrisse, production of surplus-value “predominates” over distribution).
Financiers, merchants and landlords may or may not be more powerful than industrial capitalists in particular places and times. However, Marx treats their remunerations in a pure capitalist mode of production as being exclusively made up of deductions out of the surplus-value that comes from the exploitation of living labor in production. Their rate of return is sensitive to how much surplus-value is produced, which depends in part on their own indirect contribution (or lack of it) to surplus-value production. Distributional arrangements thus impinge upon the generalities of production in ways that Marx is reluctant to allow.
THE SINGULARITY OF CONSUMPTION

The production of surplus-value depends on its realization through consumption. Consumption cannot, therefore, be kept entirely outside of political economy as a general category because it reacts “upon the point of departure [of capital accumulation] and initiates the whole process anew.” In the Grundrisse, Marx spends several pages going over the ways in which consumption and production of surplus-value relate. It is important to distinguish, Marx says, between (a) productive consumption on the part of the capitalist who needs raw materials, intermediate inputs, machinery, energy and the like in order to set a labor process in motion and (b) individual “final” consumption on the part of workers, capitalists and the various “unproductive classes” (military, state officials, and so on) that make up any social order. Consumption is necessary to complete the realization of the surplus-value produced in commodity form. But the demand has to be backed by an ability to pay. The capitalist, in short, recognizes only one kind of demand: effective demand.
So what is it, then, that lies outside of economics and political economy? To term consumption a “singularity” is to characterize it as something that is outside of the range of rational calculation, that is potentially uncontrollable, chaotic and unpredictable. The actual state of wants, needs and desires (and thus the qualities and politics of daily life) are therefore sidelined in the general theory. Capital is treated as agnostic as to what use-values to produce to satisfy final consumption, and seems indifferent as to whether people want horses and buggies or BMWs. The capitalist seems to say to the consumer: Whatever you fancy, want, need or desire, we will produce, provided you have enough money to pay for it. The issue of the historical and geographical development of actual consumption patterns and cultural lifestyles is thereby evaded. In Volume I of Capital Marx assumes that an effective demand always exists, that commodities (with the exception of labor-power) are traded at their value. This permits Marx to produce a general theory of capital accumulation that has the same relevance over entirely different final consumption regimes. This is the advantage that comes from abstracting from any distinctive regime of use-values. Had he locked himself into the consumption habits of mid-nineteenth-century Britain, we would no longer read him in the way we do.
But there are some general forces at work that call for elaboration. If a commodity is no longer wanted, needed, fancied or desired as a use-value, then it has no value. Both old and new uses and needs must therefore be stimulated to keep accumulation going. The problem is that, while “commodities are in love with money … ‘the course of true love never did run smooth’. … Today the product satisfies a social need. Tomorrow it may perhaps be expelled partly or completely from its place by a similar product” (C1, 202–3). A vast industry has grown up since Marx’s time to stimulate demand through fashion, advertising, emphasis upon lifestyle choices, and the like. But human curiosity and desire is not a blank slate upon which anything can be written. One need only look at the alacrity with which young children deploy their desires to play when given an iPad to recognize that Steve Jobs’s brilliance lay as much in his understanding of human wants, needs, desires and powers as in his technical sophistication.
The manipulation and mobilization of human desires has been central to the history of capitalism, but Marx excludes it from the political economy precisely because it is the work of history to deal with it. But it is not entirely outside of theoretical elaboration.
Laborers, for example, exercise choices in how and on what they spend their money, so the state of their wants, needs and desires can become important. Maintenance of the necessary balances between the different sectors of the economy may require, Marx suggests, bourgeois manipulation of mass consumption to make the workers’ consumption “rational” in relation to accumulation. Bourgeois philanthropy is therefore often about channeling laborers’ consumption habits in ways favorable to accumulation. This was later most clearly exemplified in Henry Ford’s use of social workers to monitor and direct workers’ consumer habits when he introduced the $5 eight-hour day into his factories. The distinction between luxury goods and wage goods also becomes important because the dynamics of bourgeois consumption and of workers’ consumption are qualitatively different.
Throughout Capital, the manifold ways that consumption can affect production are largely depicted in formal and technical terms, rather than as social relations and ways of daily life that have dynamics of their own. Marx avoids any specific characterization of the nature and form of final consumption habits, and he certainly avoids any mention of cultural preferences, fashion and aesthetic values or the compulsions of human desires (the role of sexuality in shaping consumerism, for example). But we can clearly see in Marx’s presentation certain imperatives that explain why China is now the biggest market for BMWs when, a few years ago, the streets were full of bicycles.
Part of the work that Marx left us to do, therefore, is to pull together a far better understanding of contemporary consumerism than we typically possess. Traditional methodologies of political-economic enquiry do not work very well in this sphere (which is probably why Marx resisted bringing too many of the facts of consumption within the field of political economy). This applies as much to productive consumption—the application of labor in the labor process to consume materials in commodity production. The difficulty of controlling the singular character of laborers at work has come to be recognized, particularly through the work of Mario Tronti and Antonio Negri, as having great revolutionary potential precisely because of its singular character.6
In recent times, studies galore of consumption and consumerism have been produced, mainly in the field of cultural studies; but unfortunately all too many of them fail to situate their topic in relation to the totality of relations that Marx envisaged. Indeed, many such studies are conceived as antagonistic to the lawlike character of capital accumulation. There is, obviously, a sense in which this antagonism is correct, which is precisely why Marx held consumption to be about singularities, not generalities. But insofar as the ultimate aim of historical work (as opposed to lawlike political economy) is to understand a capitalist mode of production as an organic totality in evolution—so any attempt to understand our current conjuncture requires that we bring the world of consumption, of political subjectivities, and of the aesthetic, cultural and political preferences of individuals within the frame of enquiry, not as a substitute for the political economy but as a foundational and complementary field of analysis.
Of course, the world of human desire is not beyond the marked influence of the laws of motion of capital. The way that capital has changed our material world has implications for how our mental conceptions and our psychological make-up, our wants, needs and desires, our self-understanding have also changed. When the laws of motion of capital produced suburbanization as one answer to the persistent problem of overaccumulation, then tastes, preferences, wants, needs, desires and political subjectivities all shifted in tandem. And once all of these become embedded in a culture, then the rigidity of those cultural preferences came to form a serious barrier to revolutionary change. If, for example, it becomes necessary to revolutionize and reject suburban ways of life in order to open new paths either for capital accumulation, or even more compellingly for the transition to socialism through re-urbanization, then the fierce attachments of powerful political constituencies to suburban lifestyles and cultural habits will first have to be confronted, and eventually overcome.
It is undeniable that Marx operates throughout most of the three volumes of Capital within the “shallow syllogistic” framework derived from classical political economy, and that he largely confines his theoretical investigations to the level of generality within a purely functioning capitalist mode of production. In the texts that have come down to us, he marginalizes and frequently excludes questions of universality (the relation to nature), particularity (of exchange relations and distributions) and singularity (of consumption and of consumerisms), even as he recognizes in various study plans (such as that in the Grundrisse) that he would need further books on, for example, competition (actually there is a not very informative chapter on this topic in Volume III), the state, and the world market, to complete his project. When he does hit a point in Capital where the framework does not work, as we will see in the chapters on the circulation of interest-bearing capital, then he finally goes beyond it. But Marx does not attempt to re-specify what the laws of motion might look like under those new conditions where the framework is broken.
Volume II of Capital is written almost entirely in the shadow of the “shallow syllogistic” framework that Marx tended to impose upon all his political-economic enquiries. Rarely does he venture beyond that framework. While far-reaching and enlightening in some directions, the theoretical world he depicts is rigorously limited in others. Confining himself so tightly within the level of generality permitted Marx to construct an understanding of capital that transcended the historical particulars of his own time. This is why we can still read him today—even Volume II—and make sense of so much of what he has to say. On the other hand, this framework makes for difficulties of any immediate application to actually existing circumstances. This is the work we are left to do. We can better appreciate the nature of that work, however, when we understand the self-imposed limits of Marx’s general theory and what, within its limitations, that theory can do for us. It is in the spirit of that question that I propose to take on the contents of Volume II. And it is to that exciting but daunting task that I now turn.