Proposal of a Hegelian Marxism - I. Political Economy - Text
- 1 I. Political Economy
- 1.1 1. Epistemological Differences
- 1.2 2. Theory of value
- 1.3 3. Theory of capitalist exploitation
- 1.4 4. The different critiques of capitalism
I. Political Economy
1. Epistemological Differences
a. The Context
A professor of economics, a Marxist, once corrected me with some vehemence, "Marx didn't write a political economy, what he did was a critique of political economy." As his statement is true, and as an enormity is omitted (as well as in his vehemence), there is much important content to deploy.
On the one hand, it is strictly true that what Marx did was a critique of political economy. On the other hand, as certain as it is that way and, moreover, the foundation and purpose of his criticism is quite different from that in his own time, as did theorists like Say, Cournot or Stuart Mill, and very different from that of historians of economic theory, schooled and disciplined by Schumpeter, recognized or would recognize.
The economy, among the social sciences, perhaps because of its claim to resemble the "hard" sciences, is the one that has least recognized the significance of its incorporation as a discipline, starting from the mid-nineteenth century. Among economists and even among historians, a similar atmosphere to that of the physicists or chemicists prevails, for which the road from Lavoisier to Prigogine is simple, more or less linear, and merely cumulative. Thus Quesnay's or Smith's reflections would be the origin of a tradition that with no major breaks or even less epistemological breaks, would have limited itself to extend its empirical spectrum, to develop its analytical tools and self-correct its limitations and temporary failures. So much so that the current prevailing schools of thought in economics are pleased to be called "neo classical" or "neo liberal". 
The great philosophical and methodological issue that remains concealed in this artificial claim of continuity is the deeper meaning of the transformation of modern knowledge about society in disciplines, for the sciences grouped as Social Sciences.
It is an impact which in sociology and psychology is not only distinguished clearly by their own theoreticians, but is being proclaimed with a certain pride, and given a foundational character. This is the difference between a possible sociology in Machiavelli, Hobbes or Hume, who are stigmatized as "philosophical" and the "truly scientific" one, which would be the one from Durkheim, Weber and Merton, or the perfectly analogous difference between a psychology of Descartes, Kant (his Anthropology) and Espinosa (his Ethics) and, again, those that do follow and would have the status of scientific researchers, like Pavlov, Watson, Hebb or Skinner.
In comparing the apparent continuity of academic economics with those celebrations of rupture and refounding, you can only conclude that the economy is the most naturalized of the fields of bourgeois social knowledge. Naturalized to the point that since the late seventeenth century, its development can only fit through empirical expansion and formal refinement of its propositions.
The epistemological center of the professionalization of knowledge that comes with the disciplines of Social Sciences  is the displacement of the commenter, moving in various fields, with quite informal observation tools, actively and explicitly basing himself on broad philosophical concepts, who feels involved and direct participant of the reality he comments (as Machiavelli, Locke, Hobbes, Burke or Hume), by the scientist who becomes a specialist who strives to clarify and formalize his methodological tools, which claims to have become independent of the "metaphysics" and claims to be located, as mere technician, at an ethically neutral position facing the social realities that he describes (as with Cournot, Durkheim, Wundt, Saussure, Walras, or Schumpeter).
In practice, these displacements do but make invisible the philosophical foundation of modern knowledge about society, naturalize them to convert it into fields of facts which are presumed to be knowable in a purely objective way, and to proclaim the new learning, which would "now" be genuinely scientific, as sources of practical intervention techniques that would be purely neutral in the conflicts on which they operate.
Perhaps just because of this operation of omission, of bracketing of the fundamentals, rising them to the rank of the obvious, results in drawing them of the field of the controversial, of the challengable, economists can afford to keep their assumptions at sight. After all, the patriarchal, eurocentric, individualistic, ubiquitous content in the foundations of psychology, sociology or linguistics should be conveniently obscured in the alleged ethical neutrality, because they have been directly challenged in social reality. The social scientist avoids to explicitly rule on these connotations, taking refuge in his mere technical "neutral" character, while at the same time he keeps holding them up, follows its consequences, sheltering them in the apparent obviousness of the assumptions.
In the field of economic reality, however, the hegemony of bourgeois thought remains unaltered in the practical field, and is displayed shamelessly as obvious in the field of the theory. Nobody can be explicitly Hobbesian, Malthusian or utilitarian, in psychology, sociology or anthropology, without paying a certain cost on his image of professional "neutrality". No economist, however, exactly the opposite, feels uncomfortable talking about "human nature" or attributing to such alleged nature selfish, aggressive, competitive, individualistic and patriarchal features. For economists, Kant never existed, nor Hegel, Wittgenstein, Heidegger, Schopenhauer, Schiller, Freud ... to mention only some of the thinkers who have gone beyond such assumptions.
In the current economic discipline, the displacement of the philosophically informed observer and activist in the realities he describes, has not so much the nature of making something invisible or of an abrupt omission (as in Parsons, Luhmann, or Kelsen) but, rather, its reducing the initial two or three pages of all economic treatise, which list the "platitudes" which will then never be subjected to discussion: men have natural needs and behave in individualistic and utilitarian ways to satisfy ... etc.. The result of this lack of philosophical modesty is the same as the darkening practiced in other social sciences: essential and substantive parts of the theoretical assumptions simply leave the field of what may be subject to discussion.
Having considered these epistemological shifts, in which the classic philosophical foundation of modernity remains, from the work of Marx, one could say that the cycle of economists that begins with Say and Cournot, and continues with Jevons and Walras, also represents a "Critique of Political Economy", very different, indeed, to the one done by Marx.
Before Marx and Cournot, Political Economy was the name given to the tradition of economic thought that formed by British, French and some German scientists, starting with William Petty. The most important are Francois Quesnay and Jean Charles Leonard, Count of Sismondi, among the French, Adam Smith, Thomas Malthus and David Ricardo, among the English, to which Georg Friedrich List and Adolph Wagner can be added among the Germans.
From the viewpoint of the logic of social science disciplines, the work of Say, Cournot and Jevons, make a real transition from a Political Economy to Scientific Economics. A transition that makes of it perhaps the most "scientific" of all disciplines, except for other extremes such as radical behaviorism in psychology, Luhmann's formalism in sociology or structuralism in linguistics. No one seems to doubt that boast of sophisticated mathematical techniques and allegedly neutral technical language makes this science a "hard science", despite the cumbersome inefficiency of such techniques to predict the smallest price swings, or the most catastrophic global crises, and the strange emptiness of technical language that says what everyone knows in ways that almost no one understands.
What we find in this Scientific Economy is a Critique of Classical Political Economy which suspends and ignores what it just had as "Polical", thereby maintaining, and removing the critical discussion of the theoretical foundations and their explicit connections to the political world that seemed essential to each and every one of the classical economists. Discussing economy without discussing politics would have seemed crazy precisely to Adam Smith, who not in vain considered his reflection on the wealth of nations as a treatise on ethics. And do not incur the absurdity of calling "political" what the finance ministers call "economic policy" because they themselves time and again do emphasize that the content of that expression is a set of "technical and non-political" problems.
The Scientific Economy, falsely depoliticized under the ideological assumptions of the scientism of disciplines, fulfills its purpose, which is merely to maintain, authorize, protect the hegemony of bourgeois interests in this area of reflection. Regarding it, the Critique of Political Economy made by Marx precisely and explicitly keeps the deep spirit of classical political economy, but by radically challenging it in content. And from that challenge epistemological differences arise, which I will try to specify.
This whole spectrum of theories, then, makes a difference in three terms: Classical Political Economy (fully present in the foundations of the current discipline), Political Economy formulated by Marx, and the Economy which I will call "scientific" because, strictly speaking, it is, or "conventional" because it is commonly studied in faculties of economics.
In this triangulation, I only will address the problems of foundation of Classical Political Economy regarding the philosophical considerations devoted to the notion of value, desire and need, in Chapter IV. Because of this, in what follows, the term "political economy" refers to Marx, and whenever necessary to discuss the foregoing it will add the word "Classic".
In this section, what interests me most, for political reasons, is the comparison between the epistemological foundations of the economy given by Marx and conventional economics, which are commonly studied as if it were the only possible one.
b. The differences
There are fundamental epistemological differences, affecting the general philosophical approach that addresses economic issues, and other, more specific, derived from them, which result in methodological differences in how to formulate and address particular problems.
Among the former, the first major difference is the complete historicization of human action, directly opposed to the naturalization of the motives for the actions of economical agents. In Marx's reasoning, smooth and simply there is no "human nature" that could be considered under the classic metaphysical background, or in the forms of a "biological basis of behavior", as it is usual in psychiatry, or as they do in the same economy by appealing to the drift of natural selection, or ethology, to account for the basic behaviors of consumers. All empirical situations that scientific economists repeated again and again, of ritual and boneheaded way, on selfishness, hedonism, competitive and utilitarian spirit are, for Marx, consequences rather than causes of the situation we want to explain, and can be removed by changing the historical conditions that determine them.
A second set of differences that stem from Marxist economics is a global analysis focused on the idea of exchange value, a strongly historicist analysis of the capitalist system as a whole. What Marx is interested in, is to understand the phenomenon of capitalist exploitation, for which he makes a consideration based on the level of commodity production and historical subjects, the social classes, which would be confronted about it. The scientific economy, however, focused on the idea of price, whose aims and purpose are economic calculation, for which it focuses on the processes of circulation of goods, constantly distinguishing between two analytical levels, micro and macro economics, that are never articulated in a global analysis. For this analysis, traders are simply individuals, or collectives, that are never truly considered as historical subjects. The history has been reduced to its simplest form of temporality, of course, as an independent variable, and the contradictory effects between local action and global results, which Marx insisted in treating as "alienation", are simply not considered, or seen as external to the economic system variables.
This profound difference in general approach in turn contains a third difference now directly affecting the merits and projections that can be made from each. While scientific economy is governed by strict methodological individualism, for which the "social" action is but the result of collections of actions of many individuals, Marxist economics and social studies assume and studies whole social sectors, social classes, whom it considers subjects. And this means that while in the former the subject of freedom is the individual, strictly limited by the determinations of "human nature", in the latter the subjects of historically significant freedom are the social classes, limited only by the reification of social relations that they themselves have created, while individual freedom is more of a project, a great historical task that has begun under bourgeois hegemony but that can not be made real and effective, in a comprehensive way, under its domain.
The most important political consequence of this foundation is that Marx is not interested so much in criticising the enrichment, or abuse, carried out by private operators. His argument is directed globally against the appropriation of surplus value exerted by the bourgeoisie as a whole, as a class, on the whole proletariat as a class. Capitalist exploitation, in Marx's concept, is not really a interpersonal relationship but, in every sense of the term, a social relationship, a relationship between historically determined social subjects.
On the methodological level these differences have an effect on everything in the investigation of value and price. For Marx value is an empirical but global and historical variable. Its magnitude must be investigated considering very long series of products, or entire branches of production, and can only be obtained from a statistical weighting of the factors of production that operate on them. The price, however, is an empirical but temporary local variable, and its investigation requires more effort than simple statistics that can be done from their immediate values in the market at any one time. As I will postulate later, all of Marx's reasoning is done, and acquires its formal validity, around the idea of value, and the historical implications of its movement, due to which in fact it does not require, to consider their overall argumentative validity, a step by step conversion between values and prices that are expression of every day economy.
The status and methodological imperative in conventional economics are completely different. On the one hand, to the extent that it is oriented to pragmatic economic calculation, it requires immediate empirical observation of prices, and is subject to the imperative to formulate rules and laws surrounding them. Moreover, to the extent that it completely ignores any political consideration around exploitation, it has no need to reason about the reality and movement of value to achieve its goals. Because of this, the practice in conventional economics is, quite simply, to identify both variables (the price would be the same as the value), without taking over their epistemological difference.
Given this practice, which fully takes the central methodological issue from the field of production to the area of circulation of goods, a long tradition of Marxist economists, hurrying to upgrade their credentials to "scientific" economics, have attempted to find formulas for calculating prices (local and temporary) from the value (a historical and global variable). This problem of "conversion of value to price" has been even considered by some as the central problem of Marxist economics. My opinion, about which I will argue in more detail later, is that this is a fictitious or at least unnecessary problem. On one side it is fictional, because it arises from not recognizing (as the bourgeois economists do) that there is an epistemological difference between the two variables. On the other hand it is unnecessary, since the global and historical validity of the arguments of Marx does not depend on such a conversion formula to be found.
Also regarding methodology, a central consequence of these profound foundational differences is that Marxist economics can provide a strong explanatory theory with predictive power to historical level of the cyclical crises of capitalism.
It is noteworthy that scientific economy has had systematic difficulties in addressing the problem of general crisis. This is a topic postponed by the mainstream discipline until about twenty years ago. Remarkable and curious issue: although it is empirically verifiable that the cyclical crises of capitalism are a systemic feature that causes the greater effects at all levels, but the science dedicated to it historically postponed its study until they reached the frequency and severity of financial crises. Even until today, however, there is no theory to explain the crises under purely internal mechanisms. Always their source is seen as external and contingent on the system as a whole. Droughts, storms, contingent shortage of raw materials, investor panic. Again and again scientific economists focus their analysis on the periphery.
Exactly the opposite, the starting point of Marx is the idea that the global economic system is historically unstable. And its instability derives from deeper structural conditions: it results from originally unequal, individual operators competing in a market that is opaque to each of them, and in which each is interested, due to the competition, in keeping that opacity.
While scientific economic theories insist in putting the dogma of balance into their foundation, for whose failure they can only offer external explanations (the system itself is never to blame for its crisis), or merely descriptive ones (just do not explain anything) without any, neither local nor historical predictability, Marx's theory, where the imbalance is an initial datum, may offer an internal, structural explanatory mechanism, from which a clear projection on the overall fate of capitalism may follow.
I argue that the theory of the cyclical crises of Marx has not been refuted, until today, perhaps for the saddest of reasons. Simply no one has critically discussed it on its own terms. The theory of value has been criticized from a different epistemological base than that which served as its source. All kind of external and contingent responsibles for what is a blatant reality have been searched. It has come to turn to chaos theory, ultimately: reality chaotizes alone and by itself, and irrationally breaks out as the simply irrational. Never daring to take what for Marx was almost axiomatic: an economy of individual agents competing in an opaque and originally uneven market, can only lead to imbalance. Imbalance must be a structural feature of the system.
In the theoretical development of both perspectives, this leads to another notable difference. At no time Marx uses models of perfect, or even a general and abstract models of any competition. Political economy is a situated knowledge. It puts as its starting point a set of historically real empirical situations, and only from them it amounts to abstraction.
Primitive accumulation of capital, the uneven development of the techniques, of national economies, of companies in the same branch of production, the need for technological development as an internal element of competition, these are all for Marx starting elements. Even machismo, as real and prevalent cultural element is an internal variable to Marx, which enables him to explain the integration of women into the industrial labor force looking for the goal of increasing the profits on the absolute path.
It can be said that with Marx there always operate historic and cultural causes while scientific economy not only avoids causes and explanations, always tending to stay in the descriptive level, but when moving towards the explanatory level, the causes they invoke are always in the order of nature, or are merely contingent.
Exactly the opposite of the historicist method of Marx, scientific economics, like physics, makes abstract and general models in the beginning, and only from there on it will be adding variables, the "imperfections" that make that capitalists may never compete as the beautiful models of competition prescribed and made desirable. The use of chaos theory in the current scientific economics is somehow the end of such illustrated alienation to which reality must be written in mathematical characters. As the physical and contemporary meteorologists know very well, perhaps these mathematical formulas exist, but they largely exceed all what more refined mathematics, and more complex computer systems can achieve. And if this is found every day in complex systems such as weather, earthquakes, or heart attacks, it seems reasonable to suppose a fortiori to systems involving human freedom, as is, par excellence, the economic system. This, as Hegel already knew from purely philosophical premises, is obvious to Marx. The global and historical complexity of the economic system can only be addressed globally and historically . That is the central methodological difference between the two trials.
When we seek the historical background of these differences, what we find is a scientific economy that is just an illustrated rationalization of modernity or, at best, driven by the evidence of the crisis, a neo Illustrated chaos theory as an explanatory factor for dramas of human behavior. I argue that in Marxist economics instead you should see a post illustrated theory where knowledge matches a political will, a revolutionary will. It is not the same an economic policy conceived as a set of techniques, micro and macro economic ones, where the opinion of the "expert" will be imposed on the "lay", than conceive it as the task of moving social subjects towards an awareness of their own situation, their structural alienation, and to the profound transformation of their lives.
Often Marxist economists, led by the reduction of Marxism to mere science, have tried to assimilate themselves to the knowledge and competence standards dictated by conventional economics. My opinion is that these not only are attempts essentially doomed to fail, but have also neglected thus precisely the specific and most valuable analysis of Marx.
It is useful, given the long and deep prejudices prevailing, to warn, however, that I don't see that both approaches are completely antagonistic. Most likely the Marxists would do very well to study rigorously scientific economics. Mastering the Art of economic calculation, so far the myths of the discipline allow. My argument, however, is that mainstream economists would do very well wondering whether a different epistemological basis could enrich their own analyzes, beyond willing to share the will that encouraged the development of such an epistemology.
And by the way, the Marxist economists would do very well in these hard and gray times, so full of skepticism and claudication, taking and developing the specifically political substance contained in political economy.
But in emphasizing the complementary nature of the analyzes that are typical of scientific rationality and of those that are unique to the Marxist argument, as I have done here, however, I find a suspicious neutrality. In the comparisons I have drawn so far a "political" pole and a "scientific" in the sense of "technical" pole always appear. Attribute to each one its own, identify areas, declare the possible complementarity, certainly emphasize their mutual independence, these are exercises in liberal tolerance that can leave you well satisfied thinking that will surely be pleased to know that Marxism can not do without science and that the latter, in turn, can dispense of Marxism itself. Science would be, in this optimistic vision, a generally applicable tool capable of servicing many possible causes. Marxism, however, would be merely a particular value-based option. It's time to talk of the real differences.
The first question, of course, is the alleged difference between "political" and "technical". Beyond the potential effectiveness, or even the reality of effectiveness, claiming a knowledge to be merely technical is but an ideological operation. The issue is not, properly, "at whos service" a technique is, that is not the principal place of ideologism, but rather what you want to imply from that idea. The notion of "purely technical" rests, firstly, on the idea that it has been derived from a neutral knowledge (that you can "use" for this or that) and on the other hand, the idea that effectiveness derives from knowledge or, also, the precedence of knowledge about power (to have power, you would have to have, first, the right knowledge).
The discussions in the philosophy of contemporary science shows that there isn't sufficient epistemological foundation to defend the externality of knowledge in relation to the context of discovery and thus, any pretense of neutrality. Not only sociological relationships within the scientific community profoundly influence what is accepted as scientific knowledge, as demonstrated by Kuhn, Lakatos, Bourdieu , but has shown time and again the dependence of scientific knowledge from cultural variables and philosophical background, as a characteristic of its historic environment. Scientific knowledge lacks neutrality by its origin, long before its application. Needless to add that this conclusion is fully consistent with a Marxist perspective, which is posted on multiple paragraphs of Marx's work.
2. Theory of value
Marxist political economy is based on the idea of exchange value and on the theory of labor-value, from which it emerges. This section I will detail what these notions are, and some consequences that seem relevant to me, in order to explain Marx's critique of capitalist exploitation. On the historical essence of value in general I will propose a radically anti naturalist and anti utilitarian conception in Section 1 of Chapter V. Here, I shall assume that foundation, to concentrate only on the economic critique as such and on its more political effects.
Until now, human societies have been exchanging objects with material qualities, functions and diverse utilities (a sheep for a sack of wheat, two cattle for a wife, a portion of land for an oath of allegiance) by making them equivalent through socially and historically established fictions of equivalence.
In fact nothing that is exchanged, and so acquires the character of a commodity has an equivalent value to another which is not identical to itself. There is no system to establish such equivalences in a natural, objective manner, outside of human history. The value of any object is, by itself, simply incommensurable with the value of another.
Marx clarified and developed the theory that establishes how the equivalence fiction, which has historically governed the capitalist market, occurs and the characteristics it has. The idea, which comes from Adam Smith and reached Marx through David Ricardo, is that the exchange value, ie the value of an asset on the capitalist market, is determined by the socially necessary labor time to produce it. This statement is what is classically called the "labor theory of value".
The key to this mechanism is in an extraordinary abstraction, which is actually exercised, socially, without anyone having explicit awareness of its operation. The many and various real qualities of goods are abstracted and reduced to something that is in principle a simple amount: a period of time.
Of course a single commodity (a pencil, a sheep) can be produced in various ways, each of which involves different periods of time in their finishing. This is essentially because it can be produced through various technical means (tools, machines), by people with varying degrees of skill. These various periods of time should be considered to obtain a socially necessary time. But the use of these various techniques may have different social impact: with one of them, say, the fastest and most productive, 20% of the total are produced in a given time, while another, slower, produces 80%.
With this, the expression "socially necessary working time", then, refers rather to a weighting of the various rhythms and incidents, being indeed allowed and imposed by different techniques. As a consequence, the exchange value thus established will modified with the progress of technology, or changes in the social impact of the techniques used.
An extremely important result, as I have argued in the previous section, is that the exchange value is actually a historical variable, which can be set by a statistical weighting of these variations, over time and through a whole category of production of concrete objects, and that each particular product in that category, each individual specimen, can be above or below the weighted result.
This is why it is necessary to distinguish in principle the exchange value from the price of an individual commodity. As I mentioned earlier, while exchange value is an empirical variable, but a global and historical one, whose estimation requires an examination of all the ways to produce a commodity, spread over substantial periods of time, the price is a local variable, which can be determined for each individual commodity directly and empirically, with a simple survey on the market, at any given moment.
But at the foundation, there is much more than that. It is essential that, on one hand, there are many ways through which prices may change: changes in supply and demand (relative scarcity), the "appraisement" through ideological factors (a commodities ability to produce a better social status), manipulation of the expectations or needs of the consumer (propaganda), or even simple speculation on relative abundance or scarcity (as in so-called "futures markets"). But, on the other hand, there is only one way to increase the exchange value: increasing the amount of labor embodied in the goods, measured as the weighting that is the socially necessary labor time.
Two specifications are necessary to complete this idea. The first is to distinguish the embodied work from the working time. The substance of value is but embodied human labor. There can be many sources of variation in prices. But the only source of real value is human labor. The way that work is measured in the capitalist market, is working time. It is through this variable that the fiction of the exchange being equivalent is established.
The second is that the work incorporated into a commodity on the one hand comes directly from the manufacturing worker (actual work, or "live work"), and on the other from the labor embodied in the means of production (raw materials , tools) used in this task (accumulated work, or "dead work").
Thus, the theory of labor value has three components. One that it is based on: the only way to add real value to a commodity is human labor. Another is its particular mode of operation: the exchange value of a commodity corresponds to the socially necessary labor to produce it. Another is an epistemological consequence: the exchange value and its variations follows a concept different in principle than price and its mechanisms of variation.
Taking on this third component has been an ongoing headache for most Marxist economists for over a century. To the point of declaring that the main problem of Marxist economics is the correspondence value and price, ie that of finding rules for calculating unit prices of goods when exchange values are known, or calculating exchange values from empirical price series.
As I have already stated, my opinion is that this is a false problem. A problem that stems from the anxiety of economists to understand the political economy as a scientific economics, without taking over their epistemological differences, or the radical difference contained in their different purposes.
But also, it is a completely unnecessary operation to maintain the logic and meaning of Marx's argument. Regarding to Marx's intention, which is to make a structural critique of capitalism, which show the necessity and objective possibility of its overcoming, a detour through the logic that governs the variation of prices is unnecessary. All of his reasoning may be kept in a perfectly consistent and complete way keeping it on the plane of the dynamics followed by the exchange value in the processes of production and re-production of capital.
For Marx a global and historical critique of capitalism is the relevant question. That is the critical perspective that allows the formulation of the perspective of revolution. Regarding this perspective, if mining transnationals artificially kept low copper prices, or artificially high oil prices is not relevant, as important as it may be to the immediate political fight in specific countries. It is not the same criticizing the disastrous consequences of financial speculation than structurally criticize capitalism. Marx does not stop at the "excesses" or "abuses", what he wants to show is that these excesses and abuses are the product of an objective dynamic that exceeds the individual wills of the capitalists. 
From the point of view of the foundations, the problem of the difference between exchange value and prices can be settled through a general hypothesis: price fluctuations, local and temporary, tend, historically and globally, to the exchange value.
In Figure 1, the unit exchange value of a product historically decreases as an effect of technical development, increased productivity. Prices, local and temporary, oscillate asymptotically, historically tending to the actual value.
In Figure 2, the overall amount of appropriated surplus value increases with the development of productive forces. But its increase is decreasing due to the decrease of the rate of profit. Any profit that is not supported by the production of real exchange value varies asymptotically, historically tending to the overall quantity of actually appropriate surplus value.
The main consequence of this hypothesis is that while one or another capitalist may either get rich individually and locally by ingeniously following the swings in prices, the bourgeoisie as a whole, as a class, however, can only increase its wealth by appropriating exchange value. For every capitalist who becomes temporarily rich in this way, as many go bankrupt, or lessen their wealth. Or again, the local and temporal wealth produced by fluctuations in prices vanishes on a global and historical scale, so that the only meaningful thing for the future of capitalism is what happens in the dynamics of exchange value.
In terms of Political Sociology, of classes and class struggle, this implication points to something that profoundly distinguishes Marx's critique from the one exercised by many, even most, of the critics of capitalism. The target of Marx's critique are not "the rich" in general, nor the operation of each, or groups or sectors of capitalists. The object of his critique is capitalism as a system, and the bourgeoisie as a class. Capitalist exploitation in Marx is not a more or less abusive, larger or smaller appropriation of surplus value by each employer, not an interpersonal relationship with social connotations, but the overall appropriation of surplus value by one class from another. For Marx's reasoning is not relevant whether this or that capitalist pays good wages, being more or less generous. The object of his criticism is the overall effect that the action of the bourgeoisie as a class has on the whole of human society.
But this hypothesis, which relates the price swings with the evolution of exchange value, allows us to better specify what can be considered material real wealth unlike the speculative fictitious wealth. Real wealth is the one which is expressed in exchange value, i.e., which comes from the application of human labor to manufacturing of goods. This the only one which counts in deciphering the nature and viability of capitalism as a historical social formation.
One of the fundamental contributions of Marx was to establish that there is a particular commodity which is generally paid according to its exchange value: labour power. Capitalist exploitation occurs, as I will detail in the next section, because when the employee provides value (an amount of work which is incorporated into goods) in return he doesn't receives the price (in cash, wages) of the delivered value, but the prices which corresponds to the cost (exchange value) of the production and reproduction of his labour power. The secret of capitalist exploitation is this: producing and re-producing labour power costs less than the value it produces. The difference is what is called surplus value, and its appropriation is the source of capitalist wealth.
This fact may also be stated this way: under capitalism labor power is a commodity. This is so important that Marx considered the existence of a (free) market for labor to be one of the defining characteristics of capitalism. The other one is private ownership of the means of production.
So far most of what I have argued about the exchange value, details more or clarifications least, could have been subscribed without major problems by a conventional Marxist. But I have not written this book for conventional Marxists but for those who want to discuss new ideas to help better understand the present, and plan for the future, and not merely to conserve and devote a legacy. The theses that follow, seek to adhere to the logic of Marx, but may differ sensibly from what has become up to now the manner and creed of the Marxist tradition.
The crucial point is this: I maintain that there are goods, commonly traded in the capitalist market, whose prices almost never approach the logic of exchange value, which, in general, do not oscillate or tend around it. Ie goods which are not exchanged, not even globally and historically, according to the socially necessary time to produce them.
The most flagrant case is money, which in the logic of finance capital is, neither more nor less, the main merchandise. However, the current distortions and the gigantic proportions this particular form of trade has reached, does not make it the clearest, nor the most general example, neither.
Other examples seem to be clearer and more useful for the doctrinal point I want to propose, in order to extract their economic and political consequences: educational services; works of art; professional practice of sport, law, or medicine. Prices of educational services, for example, in the context of the commodification of education, do not derive at all neither from the social cost of teacher training, nor from the infrastructure used ; nobody might think that the progressive and dramatic increase in the price of a painting by Van Gogh obeys to the cost of labor, or of the materials with which it was produced; not the dramatic difference between the cost of post graduate studies and their performance in terms of knowing or, even, to increase employment opportunities.
What these activities have in common is that while on the one hand, the wages paid for them do obey the cost of production and reproduction of the labor force, prices paid for the goods produced do not obey in general, their production costs, in terms of means of production and labor employed. What happens in these cases is that prices are strongly influenced by ideological factors, not only locally and temporarily (as may occur with any good), but globally and historically, that is, outside the purely capitalist logic which governs manufacturing.
That there are these differences, and that these activities may be good business, provides a good reason to distinguish more accurately between surplus value and profit. I will call surplus value only the global and historical usufruct the bourgeoisie as a class derive through the exploitation of labor processes in which exchange value is produced. But I will call profit, however, first to the local and temporal expressions of surplus value (which are manifested as prices, money) and, secondly, the local temporary usufruct being obtained in activities that do not produce real material wealth, but only differences between the invested money and their business results.
The strategic economic importance of this difference is a specification of the general thesis I have set out in respect of the historical relationship between value and price (see Table No. 1). The thesis now is that, in global and historical terms, the profit obtained by the commodification of services varies around the global exchange value, and ends canceling itself, especially after its cyclic destruction during the crisis of speculative capital.
And this thesis also means, therefore, that the bourgeoisie as a class does not increase real wealth through the production of services, however spectacular their temporary profits may seem to us. Or even the other way around, the expected enrichment due to the development of productive forces may even decrease as a result of paralysis triggered by the excessive operation of financial capital over productive capital. Due to the latter effect, you can also consider the speculative wealth as another case of "impoverishing growth", as is also produced based on the plundering of natural resources.
The sociological significance of this overall thesis is the ability to distinguish between workers who produce surplus value (which translates as money, gain), and producing only gain, without entailing a process of creating real value. As much as this may hurt the sensibilities of the union movement organized around this second type of processes , this difference is theoretically relevant material to establish, objectively, what is the core of the social sector can be a subject revolutionary cash (on which it should apply maximum political efforts), and which are in progress and diversity, his closest allies. It is important, of course, in the context of strategic communist politics that I raised in the introduction, and all projections to be made from it to the field of immediate political struggle.
The idea that all the profit which is not generated within processes producing real exchange value (and its appropriation as surplus value) is destroyed in financial crises, and vanishes in historical terms, is important, in a divergent manner, both for theoretical work and for immediate political action, because it contributes to assign a more realistic place to the spectacular processes of financial speculation and its catastrophic effects in terms of financial crisis and paralysis of productive capital.
In one direction, in terms of theoretical work, it helps us to remember that the main problems for the deep social critic who has revolutionary vocation are not those which set the tone of television news, or alarms and complicity of bankers and politicians, but those which are contained in the historical and structural features of capitalism. In the other direction, in terms of political struggles, it help us to establish a certain hierarchy of immediate enemies where, in the first place, you have to locate the financial capitalist, who commodified services, which only usufruct from unproductive income, and higher-level bureaucrats, both state and private, who profit from managing their operation. The task of theory is to provide a common argumentative framework for these two levels of analysis and intervention.
To further clarify the explanation of exploitation mechanisms, in the next section, I summarize the overall thesis I have stated. There are three areas that can generate capitalist profit without it arising in the production and ownership of real surplus value: financial speculation; "wealth" produced in the sphere of circulation (trade, income arising from leases); services (education, administration, health, art production or know). Or, conversely, there is only one area in which the surplus value it produces and appropriates is real and effective wealth: producing tangible material goods (manufacturing, mining and processing of raw materials), and the immediate services needed for its actual feasibility.
3. Theory of capitalist exploitation
a. The appropiation of surplus value
A given social relationship can be called exploitation, in general, when it has an unequal exchange of value involved. The concept makes sense when at least one of the two goods is human labor. Specifying this is important because although the enrichment of a social class is due to exploitation, both concepts may not match. There may be many factors that allow a local and temporal enrichment of individual economic operators, however only human labor only allows the actual enrichment of a social class, in global and historical terms. Thus, strictly speaking, only workers who produce real, material exchange value are exploited.
By extension, it can be said that those, whose labor is paid as a commodity (ie, according to the cost of its production and re-production), are also exploited, although the products arising from it are not paid in the same manner (as, for example, services, as I have proposed in the previous section).
Thus the capitalist profit (expressed as a local and temporal price) may be due to exploitation (the appropriation of real surplus value), or usufruct (local and temporal price differences) that can be obtained when purchasing the workforce at its objective exchange value and instead sell its products at prices determined by (subjective) ideological variables. Of course, thirdly, a profit (usufruct) obtained locally and temporarily, only as an effect of the movement of goods (such as trade or financial speculation) is also perfectly possible.
According to the thesis on the relationship between exchange value and prices that I have proposed in the previous chapter, usufruct, ie, the gain produced from services or circulation vanishes global and historically, is destroyed in the global crisis of capitalism. Because of this, I will restrict the analysis in this section only to exploitation in the strict sense, ie the appropriation of real surplus value.
Therefore, to the extent that only human labor produces real value, I will not consider it appropriate to speak of "exploitation of nature". There is no "natural" value. All value is created historically by human labor. Only in a very broad sense and, in fact, simply metaphorically, I will later talk of the "exploitation of nature" to distinguish the predatory capitalism, that impoverishes the natural and social means of which it has usufructed through the ground rent (mining, fishing, agriculture), from the classic bourgeois, which are able to maintain a relatively sustainable relationship with their environment.
In capitalism, exploitation is an uneven trade of exchange value in which one of the exchanged terms is wage labor. The critical connotation of the word exploitation, in this context, long before this review becomes a moral judgment, derives from the fact that this exchange is passing out the fiction of equivalence presiding commodity exchange in the capitalist market itself.
The objective judgment, then, "this is an exploited labor" is an internal view, with respect to the rules of the bourgeois exchange itself. According to the logic of wage labor contract, the employee will be paid "his work". What to ask then is what is the exchange value of the work performed. This corresponds to the exchange value of what his workforce has added to the means of production brought in by the capitalist. That value added by the labor force I'll call " surplus value". The capitalist, in turn, has provided the raw materials, tools, infrastructure, to carry out the task of valuation. These are the "means of production".
After a productive cycle, the capitalist will sell the product in the market, and prices he obtains will reflect the exchange values embodied in production as surplus value (the actual, or "live" labor), and as exchange value of the used means of production (work accumulated in them by those who produced them, or "dead" labor). When this sale is successful, it is said to have "realized" the goods.
If we return to the employment contract, the capitalist should recover, from the price obtained, the exchange value invested in means of production. All the rest, which comes from the immediate valuation process, the worker should be paid, since that corresponds to the surplus value, ie, the value of what has been "his work". If in this alleged exchange of equivalents we assign the capitalist some compensation merely because of the fact, secondary in rigor, of having put these factors in contact with each other, where does the real capitalist profit come from, a profit, of course, that at their eyes would justify their effort?
Globally considering the historical situation, it is quite obvious that, for participating in this cycle, the bourgeoisie does receive something, and much more than compensation. And it is also obvious that they appreciate their participation in the process as a much more meaningful contribution than merely "putting these factors in touch." On the one hand the overall profit of the bourgeoisie is not at all explained by this set of equivalents. Furthermore, their rationalization of the entire process and of the rupture of equivalent exchange that it contains, differs significantly from what they do consider fair when only exchanging usual goods with each other.
A coal miner will be living all of his life in poverty and will die without having accumulated assets after decades of painstaking effort; the owner of the mine, which may have worked diligently in his administration or not, in those same decades becomes rich.
You would think, by the rhetoric of equivalence and eventual justice surrounding the contract, that the worker has been paid "for his work". In terms of human exchange this could mean "for his effort, for his dedication." But it should also mean in a slightly more objective way, "in proportion to what has been produced". The discourse that employers have become accustomed to do every Labor Day usually abound in this type of acknowledgment, carried to the point of worship.
Everything seems to happen as if while exchanging one physical good for another, say, a sheep for money, the bourgeois said "for this, which is an object, I do not pay more than its cost of production (weighted by their relative abundance or scarcity)" and, on the other hand, when it comes to buying "work", the bourgeois said "for this that makes up a human being, I will pay what their efforts and skills deserve". There seems to be a double standard: physical goods are paid by exchange value, "work" is paid as some kind of value-based estimate. It is very important to note that this reasoning has really guided, more or less effectively, the way the bourgeois purchase the work of artists or craftsmen they esteem, of teachers or academics who seem wise, of doctors of whom they believe they can save them or keep them healthy, or faithful stewards accompanying them directly all of their life.
Despite the enthusiasm of bourgeois rhetoric, however, a great merit of Karl Marx, is to have revealed the fact that by buying "work" destined to manufacturing in their factories, capitalists aren't guided by these "humanist" valuations nor, even, by the fiction of retribution proclaimed in their contracts. They purchase "work" according to the same merciless logic with which they buy a sheep: according to how much it costs to produce it. They purchase manufacturing "work" as an additional commodity.
To clarify this idea Marx distinguished "work" from "labor force". If the worker is paid the value of "what he has worked", he should be payed all the surplus value that has been added to the means of production, and the bourgeois should only deduct a "compensation" for its task of coordination, equivalent or not substantially greater than a common salary either. Instead bourgeois pays only the "labor force", which is equivalent, in Marx's at the same time poetic and unusually precise words, to the "expenditure of muscles and nerves" he has made, valued, such as a sheep or either a sack of wheat, according to their cost of production. The difference occurs because the workforce is able to produce more value than it itself costs. This difference is what can properly be called surplus value. The bourgeois becomes rich because he appropriates and accumulates surplus value created by workers.
Under the assumption that only human labor can valorize the good, ie, that the only real wealth, in a global and historical sense, is that which comes from work that produces tangible goods, the cycle through which the capitalist enriches begins when investing money in buying means of production and labor power. Throughout the production cycle, the worker adds value to the means of production, transforming them into a product. The capitalist takes the product, selling it on the market. In the price obtained are incorporated: the exchange value of the means of production, and the surplus value added by the labor force. From that surplus value he recovers what has been invested in workforce (what has been paid in wages), and obtains a difference (surplus value), equal to its actual profit.
As throughout this process the means of production do not add value (only the current work can), Marx called the money invested in them Constant Capital (CC), and named its projection on the final value of merchandise as transferred value (tv). Instead, as the workforce does add value, he called the money invested in it Variable Capital (VC) , which projected on the final value of the goods equals the wage (w). All these concepts, and the process itself, can be seen summarized as in the following chart.
Note that, as in capitalist exchange of any goods, a key factor in all this is the time: the goods are exchanged for the socially necessary time to produce them. The capitalist does not pay the worker all the time he has been working along and producing surplus value, but only that part he has occupied in producing a value equivalent to the cost of his own labor force. An obvious consequence of this is that in good accounts, the worker himself produces his own salary. All the bourgeois invested in salary he will recover when realizing the goods.
Because of this, for Marx it is important to distinguish, along this generic workday, which is the paid time (pt), the worker creates a value equivalent to its own wage, from the unpaid time (upt), during which all of the value he produces is appropriated as surplus value. Both are distinguished in the graph around the point A, in which the progressive valuation curve cuts the level of wages, and its projection on the time axis.
Having put things this way, Marx defines two relationships that are key to express and develop his critique, which clearly show the clarity and depth of his reasoning.
On the one hand, he defines an exploitation rate as the ratio of unpaid time and time paid off. It should be noted that, simply applying Tales Theorem on the graph, this is equivalent to the ratio between the surplus value and the wage.
On the other hand he defines a profit rate, as the ratio between the surplus value and the sum of Constant Capital and Variable Capital. According to its habit of using Hegelian formulas, Marx calls this sum Organic Composition of Capital (CC + VC).
From an epistemological point of view both definitions are notable for their character, and the political implications involved.
On the one hand Marx works with rates, or proportions, not absolute values. Remember that also generally he works with weights and global values, not with specific empirical values, or with simple statistical series of local values. You could say that for the reasoning of Marx the absolute enrichment is not relevant (the profit'), which is what has historically filled with indignation the anarchist and socialist utopians (and himself), but the ratio of what the capitalist invests and what he earns, that is, not how much money he gains with a particular business (the profit mass), but how good that business was (the profit rate). We can see this difference by the apparent paradox which is summarized in the following table Nr. 1:
|Table 1 - Comparing two profit rates|
|Bourgeois||CC (Means of Production)||VC (Wage)||CC+VC (1+2)||Nr. of Units||Unit Price||Profit Mass (4*5)||Surplus Value (6-3)||Profit Rate (7/3)|
|Comparison||Bourgeois 2 invests less||Investments||But sells at a better price||Bourgeois 2 earns less||But does a better business|
What we see here, is that even though the second bourgeois earned less (profit mass), his business was better (profit rate). In examining the numbers in this table, which provides only an abstract and isolated example, you can see that the effect (in this case) is due to the fact, that the second bourgeois, although he invested only half than the first, achieved more than half the first price (he sold at 3, not 2.5). If each unit had been sold at 2.5 all factors are evenly halved, and the rate of profit would have been the same. His ability (in this case) is that has managed to sell relatively more expensive than the first.
This situation, and the way chosen by Marx to address it, have huge consequences, as I shall later explain, when examining not only the specific fact of appropriation of surplus value, which is what I have shown here, but its evolution through many cycles of production of goods, ie, considering the re-production of capital in its historical dimension.
In the same way, and counter to the immediate indignation from anarchist and utopian socialists (and himself), Marx does not reason on the basis of absolute wage, ie the material poverty of workers arising from capitalist abuse, but from the ratio of wages and profit.
In an extreme, again abstract, case, just to show this point, we can consider the following comparison, summarized in Table Nr. 2:
|Table 2 - Comparing two exploitation rates|
|Worker||CC (Means of Production)||VC (Wage)||CC+VC (1+2)||No. of Units||Unit Price||Profit Mass (4*5)||Surplus Value (6-3)||Exploitation Rate (7/2)|
|Comparison||Worker 2 earns twice an amount||Bougeois 2 produces 10 times more||But his prices are reduced 10 times||Bourgeois 2 earns 4 times more||Worker 2 is exploited twice as much|
Here you can see aspects that also have huge projections. On the one hand, the second bourgeois invests twice as much than the first, but with that he manages to produce ten times more. This increased productivity is probably due to having invested in tools and machines that have far superior development and technological power as compared to those used by the first bourgeois . This increase in productivity allows him increase his profit mass despite reduced unit prices: to sell cheaper, but sell more. But not only that. The increase in productivity has allowed him to increase the wages of his workers, an issue which, projected historically, has enormous political implications. However, in an apparent paradox, these workers who have increased their salaries are, according to the criterion of Marx, more exploited. The exploitation rate you get from them is, plain and simply, twice as high. A situation that is repeated again and again in the history of capitalist technological development: increased productivity will, in turn, enable higher wages and higher rates of exploitation.
It is part of Marx's huge insight to have followed this thread of the rate of exploitation, to examine its impact on the evolution of capitalism, instead of stopping in the other thread, much more visible and outrageous, which is the wage considered absolutely, the visible misery, as did all the other leftist anti-capitalist critics, and as most Marxist politicians normally do, until today.
Conceptually, as I have insisted, this point is extremely important. It shows that, however outrageous and urgent poverty is, Marx's allegation is not directed primarily against it, but against exploitation.
In the logic of Marx, actually the rich are getting richer and the poor are getting poorer, as utopian socialists and anarchists have rightly found out empirically. What is not true, however, is that workers, producers of surplus value, are necessarily getting poorer. Increased productivity not only allows the capitalist to historically increase real wages, but even generates a series of pressures, some internal to capitalist competition (structural), and others derived from the processes produced by such competition, on the future of capitalism (historical), that will make these increases necessary.
This progressive rise of the labor force's prices will, in the reasoning of Marx, result one of the key factors in the actual development of capitalism. In this logic, which is fully internal to his theory, resides the root of a phenomenon that is empirically verifiable today, conspicuously, and that most Marxists, reasoning in the very style of utopian socialists, are bent on denying, even tearing their clothes and making all kinds of scandals: that the real, actual wage, considered as purchasing power, has risen steadily in historical terms among workers effectively integrated to capitalist production. And that is, neither more nor less, the origin of the vast "middle class" that grew throughout the twentieth century. A stupid denomination, that stems from not understanding this aspect of the logic of Marx, and re-conceptualizing workers not in terms of social class (direct producers), but in terms of social stratification (according to their salary levels).
Of course, at this point, some will rush to show calculations indicating that the wage of workers has dropped globally in historical terms. The most common "trick", that goes generally unnoticed, in these calculations, is including in the salary averages the huge mass of potential labor force that is not actually integrated into capitalist production, even not as reserve army, that is, the hundreds of millions of human beings who not only don't have precarious jobs, but are simply absolutely jobless. Obviously, if we carry this enormous mass, which does not produce real surplus value for the simple fact of being unemployed, onto the wages actually paid, the average does not only have to be very low, but because of the tendency to structural unemployment could even go decreasing even more. In the logic of Marx, as will later be explained, there is a consistent way of accounting for this enormous reality of marginalization. A way that makes it unnecessary to criticize it by using these spurious averages.
Another notable difference between the reasoning of Marx and other leftist anti capitalist critics, which is closely related to the previous one, is the complexity with which considers the salary variable.
In principle, considered as a commodity, wages correspond to the cost of production of the workforce. This literally corresponds to what it costs to keep a worker producing, ie, the cost of food, clothing, housing, etc., all he needs to stay alive, and able to work and also what he requires to replenish the labor force he has spent in a productive cycle, and to be available for the next one. The critical literature traditionally called the cost determined by these factors a "subsistence wage."
In the evolution of capitalism, however, two crucial re-productions occur. One is the re-production of capital which, so far, I have described as one case and in isolation. For capitalism to persist in time, the situation of appropriation of surplus value must be repeated, and expanded, again and again. If up to now I have described the production cycle of capital, ie how, after an initial investment, the bourgeois comes to appropriate surplus value, then it will be later necessary to describe the reproductive cycle of capital, ie, how this is repeated and expanded again and again, until capitalism is converted into a social system.
But, secondly, in an exactly corresponding manner, for this re-production of capital to be possible, the workforce itself must be re-produced. This means, firstly and trivially, that workers should have children and train them as future workers, and also, more subtly, that new generations of workers must be prepared to assume the new techniques and ways of working that will occur because of capitalist competition.
The economic effect of this requirement is that the cost of the labor force has two components. One of them is related to its production, the other, much more complex, to its re-production. The first, the subsistence wage, historically tends to decrease, due to technological development and increased productivity, and the consequent historical downward trend in unit prices of manufactured products. Each time it costs less to keep each worker able to produce. The second, however, by virtue of the multiple factors that determine it, historically tends to rise. The progressive rise of the labor force's price in historical terms is due to this second factor and grows much faster than the first decreases. A notable aspect of Marx's multiple contributions is that, counter to all other leftist critics, he was able to predict this phenomenon, and to integrate it fully and consistently to his explanation of the mechanism of cyclical crises, and to his predictions on the need for expansion of the capitalist system.
The cost of reproduction of the labor force is a complex variable, strongly influenced by social and cultural aspects. On one side the capitalist must assume that, in the salary paid, the needs of the worker's family (reproduction literally) must be included, those of his wife if she doesn't work, those of their children. One of the reasons for the rise of the modern nuclear family (restricted to father, mother and children) is that no bourgeois considered it necessary, beyond this simple reproduction, to pay their workers enough to keep grandparents, uncles or servants, he instead did consider he requires and deserves.
A second aspect is that the bourgeoisie has to assume one way or another the cost of technical training needed for workers to be enabled to efficiently exercise their industrial work, either by direct technical training in the workplace, or indirectly through social spending on education, to which they must contribute with their taxes.
If the first cost factor, immediate reproduction, is but an extension of the subsistence wage and, as such, tends to decrease historically, this second factor, however, due to the technical complexity of production only increases constantly. If the passage of craft guilds to Taylorism and Fordism can be seen as attempts to reduce this cost, replacing workers with complex skills by workers with low qualification, the historical trend has shown, however, that these only had partial and temporary effects. On one hand, if the cost of the qualification of the immediate workers fell drastically, the overall cost of the qualification for the job, which should considered industrial designers, coordinators and administrators, increased significantly. Finally, with post Fordist organization, the attempt to reduce the cost of this second type of workers by directly qualifying those of the first type, once again only increased the overall cost.
But beyond these two main factors, the reproduction of the labor force is substantially affected by social and political variables. First, the constant pressure of the trade union movement to improve wage levels. But also the horizon of material development that produces capitalist progress itself, which in turn acts on the expectations of the labor movement. Moreover, the growing self-validation, founded on mere ideological variables, of professionals offering services (doctors, academics, administrators, artists), which allows them to increase the prices of their bid beyond the cost of reproduction of their skills, and this acting in turn as a model for the expectations of the other workers.
A striking phenomenon, and only in some extreme sense, which derives from these variables, occurs in industrial economies during their times of relative stability, where workers simply do not accept jobs below a certain "socially acceptable minimum wage", preferring unemployment to less legitimate tasks that offer lower wages. This is in good accounts, opening the doors to migration flows of workers in whose countries the average salary is even lower, who came to deal with the most basic services, domestic jobs or less paid factory work. It is in this way that, until very recently, before the current crisis, Europe looked at the curious spectacle of millions of migrant workers in parallel to a similar amount of millions of unemployed European workers. Of course, after this initial trend, two powerful forces contributed to converting it into the huge demographic revolution that is one of the most visible features of post-Fordist labor. On the one hand the capitalist's greed continuing to hunt for cheaper labor work. On the other, the mirage pushing migrants to leave their countries under the promise that they will have an opportunity for social advancement. The historical tragedy of these population movements to the havens of capitalism is that social mobility also contributes to a global increase in labor force prices, so that eventually the capitalists turn their back to their own countries, close their factories and reopen them in countries where the cost of labor is still lower ... leaving behind a dramatic and gigantic trail of frustrated migration and social violence.
The important thing here is that capitalist progress itself, the gradual increase in living standards that it makes possible, do generate a historical trend of rising labor force costs. Marx prophetically considered this trend to be one of the social, specific factors that determine the future of capitalism, its structural tendency towards crisis.
b. The reproduction of capital
When we generally examine the economic cycle through which surplus value is extracted from the production of value by the work force, and put it within the general logic of capitalism, what we find is that the real sense that this movement has for the capitalist is NOT to satisfy some need, even produce some real good which would do so, but simply to have a new share of capital at the end of the cycle, ideally greater than the first, to invest it again. It is no accident that we could describe the whole cycle alluding to "some commodity" without specifying whether it was books, food, weapons or cocaine.
In fact, considering the entire process, from the initial investment of constant and variable capital to the realization of the goods, from the capitalist's point of view, what has been produced in it is capital and the real merchandise, as well as the action of the labor force, appear as mere means to achieve it. That's why this whole process can be called a cycle of production of capital and not, for example, the work cycle, or the production of goods, even if it actually ist.
The real situation, however, is that the capitalist must do this again and again, and many capitalists will do it simultaneously, and its action will spread over many cycles, will extend historically and socially. This extension, and these necessary repetitions, is that we must now designate, adding two components to that name that designates a particular instant. Now we have to address the process (not cycle) of re (again and again) production of capital.
The production cycle of capital has helped us to understand in a targeted and yet analytical manner, how the appropriation of surplus value, capitalist exploitation, occurs in its particular cell. The process of re-production of capital should serve to understand the dynamics of capitalism as a whole, to understand its "laws" and locate the appropriation of surplus value in a more concrete and specific historical context. From an epistemological point of view this is the transition from the abstract and particular to the level that is more typical of Marxist analysis, global and historical consideration.
Marx devoted forty years of research and systematization to that global and historical analysis of capitalism. His many attempts and their results can be seen in four major texts. A Contribution to the Critique of Political Economy (1859); the first volume of the Capital: Critique of Political Economy (1867); a huge number of preparatory manuscripts that were published only in 1939 under the title Outlines of the Critique of Political Economy (the famous "Grundrisse"), written between 1857 and 1859; the second and third volumes Capital, sorted and edited by Frederick Engels in 1884 and 1894. To this we add hundreds of pages of notes, whole notes and texts that have been published since his death, as the Theories of Surplus Value, edited by Karl Kautsky in 1905; the Chapter VI of the first volume of Capital, which remained unpublished for nearly a century, and several hundred pages, incredibly, have not been published until today.
In all this vast material, which certainly requires several semesters of specific study, and that lends itself to several tens of explanatory texts, this book I'm interested in only the most essential of his line of argument. And I can only beg the reader to contrast (and control) the adequacy of the minimum corresponding abstract undertaking the necessary research, that will surely be full of significant details, variants and lively debate, which I here have no way of recording. My purpose is only to generally record the procedure required by the development of Marx's argument, list its main results and, above all, show its political consequences.
From an empirical point of view, the task of Marx requires examining what happens over many production cycles with a particular commodity (eg tomatoes or chairs) considering the competition that occurs between different producers, applying varying degrees of technological development. Then it requires extending the analysis to consider the effects of competition and technology in an entire branch of production (for example, food production, or furniture). Marx's conclusion, after these analyzes is that the internal logic of capitalism leads in each branch to cyclical crises of overproduction, with a number of effects that I will list later.
But that is not enough. The next step is to see how the logic of the crisis will then affect the entire production of manufactured goods. But in turn, to this, Marx saw the same phenomenon in parallel on three key areas, which then interacted with each other. The production of manufactured goods, the production of raw materials (or, more generally, the "ground rent": fishing, mining, agriculture), and the production of means of production. After showing that the cyclical trend of the crisis of overproduction is repeated in each of these areas, he could shown that, in turn, their composition and interaction leads, also in a cyclical and structural way, to a general crisis of capitalism as a whole.
This internal and structural propensity for crisis may be understood, although not in the terminology and in the way in which Marx himself formulated his theory, by starting from one of the most remarkable epistemological features it contains: Marx developed a situated, historical economic analysis, stating as its starting point a real situation (not an abstract competition model).
The actual historical situation is that the capitalist economy is founded on competing individual, originally unequal operators, that act in a structurally opaque market.
On the one hand, they were never equal, these agents never had the same skills or the same means available, or the same access to sources of initial capital. On the other hand they can never know, or estimate, the joint state of the economy, not only for its complexity, but because they compete with each other, and that forces them to hide their intentions and advantages until such time that they can carry them out effectively. The capitalist market not only is not transparent, not only never comes to be transparent, but is so constituted in such a way that it can not be transparent. The overall result of this opacity is that each individual capitalist, if he wants to survive as such, has no choice but to try to compete with advantage, and part of this attempt is just to hide his intentions until performing them.
Of course, one can obtain advantages in many ways. By force, through corruption (eg, insider information), through manifest abuse (for example, overexploiting workers). And each of these forms can be documented very extensively in real capitalism, and have been denounced and challenged not only by leftist critics, but also by more progressive liberals. Again, however, the great merit of Marx is to not have stood still at these figures of capitalist "abuse" to moralize from them, as did and still do almost all other opponents on the left (and he himself did), but to focus his analysis on what could be considered the "best" possible capitalism , which makes technical progress, which can pay, relatively speaking, better wages, and from there to show not only that under its operation the tendency to crisis remains (and in some sense is sharpened), but the alleged "abuses" are really necessary resources that, beyond their moral content, do belong to the overall logic of capital historically considered.
Marx's critique thus, is substantially more powerful than any other leftist critic. "Abuses" of capital do not arise (or do not have to originate) in any particular ill will or moral disposition (as profit greed, unbridled selfishness or avarice), but are, using that curious Weberian formula, perfectly understandable "rational actions" in the context of an objective logic.
But even more, what happens in his criticism, on the other hand, is that it can be shown that the other types of actions which, now in evaluative sense, can be called "rational" like appealing to technological development in order to increase productivity , also lead to crisis, with all the negative moral connotations that critics abound in pointing out. That is, even the "best" capitalism is structurally questionable or also general crises are not a defect of the movement of capital but precisely, given their concrete historical conditions, its main result. As Hegel said, "contradiction is the soul of becoming": perfectly rational individual actions are combined in such a way, that the overall result is irrational.
Let us then just that follow this way. From the actions of certain "good" capitalists, understand how the crisis occurs, how, from it, these same agents are forced to become "bad" capitalists, and how, when you consider the process as a whole, those moralizing adjectives, "good", "bad", "rational", "irrational", lose sense and, once dissipated, leave us with the picture of an inherently contradictory and catastrophic society.
Following this thread, the general point is that the "rational" action of each capitalist in a competitive, uneven and opaque market can only be trying to compete with advantage. He best accomplishes this if he can produce better and cheaper, thus leading to the bankruptcy of his competitors. The best strategy for this would be to try to maximize profits and then, from there, "give up" part of it by lowering prices.
In this logic, the effort to maximize the profit is not due to greed or the lust for lucre, nor the price reduction is, conversely, due to a fit of generosity, but both can be understood as means for a perfectly rational economic purpose. Or again, to elaborate further on this point, which I think is crucial, Marx's argument does not require attributing capitalists any particular moral condition except seeking their own and their kin's benefit. The argument can be kept perfectly in an objective (and objectifying) plane of the actions and economic purposes only. If we consider the value / time graph we have used to describe the appropriation of surplus value, we'll see that there are basically two ways you can increase the profits, or the appropriated surplus value. To show the first, I've gathered two situations on the same graph to compare them:
The situation differs in that B's working time (tB) is greater than A's (tA). As the appreciation that the workforce exert on the means of production depends mainly on time, the immediate effect of this change is that the surplus value from B (SB) is higher than that from A (SA).
It is important to note (but is not registered in this chart) that one would have achieved the same effect (SB> SA) if by going from A to B the wages would have decreased. (This is what is indicated by the thick arrows).
These two mechanisms, increase of working hours or lowering wages in order to increase the profit, are what Marx called "mechanisms to increase the surplus value on the absolute path" and it is common for Marxists refer to them with the contraction "absolute surplus value".
This option, then, gives the existence of working days of ten, twelve or fourteen hours full sense (whose existence can be extensively documented through the history of capitalism), or mechanisms to reduce wages (like paying women less, hiring child labor or suppressing labor rights). And these are the practices that rightly can be called "savage capitalism" or "bad capitalism". To the extent these are highly visible practices that are used very often and, of course, have a direct impact on the lives of workers, most of the left critique rightly has been traditionally focused on them.
But just as it is said, it is NOT from here that Marx organizes his critique. There is another, very different way of increasing the surplus value, that can be seen in the following chart where, again, I have gathered two situations to compare them.
Now what happens is that the pace of valuation is different in each case. In situation B, within the same working time, more value is added to the means of production than in A. This is possible because the productivity of labor has been increased. Marx calls these procedures "mechanisms to increase the surplus value on the relative path" and it is commonly referred to as "relative surplus value".
Using today's terms it could be said that there is a "hardware mode" to increase productivity, which is to have better tools and machines, and a "software mode", that, with the same machines, involves improving the order in which concrete, particular operations are performed in the course of productive work. In this second case, to the extent that the working day is maintained, optimizing the order of operations increases the working time during which the raw materials are being really and directly transformed. So we can speak of intensification of working time. 
Throughout the twentieth century the importance of this optimization in the order and how the production processes are organized, has been determining modes of capitalist accumulation, distinguishable by these techniques and by the innumerable effects on social relationships. These modes, whose origin and nature are rooted in the organization of industrial work, are Taylorism, Fordism and Post Fordism. Again we find here one aspect prophetic in studies of Marx, who was able to anticipate each of these forms and their effects on capitalist development.
Concluding, the maximization of profit can be obtained by way of absolute surplus value or relative surplus value. Before considering the effects, and the role each of them plays in the course of the competition, let us directly compare them with each other.
A first and crucial way to compare is to examine the direct effect they have on exploitation. Of course the absolute surplus value, to the extent that it resorts to decreased wages, increases what we usually mean by exploitation. And, conversely, to the extent that increases in productivity allow, in principle, to raise wages, the relative surplus value would seem to decrease.
The result obtained in addressing the exploitation rate, however, is exactly the opposite. If we compare the paid time and the unpaid time, in the case of absolute surplus value (see graph), we obtain:
- tpA = tpB but tnpA < tnpB, as the exploitation rate is Rexp = tnp / tp,
- RexpA = tnpA / tpA < RexpB = tnpB / tpB is obtained
- That is, although the salary decreases, the exploitation rate also decreases.
- However, in the case of relative surplus value:
- tpA > tpB and, as the total time is the same, tnpA < tnpB, thus, on calculating the exploitation rate, both factors operate in the same direction, obtaining:
- tnpA / tpA < tnpB / tpB
- This is, although the salary increases, the exploitation rate also increases.
This difference between exploitation and exploitation rate that I mentioned, has enormous political consequences, which I will discuss in the following chapters. So far we have progressed as follows: while resorting to absolute surplus value by increasing what is commonly meant by exploitation is the most frequent target of criticism from the left, it is actually not the most essential and profound effect of capitalist oppression.
The increase in the rate of exploitation, which results from using relative surplus value, is not only a numerical calculation, or a mere relative indicator, it really is the factor that accounts for the increasing alienation of the proletariat as a social class. If we understand alienation literally like being stripped of what is proper (that what is proper becomes strange), the exploitation rate is a better indicator of this appropriation, of the the ratio between what the worker puts from himself, as effort in his work, and what he gets as salary, than the absolute level of wages, especially in the case where this absolute level rises in real terms.
If absolute surplus value relates to the alienation brought by physical poverty, relative surplus value is an indicator of the alienation that occurs in abundance. And, of course, this is not just a numerical calculation. When we bring these seemingly abstract factors down to the level of everyday life and express them in existential terms, the meaning of the phrase " the rate of exploitation increases" expresses what is a situation in which the worker is responsible for ever increasing product volumes, on which he must operate through increasingly complex interfaces, in which his eventual labor faults will become increasingly costly for the employer. The extreme technical division of labor that is necessary to maintain and control this situation (Taylorism, Fordism) directly impact on his body, his sensory capabilities, his capacities for disciplined attention and reaction. With all this even the form of fatigue changes. From rather muscular fatigue which requires an extensive workday it passes to a neuromuscular and psychological fatigue, rather affecting fine motor and mental activity. Correspondingly, new and more intense ways to restore his workforce are required, which will lead to a tendency of the whole system to colonize the "free" time, in order to ensure that restoration, to ensure that the worker is able to continue being exploited the next day.
All this dehumanization is contained in the seemingly harmless formula, "increasing rate of exploitation". And it is remarkable that the calculation of Marx is fully aware of these potential economic and existential components and constantly combines them. Here we see once again the deep sense of what "political economy" means, ie, an economic calculation in which human suffering is constantly at the center. And this should also be present whenever the simple estimates see in the increase of salaries allowed by relative surplus value the "good" aspect of capitalism.
Another way to compare both types of increase in surplus value is considering its social consequences. While the use of absolute surplus value implies a net worsening in the situation of the workers (lower wages, a longer work day), the use of the relative way makes it possible to improve wages directly and also by the lower unit cost manufactured products will have, it enables its indirect increase, ie, an increase in purchasing power.
But there are important elements that complicate this apparent dichotomy. The first is that the "wild" capitalism is not socially viable, in one particular society for a long time. It is politically unstable. From the moment industrialization became widespread, multiple forms of resistance appeared, of organization and political pressure from workers. When observing the century of labor struggles going from 1830 to 1930, and putting it in the perspective of the previous one thousand years, any observer will be amazed at the countless rights conquered, especially in the core capitalist countries. The right itself to organize, the extension of political rights and guarantees recognized by the state, the pressure on states to undertake policies of education, health, urban development and housing. And above all, two rights that directly undermine the absolute surplus value: the reduction of the working day up to a maximum of eight hours, and sustained pressure to set minimum wages, and to maintain and improve the average salary. Even bourgeois states, also driven by the needs that generated the general crisis, had to accommodate these demands and enlarge them to form what were called "welfare states". At least for a moment in history (1935-1985), and at least in one of the worlds (Europe, USA, Japan), the "wild" capitalism seemed not to be feasible.
We now know, however, that it may continue, and in fact remained perfectly viable and completely real. On the one hand, the prosperity of that first world was sustained by the systematic looting of much of the planet. And on the other, and according to the most dire predictions of Marx, there was absolutely nothing sacred or untouchable in this well-being, and since the early 80s not only a dismantlement began of all their conquests in the first world but , and this is what has the greatest historical projection, the capitalists, without any "love of their fatherland", proceeded to de-industrialize their own core countries, and carried the bulk of manufacturing to the "third" world, that had been stigmatized by the dominant ideology as "unable to develop". And they have done this, neither more nor less, through the "cruel" and "evil" absolute surplus value. As a famously quoted Don Vito Corleone would have said: "really nothing personal, just a business problem ...".
If, on the other hand, we stop at the "beneficial" and praised procedures that use relative surplus value, we again find the contradiction. It happens that the extraordinary technological advance allows to greatly increase the volume of production while progressively employing less workers. This effect is often called "structural unemployment trend" or, directly, "structural unemployment." But it happens that the workers are at the same time, the main potential consumers. There cannot be more and more goods available while fewer workers. This would directly aggravate the tendency to general crisis of overproduction.
As is widely known, the "welfare states", and even those that were not so much, sought to resolve this contradiction by promoting intensive tertiarization of the economy, on a scale never before seen in human history. An industrial and developed country as the United States came to have, in their golden years, up to 70% of its labor force employed in the production of services, against 25% that produced all manufactured goods, and only 5% dedicated production of all the food that its population required. It is remarkable and extraordinary that only a hundred years ago the ratio of agriculture and services used to be the exact inverse. These policies, which were called "of full employment", did not involve, in historical terms, anything but the ideal that all human beings earn a salary, regardless of the futility and stupidity of job performed, provided that it is spent on purchasing the products the market does not stop providing.
But not only that. The policies of containment of the trend to crisis again and again turned to war, to programmed obsolescence of goods, frank waste (such as sending men to the moon, or building giant particle accelerators), ie, to direct and irrational destruction of the products of the productive efforts of the whole society, only to make room for the sale of new goods.
And, again, the contradiction. For all that to work, the big capitalist firms had to increase wages and, above all, pay a substantial part of their profits in taxes. And the results, now this way, the way of abundance and waste, also tended to what I have described only two paragraphs above: plundering of the Third World, deindustrialization of the First.
c. The capitalist crisis
The great ghost walking the capitalist world, rather as a recurrent horseman of the apocalypse, is the general crisis, the crisis of overproduction.
As said in advance, to understand how they occur, Marx endeavored to analyze the result of the "best" possible capitalism, one that draws on the relative mechanisms to increase its appropriation of surplus value.
We can also condense his argument in the charts have been used so far, but I now will also support the explanation with numerical examples that describe in several stages.
We can begin to clarify the general case if we notice that on the chart where I showed the relative surplus value by bringing together, for purely pedagogical reasons, the two situations A and B, is actually hiding something essential, that is now pertinent to add.
The difference can be seen by separating both situations into two parallel graphics:
What actually happens is that to move from situation A to situation B, to increase productivity, it is necessary to increase investment in Constant Capital (CC), ie, buy more complex machines, develop or pay more advanced techniques. It is also necessary to remember that the economic sense of this step is to eventually "relinquish" a part of the unity profit (which is obtained for every unit of output) in order to be able to lower the prices.
But by limiting the unit profit, while increasing the investment in constant capital, the profit rate decreases. The surplus value (SV) obtained (by reducing prices) is more or less the same, but the invested capital (CC + CV) is greater: 
Note that this reduction would be even greater if not only the Constant Capital (CC), but also wages (VC) were increased.
Let us examine this in more detail, through a numerical example that I will develop in stages. In this example I have also composed two elements that make all of the process a little more real. One is the actual fact that the capitalist always devotes part of the surplus value to his own consumption and enjoyment, thus withdrawing it from the process of re-production capital. Another is that when it is a re-production process that includes many individual production cycles, it is necessary for the capitalist to devote a portion of his profits to replacement of the progressive of wear suffered by his machines and tools, either maintaining them, repairing, or accumulating a capital fund for their replacement. With this, the fate of the surplus value obtained is determined: 1st,reproduce the invested capital, ie, re-invest in CC and VC, and replace the wear of their means of production; 2nd, removing a portion for their own consumption; 3rd, invest an additional amount in CC and VC to extend the cycle. And it is for these three objectives that all this can be called "process of expanded reproduction of capital": production - reproduction - expansion.
In Table 1 I have recorded, with relatively arbitrary numbers, the first step, only the production of new capital from an initial capital investment:
|Table 1 - The Production of Capital|
|CC (Means of production)||VC (Wages)|| CC+VC
|Nr. of units||Unit price|| Profit mass
| Surplus value
| Profit rate
| Exploitation rate|
| CC 100
|80 Consume|| CC' 100
|Reinvestment as well as replacement and consumption are charged to surplus value.|
|Minimal Sales|| Recover
It is remarkable, and it is no coincidence that in this table we can put a number of units of "some product" without specifying what it is (chairs, shoes, books, etc..). This is because, as I indicated above, that the capitalist sense of this whole operation is to produce (increase) the capital itself, no matter through what products (weapons, cocaine, snuff) this is achieved.
But for this operation to complete, it will be necessary to "realize" the goods, ie sell them. That is why I entered the unit price (the price of an individual product), and the profit obtained by selling the entire production. But of course, it is necessary to distinguish this profit mass (all the money obtained by selling the entire production) from the surplus value, which is only obtained by deducting from the profit mass the initial investment, which is the sum of constant capital plus variable capital. And, in turn, distinguish it from the profit rate, resulting from dividing the surplus value by the initial investment. I have also recorded, to then see its evolution, the exploitation rate, which can be obtained by dividing the surplus value (profit) by the variable capital (wages). I am finally interested, pulling away for the umpteenth time from pedagogical orthodoxy in these matters, to consider a "selling effort" which would amount to a minimum number of units that the capitalist must necessarily sell to recover at least the total investment (CC + VC + replacement cost). What I hope to show with this unorthodox variable is that as the process moves the minimum that is required to sell increases dramatically, to the point that the purchasing power present in the market will be saturated, that is, a crisis of overproduction will occur that will collapse all the growth obtained up to that point.
Into Table No. 2 I have entered a production cycle where the only thing that happened is that all factors have been doubled. 
|Table 2 - Simple Extended Reproduction|
|CC (Means of production)||VC (Salaries)|| CC+VC
|No. of units||Unit price|| Profit mass
| Surplus value
| Profit rate
| Exploitation rate|
| CC 200
|160 Consume|| CC' 200
|Reinvestment, as well as replacement and consumption are obtained from surplus value.|
|Minimum sales|| Recover
Note that this duplication is possible because in the first cycle, even discounting consumption and replacement cost of machines and tools, there has been a sufficient amount of surplus value to do so. The same technological level and the same wages have remained. And by investing in them twice as much, just twice as much has been produced. As these numbers show, this has been an excellent business, and each time the entire production has been sold.
Although this may be a rare case, it already contains an aspect that is interesting to note, and having a completely general nature: the expansion of the investment has fully emerged from the profits or, put in another way, it does not come from savings nor from any restrictions on the share that the capitalist destines to his own consumption.
The expansion of capitalist reproduction does not come from any ethics of effort, productivity and savings, as Max Weber argued in a famous thesis, which is not only empirically false but conceptually racist. when things work well, capitalist growth just comes from profit, as I will point out a little later, but when things go wrong it comes simply from looting. The capitalist ethic is contained, like all ethics, in its facts, not in the ideals proclaimed by bourgeois culture.
Note, on the other hand, if the business is as good as I've recorded so far, capitalist consumption or enjoyment may also double, without affecting the logic of expansion. And of course, this duplication is also obtained from the profit, not from saving or sacrifice. Countless examples of rude and bombastic waste of wealthy New Englanders, Germans and Americans, from the moment of capitalist upswing in their countries (think of the huge mansions of the German Junkers, or of compulsive and exhibitionist consumers like Randolph Hearst or Nelson Rockefeller), again debunks the idea that their wealth can be explained by some kind of asceticism, or ethics of effort and sacrifice. Let's also aggravating say, that Max Weber was a direct witness, and occasionally himself a critic of such ostentatious gestures.
In Table No. 3, I have entered two things. One is that the business is so good that the capitalist can simply expand it five times. But at the time, and due to the emergence of competitors, he is able to leverage the volume of production, the volume and mass of profit made, to lower the unit cost and thus "compete with advantage", but this will not mean detour significantly from the path followed up to this point.
|Cuadro 3 - Extended Reproduction and Competition|
|CC (Means of production)||VC (Salaries)||CC+VC (1+2)||No. of units||Unit price||Profit mass (4*5)||Surplus value (6-3)||Profit rate (7/3)||Exploitation rate (7/2)|
| CC 1000
|200 Consume|| CC' 800
|Reinvestments, as well as replacement and consumption are obtained from surplus value.|
|Minimum sales|| Recover
With the same level of technology (CC), and wages (VC), but investing five times more than in the first cycle, he gets enough profit mass (see the third row) to lower the unit price (see the fourth row), and still obtain a profit mass that allows him to maintain or increase his own consumption, and reinvest in the expansion of capital.
But this price reduction (forced by competition) has a crucial effect: lowering the profit rate. Note also, again, now increased by the decline in the unit price, the marked increase in "sales effort".
Table No. 4 contains a real leap in which all previous variations come into play. Business has been so good, and perhaps the competition has been, for that matter, so active, that our capitalist has decided to "get" a lot more capital to invest in large, looking to improve productivity with new machines and technologies. He invests ten times more than in the previous table (one hundred times more than in the first) to buy sophisticated machines that allow him to produce twice as much for each unit of capital invested.
|Table 4 - Extended Reproduction: the Great Leap|
|CC (Means of production)||VC (Salaries)|| CC+VC
|Nr. of units||Unit price|| Profit mass
| Surplus value
| Profit rate
| Exploitation rate|
|Primitive accumulation||Individual salary rises|| CC 10.000
|500 Consume|| 8.000
| Great expansion of capital|
Increased exploitation rate
Increased sales effort required
|Tendency to an overproduction crisis|| 11.500
|500 Consume|| 8.000
| The Great Leap: Large investment in constant capital|
Pronounced decrease of profit rate - Pronounced increase of exploitation rate
But these machines also allow him to hire fewer workers for the same output, ie, this has the effect of contributing to the "structural unemployment" that I mentioned above. Yet, despite the adverse fate of the workers that are made unnecessary, this allows individual salary increases while maintaining the overall amount invested in variable capital.
Considering the size of the investment and the productivity growth, the volume of production increases dramatically. This allows, in principle, an also huge mass of profit. However, given such volumes, the most rational strategy is to radically lower the unit price and, with that, just blow away all competitors who do not have such technological advantage. The effect of this reduction in unit price is recorded in the first row of Table No. 4, to be compared with the proportions achieved in Table No. 3.
What the comparison shows first, is that the profit mass obtained still allows: 1st, to retrieve and reinvest the capital expended in this cycle; 2nd, to replenish the wear suffered by the means of production; 3rd, to consume a portion of the profit (a greater amount, although the proportion is lower); 4th, still get an amount of additional, new capital, to extend the cycle or to accumulate in preventing new contingencies.
But this good news, and the success of such a strategy, depend crucially on the goods actually being sold. By observing the minimum number of units that is required to be sold to get some net profit, it turns out that these also increased greatly (from 550 to 11500), ie, the "sales effort" increases significantly, thereby revealing its economic significance: it essentially is a measure of risk to the capitalist on the market. With huge investment in constant capital, the case is that the risk of not recovering the investment simply because it doesn't manage to sell a sufficient amount of the product increases.
A more canonical way to explain the same point is to observe the steady decline in the profit rate that has occurred in each step, and now is accentuated. Read in reverse, this trend shows that the economic effort that capitalism as a whole must do to achieve success with increased investment is also much higher. And it shows that the only way to recover this effort is to sell many more product units or also a growing share of what is produced.
But the comparison also shows that this economic effort is not only done by capitalism but, in fact, it is mainly suffered on an enlarged scale by all of the workers: the exploitation rate increases considerably. And with it, the physical and existential consequences of an absurd situation where the wage grows while the quality of life worsens: all the slow horror of alienation, standardization of life, subjective and bodily disciplining accompanying Taylorist and Fordist production techniques with an equally absurd global result: the capitalist can not even really take advantage of everyone's efforts ... because just around the corner awaits the crisis of overproduction.
In Table No. 5 I have recorded the limit where competition may simply not further lower the prices, because it could not recover the investment. At this limit, in a market where more than one capitalist has tried to make his big move and production exceeds the purchasing power of society, the products can not be realized to the extent that is necessary to recover the invested capital and may not even be given away (since that only would have the effect of lowering prices even further): they must be destroyed. Burning of agricultural surpluses in societies suffering from the scourge of hunger, wars all suffer just to "make room" for the output of new products, turning into business the rebuilding of what was only destroyed for that business, the introduction of planned obsolescence for products intentionally to wear earlier than the most advanced techniques allow, all of them irrationalities that only have as a background the overproduction generated by competition.
And yet it is necessary to stop over at another possibility. Capitalists might try to absorb excess production by increasing the purchasing power of workers, ie, raising the standard of living of the society as a whole. A beautiful illusion which was called "Welfare State" for over fifty years. The reverse of such generosity (a "bounty" that, of course, just looking for profit) is to raise wages, to increase the purchasing power, and again, now by this factor, the profit rate falls, increasing the risk for each capitalist of failing to sell what they need to recoup their investments. The way out of this new nonsense, which now, in the early twenty-first century, we are witnessing every day, is that capitalists simply transfer their industries from those countries where the salary has reached "too" high levels, sinking the much vaunted "Welfare State" only by virtue of their immediate interests, despite the fifty or seventy years that it seemed to be the great model of a productive, entrepreneurial, and beneficent capitalism.
|Table 5 - Expanded Reproduction: the limit|
|CC (Means of Production)||VC (Salariies)||CC+VC (1+2)||Nr. of Units||Unit Price||Profit Mass (4*5)||Surplus Value (6-3)||Profit Rate (7/3)||Exploitation Rate (7/2)|
|Primitive Accumulation||Individual Salary increases|| CC 10.000
|500 Consume|| 0
| Great Expansion of Capital|
Extreme lowering of prices
Limit of requirement to sell
Does not obtain capital to expand
Minimal profit rate
|Tendency to a Crisis of Overproduction|| 19.167
|500 Consume|| 0
| The Great Leap: limit of the Large investment in Constant Capital|
Minimal Profit Rate - Risk of Overproduction
All weft yarn Marx deciphered in the operation of "best" possible capitalism is now in sight. Competition forces try to lower unit prices. For this large constant capital investments are made, but one has to resort to increasing the volume of goods that must be sold. But the effect of both initiatives is a sustained downward trend in the profit rate. The obligation to achieve a profit mass that allows to recover the investment, replenish and expand, reinforces the need to increase the volume of goods to be realized. When two or more competitors again and again make these attempts, their situation will escalate until they just saturate the market, none of them achieves to sell what they require, and they default in bulk. This is what we have called "crisis of overproduction". And Marx was able to show its necessity and recurrence production by industry, by production sector (raw materials, manufactured products, production of means of production) and, finally, cyclical convergence of all of them in "general crisis of capitalism".
The general crisis of capitalism are the most irrationally destructive disasters in human history. Humans have suffered famine, pestilence and misery for thousands of years due to technological ineptitude, and fierce wars have been undertaken to overcome their helplessness before nature and ignorance. And there was some tragic necessity in this. Throughout modernity, however, this objective prostration has been by far exceeded, and spectacular volumes and efficiency in the production of goods and services have been achieved, making it entirely unnecessary to continue being tied to crisis and war. And it is exactly in the middle of the efficiency and the abundance that these huge volumes of goods must be being destroyed or wasted, only to maintain the logic of capitalist profit, and the poor freedom of being doomed to alienate the products of our work. That is the central charge, and the overall sense of Marx's argument. Having shown that crises do not arise neither from natural contingencies, nor from an immovable human nature, but from perfectly identifiable and avoidable historical conditions, Marx's work becomes a deep political accusation to the root and essence of the capitalist system.
As I have argued, the general crisis is a situation of such irrationality that products marketed in excess must be simply destroyed to recover some part of their price, and save some of the capital invested. As part of the competition and the vagaries of supply and demand, selling below cost of production or, worse, give them away, would only aggravate the crisis. Huge amounts of human effort is wasted and destroyed only by virtue of a historically avoidable logic.
Yet capitalism is to survive: it is necessary to overcome the crisis. And this is, historically, through major changes in the technological base of capital, ie just from massive investment in constant capital, which is conducted through the whole fabric of the branches of production to recompose at a new level.
This is what we have seen globally since the 1980s. Entire production systems ending in ruins, sold as scrap, as shown in the desolation of former Detroit auto workshops, or large factories abandoned in the the former German Democratic Republic. Systems that are re-articulated with other techniques, and lower wages in other parts of the world, as in China, in India, or in northern Mexico.
But this brings to mind a "little detail" of our example, in Table Nr. 4. Our capitalist has "got" a large amount of capital to expand his business. Given the logic of Marx's reasoning, what matters is not where this or that bourgeois "got" these funds from, but how the bourgeoisie as a class historically managed to get such funds.
The answer is no mystery to any historian: it got them from the colonial pillage of Latin America. Over-exploitation and slaughter of the Indians, to the extent of having to replace them by tens of millions of black slaves, that is the historical bloody origin of prosperity in Europe. And no one denies, however much sociological theory makes use of the unjustified Weberian idea that such prosperity is due to the efforts and thrifty character of the bourgeois (white, European and patriarchal) Protestants.
Nobody has exonerated European colonialism for these crimes and looting that even Marx called, gently, "primitive accumulation of capital". No one has even attempted to try, unless on overtly racist and totalitarian premises.  Capitalism can be blatantly accused by the bloody nature of its origin.
To mitigate such a scandal, yet evading its ethically and empirically dubious logic, it could be argued that this initial foray is perhaps justified when we consider that its effect is present abundance. This cynicism is not as uncommon as one might think, and is often present in many conventional economists, advocates of the system.
Against this, however, in turn two key issues can be opposed. The first is that the logic that has led to such abundance is the same that prevents it from being drawn on equally by all human beings, in particular by its direct producers, the workers. The second, which is what I want to emphasize here, is that the famous "primitive accumulation" is far from a unique process and distant in time.
It happens that, as the general crisis of capitalism are cyclical, the need for extraordinary capital accumulation is also cyclical and each time it happens it is accomplished through the same "little sensitive" means with which the original looting occurred, even if it has been clothing in something more "elegant" ways.
The "original" accumulation of capital should be considered cyclical for theoretical reasons, and is widely documentable through every kind of empirical evidence. Again and again, though changing cultural and political forms, it occurs in two fundamental ways: the use of systematic looting of the periphery, the use of absolute surplus value in the center.
Political changes in the forms of plundering the Third World do not consist of anything but the transition from banditry and original colonial appropriation, to the complicity of their own local ruling classes, backed by armies containing their own peoples with blood and fire, rather than the invaders.
The use of absolute surplus value in the center is the periodic reverse of the hard-won gains of the workers whenever capital needs require it. A backward move, of course, that can also be obtained only by the exercise of brute force.
From a purely empirical point of view, therefore, it is easily seen that the capitalist system has not only an origin, but an entire criminal history. A story regarding which it is simply an increased cynicism to attributed its "success" to Lutheran values or rationalistic ideals. England built its prosperity on the basis of piracy, slave trade and drug trafficking. The fact, there has been massive slavery until well into the nineteenth century in the developed capitalist countries, there has been content to labor movement brutally throwing it into two world wars, Latin American has been filled with military dictatorships, decimating its leftist forces through torture, murder and forced disappearance, until only thirty years ago, the peoples of Iraq and Afghanistan have been decimated just to keep oil prices, shows, among countless other examples, that the capitalist progress is not founded, nor has it been ever, in the delicacy and elegance of Steve Jobs or George Soros.
But beyond such blatant empirical findings, which some hypocrite may still qualify as "regrettable excesses", the bottom line is the relationship between such violence and the structural logic that leads to the general crisis. Part of the enormous strength of Marx's argument is to have shown, in his later writings, the association between the recurrent looting and the recurrent crisis, or also, the structural connection between the relative surplus value and the periodic need for absolute surplus value. With this, the difference we have had so far (only for pedagogical reasons) between "good" capitalists and "bad" or "wild" capitalists, is objectively diluted. That's why I kept it at all times in quotes.
There are no such "good" and "bad" capitalists. The constant oscillation between using relative surplus value and absolute surplus value is so essential to the logic of capitalism as competition itself, or as the opaque nature of the market and, as such, beyond just individual good or bad will of the individual capitalist.
4. The different critiques of capitalism
a. Epistemological advantages
All the reasoning of the previous sections, which is really only a skeletal pedagogical summary of the huge and complex work of Marx, serves to what is the purpose of this book, which is nothing else but expose the logic of his argument, rather than the myriad of details that certainly, in another context, are also very relevant.
What I have shown is that in this argument the crucial factors are competition, the opaque nature of the market, technological development (and its cost), an originally unequal position of the individual agents competing. I have shown that the composition of these factors leads to a global and historical trend of decrease of the rate of profit, and that attempts to reverse its effects lead to cyclical crises of overproduction. I have also shown, in this context, the internal, structural relationship between the use of relative surplus value and the use of absolute surplus value as forms of appropriation.
And this is the moment, then, to insist on the epistemological features that give it strength and consistency, and compare, starting from them, the criticism of Marx with other existing types of anti-capitalist critique.
The first notable feature of Marx's critique is that it only starts from internal factors, core of capitalist activity. With that, his reasoning achieves a demonstrative character, ie, does not depend on contingencies (there was drought, investor panic, or chaotic drift), nor only on immediate psychological or sociological factors (the greed of profit, "ethics of productivity", ambition, usury).
This is, of course, a certain historical situation, but its movement and effect does not depend on the good or bad intentions of its individual actors, even not on their degree of skill or business acumen. Given the unequal competition between individual actors, whose sole purpose is to reproduce and increase their capital, operating in an opaque market, the downward trend in the rate of profit, and the tendency to general crises of overproduction, are necessary, structural. The only way to avoid them is, therefore, to put an end to the mechanism from which they arise.
It is noteworthy in this regard that conventional economics, which in the first paragraph I have called "scientific economics", is even today lacking a crisis theory of this kind, and that its closest approach to the problem is through the curious idea that the economic system shares with complex systems the fact, that they "tend" to a chaotic drift alone, by themselves, and that, to precipitate such disasters, the flutter of a butterfly would be enough.
This is the place also to insist on another remarkable and distinctive epistemological trait. This is an argument that is rooted, and reaches its maximum consistency from a global and historical analysis, even over the counter trends that may have a temporary local level.
The most famous controversy about it is perhaps the one that produced Eduard Bernstein, a few years before the First World War, after noting, with some astonishment, that the global profit rate of capitalism was increasing(!) instead of dutifully obeying the dictates of The Master. Bernstein suggested that perhaps he had to review and eventually correct, Marx's analysis. Karl Kautsky, then the maximum guardian of orthodoxy, was strongly opposed to the idea that The Master could be wrong, and accused Bernstein of revisionism! An adjective Marxist tradition of the twentieth century continued using in an equally idiotic way for many decades. 
Interestingly, however, despite their arguments, Kautsky was right. And not only the matter is settled empirically with the cycle of crisis that opens in 1915 and ends in 1929, but may be decided in a deeper way.
In fact, whenever there are significant technological changes, and before a "price war" is triggered, the profit rate rises. And this does not only happen in every branch of production, and in every sector, but also occurs for the capitalist system as a whole, whenever it is reborn out of its general crisis.
What matters is not whether the profit rate in the electronics industry goes up or goes down, or if a general crisis will occur within three or five years, data that can be used to buy or sell shares, but not to think about the overall viability of capitalism. What is relevant is the diagnosis and historical judgment on the nature and eventual fate of the whole, considered as a system. And in this Marx's analysis are not only consistent and forceful, but have been being increasingly backed by capitalist development in an ever more notorious way.
An internal, demonstrative, consistent theory, widely supported by the facts; a theory of an entire social system, referred to in broad historical terms. All this is very rare in social sciences. 
b. Conservative critiques
But modern thought is, and has been historically, much wider than the poverty of Social Sciences. And it's good to give here a brief account of the various arguments that have been made against capitalism throughout its development.
First, there has been, for centuries and practically from the beginning, a persistent conservative critique. From the hateful sermons of Bernard of Clairvaux (1090-1153), which should be considered as much more subtle and profound than the simple religious fanaticism they represent, and which are often surprisingly prescient, to the sophistication of the critiques of Martin Heidegger (1889-1976), conservative thought has targeted, with good reason, against divisive individualism, antisocial market chaos, rudeness of bourgeois careerism, selfish pettiness that is presented as saving effort, the amorality of economic calculation, immorality of greed for profit.
Obviously, a Marxist should be in full agreement with these estimates as diagnostics and reviews, in spite of the fact, too obvious, he should disagree with their motivations, the place from which they are formulated, with the background reasons around which they are organized, and the solutions are proposed. Many essential disagreements, that's very clear. But the points of agreement should be seriously considered as a source of enrichment of leftist criticism.
From the Marxist point of view, the conservative critics only point to effects, not to the real causes, in both the diagnosis and the solutions they propose, through purely moral considerations, not touching the material root from which the real ethics arises, which is contained in real actions rather than statements. Or again, these are critics in the field of culture, pointing to effects that are believed to be also reversible through cultural means, without taking over again, the material contradictions that cause them.
Of course Marxists can not agree with the use of the principle of authority, or the appeal to tradition, to which conservatives recur as principles for possible solutions. That tradition and that authority is not, for Marxists, but the ritualization and nostalgic celebration of traditional oppression, and the powers attributed to them are but myths that falsely embellish what was only violence and obscurantism.
There are two issues that I care pointing out at this point of this controversy to avoid simplistic dichotomy. One is the ease with which many Marxists tend to adhere to the purely liberal counterpart to the conservative arguments. The other is the ease with which it is accepted that the values of conservatism refer to the feudal era, which would make them even anachronistic to capitalism.
It is true that before the invocation of tradition, authority and religious sentiment, Marxists would have locate themselves in a more openly democratic, secular perspective (to the extent of atheism), that substantively valued change and novelty. It is not true, however, that such values are properly liberal, though they originated in them. And to make this visible, it is sufficient to try to combine this, which we in this case defend (the democratic principle, the novelty and change, a secular and atheistic society) with what conservatives criticize (individualism, careerism, commodification, greed for profit), to find out that both sets of values are not at all contradictory. And above all, that the critical line of conservatism may be invoked even against the social reality that gives its origin and its arguments to liberalism.
There are also a crucial point in that both conservatives and Marxists could be in perfect agreement regarding the order of solutions: the need to establish a human society more in the sense of community than in the discretion of individual freedom. Our disagreement with conservatives in this area has more to do with the material conditions that would enable that goal, and the inner, more democratic organization of that situation, that with the very idea of community, of which the Liberals visibly lack.
Conservative rhetoric has permanently referent of a feudal Europe, which would have been chivalrous and aristocratic, and a medieval Christianity, that would have held a strong sense of community.
Curiously, the liberal tradition has helped keeping these myths by attacking them almost as efficiently as the conservative tradition has done defending them. What both conceal thus in a symmetrically interested way, is not only the fact that this is purely myths, but the cultural complexity of capitalism.
There was never a sense of community in Europe, much less in the referred centuries (XI. to XV.) which are full of burning of heretics, feudal wars, and rising and rampant capitalist greed. There wasn't anything besides mere intellectual pretension serving pretty brutal Lords (as Bernard of Clairvaux himself). The claim that there was, and that it was necessary to maintain, what everyone could directly see there wasn't, or as it was tried, only disintegrated violently.
The capitalist blow from which Europe was born was catastrophic and devastating from its origin. Before its action (before the XII. century) there was no community but just misery and feudal oppression. Each new era since then or, to put it more realistically, each new recomposition of capital after a ferocious war or a plague or crisis was accompanied, almost to this day, by a pole of nostalgia in which artificially aristocratized bourgeois, now defeated by new bourgeois strata now in possession of a new technological base, invent a glorious and harmonious past, whose petty background is but trading it as cultural capital for the new bourgeois, eager for a new ennoblement that conceals their immediate past as blacksmiths, horse thieves, or gunsmiths.
That pole of romantic mystification, beautification and false nobility is as essential to their enlightened bourgeois culture as its rationalist and demystifying pole. That is why only criticizing it in a solely liberal way is not enough. For Marxists the criticism must go beyond both poles, picking up their opposing substance, and rejecting what they contain of symmetrical falseness, mere legitimizing appearance of claims and privileges that are, on both sides, only those of the bourgeoisie.
The interesting thing with this conservative critique is how it streamlines the side of the internal cultural contradiction of capitalism itself. It is to point out a very deep fold in this deeply conflicted and contradictory culture. Its limit, from the Marxist point of view, is being unable to see that the dark aspects it points out are not due to bad cultural practices, but to the internal logic of a system of which conservatism itself is part, despite their nostalgia and pretensions.
c. Liberal critiques
There also are liberal critiques of capitalism. Obviously not as a system, but of rather profound aspects of its normal operation. These are critics derived from the fact that their classical theorists sincerely believed in a system in which there was a direct and close relationship between an economic model and a series of social and political ideals. The fundamental connection between the two areas they defended and preached allowed them to criticize the excesses that, from any of them, would substantive hurt the other, breaking his balance. So they not only criticized excessive state intervention, which could stifle freedom and economic efficiency but also, symmetrically, the monopoly that, from the economic sphere, could become an obstacle to genuine political freedom.
This double critical line is still in a state of suggestion in classical theorists such as Locke, Hume and Smith, whose writings can, however, still be used effectively to support it, but it emerges explicitly in Bentham, Stuart Mill, and, in the XX. century, with particular clarity in John Kenneth Galbraith, or Michael J. Sandel. 
Strong supporters of the autonomy of the citizen and the transparency of democracy, liberals have always been enemies of censorship and monopoly ownership of the media. Their systematic inefficiency at this point can not, of course, be invoked against the sincerity of their convictions. Under them, they could well be in favor of limiting the capitalist dues in this particular business, for political reasons, but they have always encountered in the solutions that could be given to implement this limit seem nearly as serious as the problem to them. The point at which this indecision transforms their sincerity in cynicism has always been, of course, very difficult to establish, although its practical results are usually easy to find.
For purely economic reasons, however, in the liberal tradition there is a whole line of argument against the commodification of services such as health, education, culture and sometimes even transportation or housing. The basic economic argument is that this commodification affects the quality of these services so that the social cost of that loss would far outweigh the private benefit from which it may be indirectly compensated.
In general these arguments seeks to distinguish the "market" from the superlative "commodification" and defend a certain area of real social autonomy from both the state and the market. An area that is sometimes distinguished as "the public", which would have a specificity and own needs.
Also for economic reasons liberals often oppose unproductive profit, the excesses of usury and overexploitation. In all these cases the arguments try to show that these are practices that paralyze technological development (as promote "easy profit", distort competition and hinder the expansion of the overall capacity of consumption, which is what can give fluidity to capitalist production).
As in the case of the Conservatives, there is much empirical truth and principles in all this criticism. Its mere enumeration would seem incendiary in the atmosphere on neoliberal economic fundamentalism that still prevails in the world, despite the crisis. Against trusts, particularly of the media, against the commodification of services, usury and unproductive profit. Under present conditions it is a simply subversive program.
Again, obviously, Marxists would not necessarily agree neither with the basics being invoked for this criticism, nor with the solutions proposed.
In the order of basics, from the Marxist point of view, they all point to effects rather than actual causes. They point to features that are seen rather as defects or deviations and not in connection with the structural aspects that make them recurring. And, therefore, they are attributed to deformations of values (selfishness, greed) rather than to an objective overall situation. Moreover, from the liberal point of view, the last line that would enable these deviations, which would be but a human nature itself selfish and hedonistic, carries a serious skepticism about the possibility of eradicating them in a real and profound way.
All solutions proposed by the various types of liberals are affected by this skepticism, and then kept in the field of reforms that can only rely on legal guarantees or moral preachings. Some favor a moderate intervention of a regulatory state, others advocate the strengthening of civil society. Some put emphasis on capacity building and political rights of citizens. Others in the organized defense of consumers.
Of course Marxists can and must agree with these criticisms, despite of their character and merely reformist scope. As I will suggest below, for a Marxism able to join a diverse left, between reform and revolution there is not a dilemma but a difference of historical reach. We must also consider that given the theoretical and practical drift of liberalism toward an aggressive predatory neoliberalism, today being consistently liberal, as I said, is to be radical and subversive on many essential points of the prevailing oppression.
As criticism, the strength and greatness of liberalism is rooted in the same economic objections, asking a certain coherence between the historical project of the bourgeoisie and its actual practice. Its limit, however, does not see that this consistency is impossible as such, that the excesses are not due to bad economic practices that could be improved and corrected transparenting the market, but, in fact, come from its structural logic.
d. Socialist critiques
Among some Utopian Socialists, and generally among Anarchists, the liberal critique was taken to its revolutionary extreme. While sharing the diagnosis, and even the basics (individualism, human nature), Anarchists have the credit for making a real political agenda of the liberal idea that the major culprit of the economic and social distortions are the State, as an articulating center, and the institutions, as a general phenomenon.
The Utopian Socialists were the first who attempted to formulate plausible models of society in which the autonomy of citizens and market transparency were indeed possible. They realistically and lucidly saw, in those terms, that freedom and transparency are only possible in small, self-sufficient social units, where direct representation and face to face economic management was practicable. Anarchists have followed this line of propositions until today.
With that, both transcended the mere preaching of values (without abandoning it) and moved into the realm of actual policy proposals, assuming that their difficulty would transform them into revolutionary policies, ie proposals that without abandoning the essential aspects of bourgeois modernity (private property, political democracy) involved such a subversive transformation of the dominant powers, that could only be undertaken by a politically radical revolutionary will.
Enemies of large property, but not of property in general; of commodification, but not of the market; of the centralized state, but on behalf of an emancipatory bourgeois individualism; of ignorance and superstition, but on behalf of progressive Enlightenment. The revolutionary principle that encourages Anarchists and Utopian Socialists is directed against the oppressive form of modernity, not against its principles, which are seen as a liberating horizon. It is a revolution from the system, against their objectification. This is to fulfill the old promises, not to abolish or overcome them.
This emplacement to the bourgeoisie, on behalf of its own lost utopian horizon, had an enormous historical importance due to its consistency and radicalism: the Anarchists are the real educators of the labor movement. They are the first (when they still had the form of Utopian Socialists), and more clearly (when they reach their Anarcho-Syndicalist form) pointed out to the labor movement the possibility of a revolutionary will. Humanity had never known before, even in the violence of the French Revolution, a similar principle, extending so fast. We Marxists will never be able to integrate a truly diverse left without previously and unreservedly recognizing this huge contribution.
But it's just socialist criticism as such the first that exceeds the logic of the system itself, by pointing to private property as a core that makes its deformations possible. And what I here do understand by socialist criticism is something that I will distinguish explicitly from Marxist critique, even though over a century they are exchanged and permanently overlapped.
By socialist I am specially referring to the social democratic tradition, which called itself "Marxist", centered in the Second International, and I want to show that in several essential aspects it contains a different argument and a different extent to what Karl Marx developed.
In the socialist critique all the previous critiques are gathered, extended,and magnified to the proportions reaching the working class poverty in European industrialization. These are critiques of poverty, usury, ignorance, profit. But it is now organized around a new concept, which translates into a new consciousness: the idea of exploitation.
The consciousness present here is that direct producers have a priority right to the wealth they produce, and that the obstacles to the effective exercise of this right is private ownership of the means of production. This idea is expressed in one of the classic formulations in which the contradictions of capitalism are presented: "the contradiction between the social character of production and the private character of appropriation". And in another, translating the same content showing another aspect: "the social production is not guided by the needs and consumption, but by profit, by lucre". The socialist tradition was able to see from there the trend towards the commodification of all aspects of life, to the plundering of natural resources, the systematic looting of the periphery.
An important merit of its criticism is that it is systemic, ie it targets essential aspects of capitalist historical formation and is able to root the idea that what is at stake is a set of bad economic practices in another, deeper one, that the background is actually in bad social practices, whose eradication requires to radically change society as a whole.
When we go on to the solutions, the great proposition was the socialization of the means of production, and its social administration from the state apparatus. Historically the Socialist tradition is deeply linked to two trusts that might today seem largely questionable. A great confidence in the emancipatory possibilities of classical industrialization (coal, electricity, large machinery and steel), and as large as that a confidence in the possibilities of effectively managing and distributing the social product fairly from a centralized state apparatus.
Beyond anecdotal and tragicomic disputes between Marx's and Bakunin's egos, the real contrast between Anarchists and Socialists (who called themselves Marxists) lies in the diametral difference in how both address their points. Most Anarchists distrusted the leveling and alienating power of industrial production, and preached against it a return to nature. And even more they distrusted state centralism, to which they opposed federalism and disintegration of all major institutions.
Making an easy, and completely useless exercise of political history and fiction, we can imagine a humanist, not alienating industrialization, that does not destroy the environment, and a democratic state administration, which does not lead to totalitarianism. But this can only be a futile, unhistorical exercise, which is but a mere projection of values and desires but, worse than that, in the last hundred years we have accumulated enough empirical, quite dramatic evidence, that the Socialists trusts were unfounded and lacked any historical viability.
However, this does not prove the Anarchists true in a decisive manner. I argue that the weakness of both sides is correlated: neither has moved towards a really profound critical line of modernity as a whole. They just have striven to meet the promises the modern horizon itself contains. They are both, in that sense, despite their eventual radicalism and professed revolutionary will, reformists. Their horizon is only to fulfill, in a revolutionary way, what the modern order promises and allows to fulfill.
But in making this estimate I'm getting involved in it an assumption that should not remain implicit in any way. The assumption that the logic of modernity does not limit itself to its narrow capitalist form, in the precise sense of the rule of law where the private ownership of the means of production prevails, and a general mechanism that makes wages depend on the existence of a labor market. What I have argued in my previous books, and am again systematically defending in this one, is that under the same rationale there still is room for another class society, where exploitation of the direct producers in other forms remains, a society in which the bureaucracy as a hegemonic ruling class usufructs with advantage from such exploitation, and from the dehumanizing alienation involved.
My argument is that there are abundant empirical elements supporting this idea, and only from the class analysis that Karl Marx devised these empirical elements can be theoretically accounted for in a consistent way. And of course, this point is crucial to establish the specificity of the Marxist critique and its eventual advantage over the other.
Having put things this way, of course the Anarchists and Socialists critiques are revolutionary, but what we know today, also in part because of them, that a revolution actually pointing toward communism, toward the end of the class struggle, may no longer just be anti capitalist. If it is not also radically anti bureaucratic, it has failed to pass, however radical its forms are, the limits of reformism.
Well, all these forms of anti-capitalist, conservative, liberal, anarchist and socialist critiques made possible the work of Karl Marx but, conversely, each and every were and are perfectly possible without his contribution.
That Marx did not invent the critique of capitalism goes without saying, of course. What interests me here is something else. I am interested in specifying what Marx himself added to them and what can be therefore properly be considered as "Marxist" from those who want to not only be revolutionaries (there are many ways to be), not only Leftists (lots of lefts are possible), including not only "Marxists" in the purely empirical and historical sense of the term (many real Marxists never read, nor needed to read Karl Marx), but Marxists in the original and proper sense of accepting and following, along with many others, precisely his arguments, because they have been assigned a value, that is decisive in a way.
When we consider, then, the arguments that can be considered typical of Marx, what we find, first, is a profound difference of the critique he exercises is based on an objectifying analysis, moving below declared values or wills of the actors examined. An objectivity where these actors are considered as social classes (not as individuals, or as a mere collection of individuals) and examined in its logic, looking for the logic that articulates their actions (rather than a merely empirical count their effects). Objectivity in that logic is located in certain effective historical conditions, where it operates as a key for the understanding of the meaning of human history under these conditions, the sense of its contradictions and disasters. A sense of discernment that allows you to show the possibilities that this history contains.
Secondly, I argue, that the critique of Marx has come to understand the causes, rather than dwell on the enumeration of the severity of effects; it has found structural unifying principles for these causes, instead of attributing them to "bad practices" or deviations in the performance of the values, or conscious bad will of the protagonists.
These causes and these structural principles are those revealed by the critique of political economy: the historical downward trend in the rate of profit due to competition in an inherently opaque market, the general cyclical crises of overproduction which occur due to attempts to reverse them, the cyclic resource to plunder and absolute surplus value as ways out of the general crisis. All disasters listed by all the previous critics may find their explanation and meaning in these structural features.
Thirdly, I finally argue, that only Marx really aimed beyond the modern horizon with a decisive idea: that the end of the class struggle should coincide with overcoming the division of labor, ie, alienated work. Not only with the end of private property, not only with the end of salary, but with building material conditions that make both exploitation and such institutions unnecessary, that extend and protect them. And this state of affairs is what he called communism.
The critical analysis of capitalist economy, the class analysis and the conception of human history involved, and the formulation of the communist horizon, these are, in my opinion, the distinctive and specific features of what may be called Marxism because they are all present in the work of Karl Marx.
f. Anticapitalist critiques after Marx
No need to read Karl Marx to understand that the capitalist market is not very viable if potential consumers are poor, or if they are gradually launched into unemployment. Many people, even not too smart ones, even some economists, did see this, especially after the great crisis of 1929.
On the one hand the workers' misery, dragged from the early days of capitalism (neither more nor less than five hundred years) conspired against the necessary realization of the huge volumes of goods the industrial revolution threw up. Moreover, the new means of production required, relatively speaking, fewer workers or, to put it another way, produced a situation in which the population growth was much faster than the growth of labor force actually employed. To this fact, known as "tendency to structural unemployment", due to technological advancement, we must add the great population explosion that began being produced by scientific advances in medicine and public health.
Despite some lucid voices, no changes actually occurred from some conscious planning, and if this finally arrived it was only to continue the trends already underway.
The first momentous change now everyone forgets, is what the arrival of plenty meant: for the first time in human history the volume of production in all areas surpassed the basic needs of all humans. In any society prior to the twentieth century scarcity reigned: if all goods of society had been distributed equally, all human beings would have been leveled below their needs, all would have been reduced to poverty. Now, for the first time, if all assets were divided equally, all human beings could reach dignified levels of existence. The great argument of bourgeois ideology, social needs forced by scarcity, stopped having actual empirical support.
Until the early twentieth century, the bulk of capitalist production was destined to social sectors that already had purchasing power. To the ruling classes, the affluent middle class. let's say, incidentally, that's why commercial advertising was unnecessary. When the purchasing power tended to be coped in the core countries, entrepreneurs begun seeking to bring their products to the periphery of the world, again looking for already existing purchase capabilities of the local ruling classes. That is why throughout the eighteenth and nineteenth centuries active "struggle for markets" grew between the capitalist powers, not so much to obtain raw materials (the colonial question had already been arranged), but to put their products .
The revolutionary growth in physical volume of production that resulted from technological progress and Taylorization of labor, however, created a situation of enormous social and political implications that conditions us to today. For the first time in human history the main target of manufacturing began to be the workers themselves. Beyond the brutal inequalities, this was the origin of something that is rigorous to call "consumer society": never before has such a large proportion of the world population consumed such a large volume of goods, and such a significant proportion of production total. The clarity of the logic of capitalism, which Marx so strongly established, was thus altered in a few ways and with consequences that are important to discuss.
The period from 1932-1974, in many ways the golden age of capitalism, showed conclusively that mass consumption can be a powerful regulatory tool of structural tendency to overproduction.
The American industrialization after 1929, the industrialization of fascist Germany and Japan since 1930, the reconstruction of Europe after 1945, the process of industrialization in some countries in Latin America, and even, in a very different political perspective, the huge economic development of the Soviet Union and the socialist countries, showed that a broadly affluent society is perfectly possible.
Having led to huge "middle classes" composed of professional employees and industrial workers, they were supported by massive state investments in infrastructure, education, health, housing and culture, generated large state apparatus capable of absorbing labor force and, in this way, increasing the general purchasing power. State apparatus which constituted a source of cheap credit and a major employers and consumers worldwide.
But these formulas, which became known as "welfare state", despite their successes, failed to prevent even for a moment or to reverse the structural trends of the system, and even, although they achieved to regulate or conceal them, generated new contradictions.
Historically the progressive raising of wages did not only accentuate the overall downward trend in the rate of profit. The same effect was produced by shifting the burden of job creation and purchasing power on the state: it only could keep raising taxes on companies ... at the expense of their profits.
On the other hand, a too significant proportion of the apparent economic success of the core countries is simply due to an extraordinary increase in the looting of raw materials from peripheral countries. The vaunted "success" of the welfare state was strongly supported by a long era, more than eighty years, of commodities virtually given away: saltpeter, oil, rubber, copper, iron, coal, aluminum ... All delivered at ridiculous prices by local ruling classes against the interests of their own people.
But the sheer volume of this plunder or, conversely, the extraordinary need that it meant for capitalist viability, created an extremely sensitive situation with regard to territorial control. On the one hand you had to deal with formally independent local ruling classes, whose political loyalty could be very variable, on the other hand the growth of the socialist camp meant a permanent danger of loss of strategic areas rich in natural resources. The conflict with the Arab countries, drawn from the late '50s, culminating in the nationalization and rising oil prices in 1974, is a true paradigm of the overall situation.
Capitalist logic always operates in specific historical circumstances. Political economy has the merit of studying the economic phenomenon always under these actual, located conditions. And, conversely, in the twentieth century everything contributed to empirically confirm this logic, and express itself through it.
On the one hand, the strategic and at the same time political and economic struggle for sources of raw materials, led to a massive arms race. Halfway through, however, nuclear standoff, the apparently military and political alleged purpose of that race became a simple matter of business.
The arms industry became the center of industrialization, around a global war that everyone knew could not be started without an ominous threat to all humanity. Rampantly producing arms for a war that will not happen, or for local and distant wars, that by themselves make no sense. an excellent business!
Ever since the Napoleonic wars, the industrialization of war was an excellent capitalist business. Even the devastation and horror of the two World Wars are marked by this commercial character. The issue now, however, is that this industry becomes the mainstay of the economy.
The purely economic defects of the arms industry have been reported many times. This is a sector that, in relative terms, creates very few jobs, that requires huge investments, in which the military and industrial secrets hinder technological advancement, that produces only waste, that can leverage its military and economic capacity to demand excessive prices, which gets inordinate resources through corruption, canceling all the potential benefits of market competition.
All these "defects", however, are precisely a "virtue" from the point of view of capital: they allow a surplus rate of profit, no truly competitive activity can achieve. But, well, nobody has said that capitalists compete for the fun of competing, what they care about is profit and much better profit without competition!
Lured by easy money giant monopolies were formed around each major aspect of the industry (construction of aircraft, ships and submarines, spy satellites and radar networks), and around them vast networks of contractors and subcontractors for the parts and pieces, and smaller weapons systems, R & D, and the associated services. Since the 40's all great classical corporations such as General Motors, Ford, ATT, RCA, IBM, Fiat, got their main income from the manufacture of armaments.
The main distortion that the arms race produced on the global economy, however, was the accumulation of a huge fiscal deficit in the United States. The industry of waste and destruction grew to such an extent that even the most powerful states in the world could finance it.
The overall economic inefficiency driven by the privilege of the arms industry bankrupted the Soviet Union. In the United States, however, it was the subject of a new business, worse than that ... lending money to the state to fund its deficit. This created another catastrophic characteristic of advanced capitalism: the trend toward large-scale financial speculation.
The U.S. fiscal deficit, and the extraordinary liquidity created by the rise in oil prices after nationalization, generated a powerful stream of just mere currency speculation that led capitalist logic to an absurd end. If making profit without competition was already an excellent business, now this was a much better business to make it without producing absolutely nothing!
The specter of the disaster of unproductive profit announced even by liberals like John Kenneth Galbraith, and clearly foretold in the writings of Marx, began to be real. Operations such as to lend money usurious rates to dependent countries that can not afford them, with the full approval of the local ruling classes. Funds often installed only to finance transnational corporations in those countries. Unaffordable amounts of money, whose repayment was imposed on the people without mercy, completely destroying the little and poor welfare state that had been lifted.
But even among the pompous central "democracies" a brutal tripping between countries, compromising their own people, was gradually increasing. Opening unpayable credit lines to workers by offering them the excesses of consumption in exchange, offering credits with also unpayable guarantees the States, and then require those States to cut the social benefits conquered, to pay the interest of new and more expensive "bailout plans". This is the current drama of Greece, Spain, Portugal, Ireland, of the middle class in America, of workers in the former socialist countries. At the end of this end, a point was reached where General Motors began to earn more money by lending money to buy cars than by actually producing them.
As if this crazy indebting of those who can only respond with their wages was not enough, the large industrial corporations in the United States and Europe found that wages made by their workers were too high and, following the oldest capitalist atavism, proceeded to dismantle the industrial base in those countries and take it to China, India, Brazil and Mexico, where they can again pay starvation wages. The contradiction could not be more blatant: indebt workers and in parallel destroy their sources of employment.
Arms race, financial speculation, deindustrialization, these are today the capitalist pests plaguing those places once pompously called "welfare states". Add to this another, perfectly capitalist scourge illegal drug trafficking ... and also the legal one.
All these evils reveal a common cause, now explicitly, although it is fully inscribed in the logic of capitalist reproduction criticized by Marx: an economic system ordered from private interests is absolutely incapable of exercising the smallest global and strategic calculation about its effects. Local economic calculation prevails without counterweight over global interests, and immediate interest over any strategic consideration. And even that is proclaimed as legitimate.
That is why tobacco or alcohol industries are accepted as legitimate businesses, although they visibly contribute to lower productivity of all other industries. That's why forests are preyed, completely avoidable polluting sources of energy are used, medications that cause almost as many alterations as they are fighting are produced. That's why education is commodified, regardless of its impairment, or health systems, without regard to the effect that lower levels of health may have on the workforce.
These immediate and verifiable evils, whose root can be found in the absolute inability for strategic calculation of a social class composed of individual agents in competition, I want to add another aspect, and other critique, now just at the strategic perspective which is missing.
One of the aspects of longest projection of the abundance revolution that occurred in the late nineteenth century, was around a great social achievement whose deep meaning has gone unnoticed by most Marxists, although it usually is a regular part of their celebrations: the reduction of the working day to eight hours.
If we consider the absolute mechanisms to increase the appropriation of surplus value (the "absolute surplus value"), we notice immediately that limiting working hours and even more reducing it, is a direct attack against capitalist profit.
Considered in historical terms, obtaining the working day of eight hours was only possible through the distribution of revolutionary improved productivity. Capitalist profit rose so much, that it was not only possible to increase overall wages, but also to reduce working time, both issues, which under normal conditions would have been radically resisted by employers. Of course, entrepreneurs of the time did not accept them graciously. The dead that are commemorated on May 1 are among the many from a sustained and massive struggle.
When I will later explain, what may plausibly be involved in a communist perspective, I shall have occasion to insist on the fact that there are few victories of the peoples movement with such a strategic projection. What interests me now to consider, however, just the opposite, is the fact that this momentous trend HASN'T continued throughout the twentieth century, and what happened instead.
What happened with the reduction of the working day to eight hours is that the benefit obtained by increasing labor productivity not only passed into the hands of the capitalists, but partly also to its immediate producers, the workers. In fact this could happen every time productivity increases, in two ways, which may well occur simultaneously: progressively reducing the general workday or integrating new workers into productive employment, ie, to the production of tangible physical goods or immediate services needed for production. This second measure could reverse the global trend to structural unemployment, reversing it towards a policy of full "productive" employment. Given this trend to full and productive employment, this could give way to the first measure, the overall reduction of the working day.
In a famous lecture in Spain in 1930, John Maynard Keynes himself, less than a year after the great crisis of 1929, estimated that a hundred years later, around 2030 , workers may have "satisfactory" wages with a workday of only 15 hours a week!
In his calculation, Keynes assumed a relatively stable population, an annual growth of total investment of 2%, a total annual productivity growth of 1%. Needless to say, when only 17 years are left to the deadline, we are far from that goal. Moreover, since 1930, in developed countries, labor productivity has grown by more than 1.6% annually, and working time, however, due to the rules of job insecurity, rather tends to increase. 
What happened in fact is that policies of "full employment" solely privileged increasing purchasing power, or what is the same, domestic demand, not caring at all about what type of jobs were created.
Of course, with the growth due to the re-industrialization productive employment increased. But the major source of increased demand was obtained by simply creating unproductive jobs.
On one hand directly through the massive increase in government officials, and services in general. On the other hand, indirectly favoring the growth of unproductive occupation in general, by moving large sections of the population outside of the labor force. This happened with the unprecedented growth of the student masses, housewives, and a vast world of underemployment.
Particularly unproductive jobs increased to levels unimaginable to any other human culture, as clerks, the military, government officials, teachers, academics and university researchers. The proportion of the workforce engaged in food production was drastically reduced. And also, as I pointed out, there was a vast potential displacement of unemployment to regions of the Third World.
This process has been usually described as "tertiarizing the economy".  In a description that has become common, food production (agriculture, fisheries) and raw materials (minerals, timber, energy) are often called the "primary sector" of the economy; "secondary sector" will then be manufacturing production, and "third sector" the name given to the production of services. For technical reasons, and according to the political objectives I pursue in this text, I will operate with a slightly different classification:
- Food production (primary sector)
- Production of material goods (secondary sector)
(Raw materials, manufacturing, energy)
- Production of symbolic goods (tertiary sector)
To glimpse the revolutionary effect of what has been called "tertiarizing the economy", it is interesting to contrast the historical proportion of the composition of the workforce, in traditional societies, with today:
|Sector||Traditional Societies||Contemporary Society|
Also, more precisely, one can observe the following comparisons, obtained from the statistics of the International Labour Organization (ILO) in www.laborsta.ilo.org: 
|Fuerza de Trabajo||26||100||29||100||141||100||145||100|
| 2° Bienes Materiales
|No clasificados||0,014||~ 0||49||33,8|
I have put in parenthesis the sector that is directly engaged in manufacturing. This allows to explicitly see the destruction of industrial employment. Note that in the United States between 2000 and 2008 it changed from 20.7 million to 15.9 industrial workers: 23% less. Another aspect of the same problem can be seen in the dramatic increase of workers with "not classifiable" jobs, or "not clearly defined job", of 14,000 in 2000 to 49 million(!) in 2008, which was mainly due to the extensive and radical processes of job insecurity, and the myriad forms of underemployment.
What these figures show, from our point of view, is that the increase in labor productivity was wasted in unproductive jobs. Or again, in other words, they show that the progress of mankind has only been used in benefit of the ruling classes, rather than distributed progressively and proportionately between its direct producers.
The only logic of tertiarizing the economy is to keep the wage labor contract and capitalist profit as the only ways to access the benefits of the wealth produced by all. To keep the capitalist market as the only way of appropriating and sharing wealth.
The abundance, which should mean well-being and true freedom for all, becomes idiot work, administered leisure, a scheme of disciplined life, alienated around market exchange, predation of lives and resources in the name of economic development patterns that have become technically unnecessary, that not only maintain the disproportionate benefit of a few, but also of those who just do not produce absolutely no real wealth of any kind.
But the model of industrialization based on the arms race and mass consumption also produced other contradictions himself.
Looking to maximize their profit, huge urban concentrations (concentrate producers, bringing near the consumers) were created, they resorted to plundering of natural resources on an unprecedented scale, polluting energy sources were used keeping in view only their immediate cost, without any calculation of their impact on the environment in the mean and long term.
In pursuit of profit maximization, labor intensity was dramatically increased in the purely mechanical routines of Fordism (extreme alienation in the workplace "for life"), or the shocks of job insecurity that combines periods extreme exploitation of empty periods without occupation ... and without pay.
A first effect of this model that matters to explicit is the increasing difficulty to restore the work force required by labor intensity and insecurity. This generated the need to manage the free time, searching (vainly) to increase the "intensity of rest", to prevent social epidemics like alcoholism, absenteeism, drug abuse among workers, produce a subjective commitment to the means of production and the objectives of the companies (the "Toyota spirit").
But the entertainment industry, which converted these needs into another business, was so primitive and stressful as the evils sought to relief; the work of personnel offices in the attempt to create a favorable subjective climate became mere manipulation and a demand rather than subjective facilitation.
Urban concentration, the technological intensity of everyday life, overdemands created by labor intensity, generated new forms of rather neuromuscular and psychological fatigue, the old industrial production did not know.
The back side of rising wages and improved living standards was a dramatic worsening of the quality of life. This should be pointed out, however, in two ways. On the one hand, among those integrated to industrialization, the local standard of living (in the family, in the neighborhood) increased, while the overall quality of life (in particular lives, in society in general) worsened significantly: one could live increasingly better in a society, that is increasingly less worth living in.
But on the other hand, part of the cost of this massive rise in living standards of integrated mass is the misery of the marginalized areas inside and outside of developed capitalism. For the marginalized not only the standard of living has fallen, but above all and catastrophically, the quality of life. It is a dark, tragic reality, at least for a quarter of humanity. A massive one in countries like India, Pakistan, Afghanistan, in the countries of central Africa. But also, increasingly, in all urban peripheries of the more pompously "developed" cities, like New York, London, Paris, Moscow and Rome.
To this we must add the drastic drop in income distribution, both domestically and globally, occurred in the last thirty years, where the crisis and financial speculation have led to a huge concentration of capital and lucre.
A second effect, in the order of the technical division of labor, appears to concentrate large amounts of tasks in a single assembly line (according to the Fordist technique), and even worse when removing those lines to rearranging them as networks of production of modules and parts (as in the post Fordian technique): the increase in the complexity of the production process becomes more susceptible to overall failure.
An example of the first type (single systems connected in series) is the catastrophic failure of nuclear power plants. An example of the second type (delocalized, networked systems) is the daily "the system crashed" in the window of a bank, or the spread of congestion when traffic lights fail two or three at a time.
The problem appears due to the sustained tendency to concentrate production operations in highly complex systems. In serial systems, by increasing its length, in network systems by increasing the number of modules and of connections between them. This makes systems that can usually overcome or correct a local failure (directly in a serial system, or doing the work with other modules on another path in networked systems), completely changed the possibilities of their overall behavior. Or, to put it directly, gradually increasing the likelihood of a catastrophic spread of a local failure, ie, that the failing of a step, or a module, precipitates the gradual downfall of those who are connected with it.
"The system is down" is a response that we heard and hear with increasing frequency. The reason, of course, is the excessive concentration of production processes or information, has no other origin than the greed for profit ("save" time and effort). Later I will add as a factor also the extreme vanity of tech bureaucrats who mistake their mere pretense of knowing for actual knowledge.
Arms race inserted into a pattern of predatory and destructive industrialization, financial speculation at the expense of the welfare of all, tertiarization of the economy led by the idiot work on unnecessary working hours, discharge of absolute unemployment to huge areas of the Third World. Technological intensity of everyday life, productive complexity prone to catastrophic failure, local standard of living increases which are paid by an overall deterioration in the quality of life. These are global critiques of capitalism that can be added after Marx. Each and every one of them, however, fully inscribed in the logic of the reproduction of capital which he described.
There won't be a communist perspective while the popular movement doesn't achieve to reverse these trends. End the destructive production (destined to waste, founded in contaminating energy and resource depletion, irrationally concentrated); end to financial speculation; reverse tertiarization of the economy, of unproductive labor, of dumbing employment; remove the essential services from the market logic; sustainable industrial development to the poorest areas of the planet.
In this long march a good first step is to try to specify as clearly as possible who the enemy is, and whom we can count on. This is the aim of the second part of this book.
- See Joseph A. Schumpeter: Ten Great Economists, from Marx to Keynes, Oxford University Press, Oxford, 1951; Eric Roll: A History of Economic Thought, Prentice-Hall, 1956.
- Let us consider the meaning and connotations of calling quantum physics "neo classical", or molecular chemistry "neo alchemy".
- See, in this regard, Carlos Pérez Soto. On a historical concept of science, Lom, Santiago, 2nd ed, 2008. In the case of psychology, see Carlos Pérez Soto: On the social condition of psychology, Lom, 2nd ed, 2008. In the content itself, and by its protagonists, one can compare the Rules of Sociological Method, by Emile Durkheim, or The Politician and the Scientist, by Max Weber, with the way they are written of Leviathan, Thomas Hobbes, or the Treatise of Human Nature, David Hume.
- I use the term "fiction" to emphasize its completely created, artificial, historic character, to say that there is nothing in them that is natural or objective. Of course the social force that these constructions acquire, becomes very real, very distant from what we mean by "fiction". But I'm more interested in that historicist trait than in this empirical finding.
- Not so, however, their will as a class. On the difference between individual empirical consciousness and class consciousness, see Section 5 of Chapter II.
- "Fictitious", of course, for the global and historical reasoning of Political Economy. It is obvious, moreover, that it is a very "real" wealth for individuals in very specific contexts.
- In earlier societies wage labor existed. From the point of view of Marx, however, this did not meet two essential conditions for them to be considered capitalist societies: the existence of a labor market, and the existence of a social sector of free men that were in a position to sell theirs. Similarly, in earlier societies ownership existed, even of means of production, but not the private property, ie, the hegemony of the personal owner's free will on the possession of their means of production and of their products.
- With the notable, inevitable and eternal exception, of course, of those who imperatively require the relevant quotes and "proper" language: those from the Master, invoked in an almost probational way to establish more or less that the same ideas that I have presented here.
- Consider that in the commodification of education the real estate business is parallel and independent of the education business. In general, the overvaluation of the prices charged for educational services is used as a source of financing real estate. To the argument that I hold it is important that while the construction business does obey to common logic of capitalist valuation, educational business as such does not. Of course, something similar happens with the commodification of medicine, or the enormous infrastructure built for "Big Science".
- There certainly are other ways and other aspects where this distinction may also be made.
- Here I do include the financial capital under the general term "services". What I am interested in, is to emphasize the difference between real and fictitious wealth generally. Certainly, the movement of financial capital, its scale and mode can be distinguished from the capital employed in services such as education, health, art or administration.
- It is good to note here, even if I will later regret the length of this footnote, this thesis about the difference between real and fictitious wealth allows direct empirical bet on the fate of European and American capitalism. My argument is that the processes of de-industrialization of Europe and the U.S. in the short term lead to a historic change in the dominant geographic center of the world capitalist system. As happened in the sixteenth century with Italy, and then in the seventeenth with Spain and Portugal, then in the eighteenth with France and Holland, and finally in the nineteenth with England, the industrialization of China, India and Brazil, each with their satellites in immediate areas, will eventually exceed the hegemony of the United States and the European Community. Or to put it more directly, capitalist hegemony can NOT can be maintained only on the basis of production of science and technology, financial services, and its military defense will bear structurally agonizing result. Only a nuclear war, of mass destruction and extermination, could save U.S. hegemony. Most likely, however, is that with such a catastrophe, American and European capitalists would end up learning Chinese and marrying Hindu wives. Just like Italy, Spain and Portugal in the seventeenth, eighteenth and nineteenth centuries, or as the Netherlands and France in the eighteenth and nineteenth centuries, what awaits the U.S. and Europe over the next century or two is a long and "glorious" decline, accompanied by cultural erudition and outbursts, being abandoned by the vitality of the capital.
- Consider that, with the progress of the post Fordist work organization, there has been a significant decline in the traditional trade unions and yet, union enclaves that maintain more vigorous traditions are just in the tertiary sector, particularly among state workers.
- In any case, it should be noted that some of these specifications are from the Marxist effort to characterize exploitation as an objective relationship, without appealing to their moral connotations of abuse (although it contains), or merely ethical judgment (although required and deserving). Later, in Section 2 of Chapter II, I shall distinguish between oppression and exploitation to analyze, also objectively, the content of these ethical connotations.
- Again it should be remembered that the "fiction of equivalence" is not a fiction because it is not met regarding to the labor force, but because the criterion of equivalence involved does't have a natural origin, it has been historically constructed, it is ideological, it is surmountable. As I argued in the previous chapter, all value is immeasurable and, for this reason, any equivalence between values is artificial, "fictitious".
- An expression, otherwise quite Hegelian. "To realize" is literally "make real". The merchandise is only "real" when the production process is completed in its sale and subsequent consumption.
- The markedly interested and ideological nature of business discourse, which varies with each new context, is not a mystery to anyone, and can be well documented. On the one hand they criticize and suppress for decades the May 1st protests, they now celebrate. Moreover, in speeches that explain the wage, they praise the efforts by the workers, and cry hardship preventing them to better pay. But in speeches explaining their riches, they use to talk about the "laziness" of workers, and praise their own creative efforts and risks taken.
- Note that this implies that the commodification of education, and charging these costs directly to users, due to the abandonment of state educational policies, merely rises the overall cost of the workforce: workers tend to demand higher wages in order to defray the educational expenses, in turn, employers are obliged to hire workers whose education is more expensive. Of course this means a terrible deal for capitalism as a whole. But this contradiction is not surprising in a culture of enemies, as drug trade, financial speculation, arms trafficking, are perfectly capitalist business globally contradicting the viability of capitalism itself.
- When, in the next chapter, I will be proposing a possible social stratification within the capitalist class, I will distinguish between a "bourgeois", for whom the satisfaction of needs makes sense, from the "capitalist" as such, whose sole purpose is to reproduce the capital in abstract form, regardless of the means used to it. This difference has important consequences in real, immediate politics, and should also be considered in tracing the long road that can lead to communism.
- The first truly comprehensive and philologically rigorous edition of the works of Marx and Engels, called Marx – Engels Gesamtausgabe 2 (MEGA 2), began being publishing only in 1990, by an association of colleges and universities grouped under the The International Marx Engels Foundation (IMEF). Its plan includes 114 volumes, divided into four sections. Of these, so far, only 59 have been published. The second section of this plan is devoted only to Capital, considering all its issues and preparatory manuscripts. Just this second section of the complete works includes 15 volumes, to be published in 23 books. See, in this regard, the edition's website at the Academy of Sciences in Berlin, www.bbaw.de/bbaw/Forschung/Forschungsprojekte/mega/en/
- For impatient readers I say in advance, that my teaching strategy will be to initially distinguish between allegedly "good" capitalists (who improve techniques, pay better wages) and other allegedly "bad" ones (who "abuse") to follow the logic that governs the first and from there, to show that this difference is actually fictional, and that both capitalist modes of operation are structurally necessary for the historical development of the system.
- A contraction that facilitates the colloquial use of the term, but that is unfortunate in a sense, because it shifts the interest from the mechanisms to get something, which is relevant, to the mere outcome, "surplus value (obtained in an) absolute (way)".
- Colloquially, the term "productivity growth" is usually reserved to the physical improvements of the first type, and the expression "work intensification" for improvements in the order of processes. There isn't , however, a general terminology to this regard. It is obvious, moreover, that both methods are not exclusive. They generally occur simultaneously and complementarily.
- There is also no generally accepted terminology in this regard. There usually is, quite stupid, arguing, whether Taylorism, Fordism and Post Fordism are mere techniques applicable to the technical division of labor, or may be considered, much more generally, as modes of accumulation, that is, as moments or steps that can be characterized globally in capitalist development. I will altogether omit these discussions on definitions, and will simply operate as if the criteria I set out (see them as modes of accumulation) were, simply for the eminently practical purpose of this text, a useful definition.
- A note for those who have difficulty with mathematics: what has happened here is that if the numerator is less, while the denominator is greater, the value of the fraction, for both reasons, decreases, as going from 9/3, whose value is 3, to 4/6, whose value is only 0.66. Examine this more clearly in the numerical examples in the tables shown on the following pages.
- Arguably, according to Max Weber's racist theses: because it lacks Protestant Ethics...
- For those who have arithmetic difficulties: the fraction decreases because the numerator tends to be similar but the denominator significantly increases, such as going from ¾, which equals 0.75, to 4/7, which equals 0.57.
- The pedagogical strategy that I will use, in a situation that contains many variables is, if possible, to make only one change at a time, in order to capture the effect of each variation by parts. Obviously, in the real process, all this occurs simultaneously. That's why these tables should be considered as parts of one and only one example which has been separated just to make its aspects visible.
- See, Max Weber, The Protestant Ethic and the Spirit of Capitalism (1905). In Max Weber; Peter R. Baehr; Gordon C. Wells (2002). The Protestant ethic and the "spirit" of capitalism and other writings. Penguin. From an empirical point of view it should be considered that a perfectly Catholic Italy had a noticeable capitalist development in the fourteenth and fifteenth centuries, and that perfectly Protestant German territories crept in feudal backwardness and inefficiency during the sixteenth, seventeenth and eighteenth centuries. Similarly, the British Anglicans, almost identical to Catholics, became a capitalist power in the eighteenth and nineteenth centuries, while their closest English relatives, the Puritans of the type characterized by Weber, suffered more than two centuries of hardships (1600 -1840) in the U.S., before reaching similar degrees of industrialization.
- In this still unilateral situation, one can see that also the rate of exploitation is lowered. This is because the technological level has been maintained (constant capital cost), that is, the level of productivity. On the following table, the general situation becomes more realistic.
- Let us recall here that investment in constant capital is not only what is spent on machines and tools, but also what is spent on raw materials.
- See, in this regard, Open Veins of Latin America: Five Centuries of the Pillage of a Continent (1979), by Eduardo Galeano, Published January 1st 1997 by Monthly Review Press. This is a dramatic account of the main sites and times of the looting, and of the complicity that made it possible.
- Even John Locke, reputed as the great apostle of bourgeois tolerance and precursor of human rights, at the time of drafting the Fundamental Constitutions of Carolina (1669), then a British colony, considered that if a people that is in a "state of nature" refuses to sell its land to another that is already in a "state of civil contract", it can be treated as an enemy, you may make war on it and that, in such conditions, it even loses all its "natural rights" (the right to freedom, to keep their property, to protect their lives). Yes, you lose even rights that according to this author, have been put in nature by none other than the Creator Himself. Such ideas can also be found in his Second Treatise of Civil Government (1689). See, in this regard, and Ulrich Franz Hinkelammert Duchrow, Life or capital. Alternatives to the global dictatorship of property (2003). Editorial Departamento Ecuménico de Investigaciones (DEI), San José, Costa Rica
- I do Imagine, almost with pride, that today this would be applicable to my theory of bureaucratic power.
- The minimum revision of the pompous and bombastic path of Social Sciences, from the mid-nineteenth century to today shows exactly the opposite, that their bulky textual volume is composed almost only of purely descriptive theories, with little predictive power, with little historical projection and almost zero global reach. All this is so spectacularly obvious that it has come to be regarded by many as simply ... their method and purpose.
- Although in political theory it is obvious, due to the particular conditions of our country it is necessary to indicate that liberalism is in general a very different tradition to its extreme, neoliberalism. In many ways the market fundamentalism, represented by Friedrich von Hayek and Karl Popper, is a reaction that breaks and contrasts with the progressive utopian horizon defended by the bourgeoisie in its revolutionary era.
- To this regard, see John Kenneth Galbraith, The New Industrial State (1967), Houghton Mifflin Co., Boston, 1967. Additionally, Michael J . Sandel, What Money can't buy (2012), Farrar, Straus and Girux, New York, 2012.
- You could win a draw, as in Korea, or just loose, as in Vietnam, or better, win swanky and way overpriced, taking advantage of the overwhelming superiority of forces, without any actual counterbalanced, as in Afghanistan or Iraq.
- It is the text "Economic Possibilities for our Grandchildren" (1930). It can be found in the anthology J. M. Keynes, Essays in Persuasion' (1963), Norton & Co., New York, 1963, p. 358-373. Also on the Internet: www.econ.yale.edu/smith/econ116a/keynes1.pdf
- Importantly, this relative increase in working hours in the core countries has influenced, during the decades from 1940-1980, in a progressive drift of underemployment and absolute unemployment to the countries of the third world. This trend has now been reversed with the deindustrialization of the United States and Europe and the powerful industrialization of a new type in China, India, Brazil and Mexico.
- According to the National Statistics Institute (INE), in 2011, in Chile, the total labor force was 8,980,000 people, of which, 7.564 million were unemployed. 1,547,000 of these workers, 20.5%!, were working in the trade sector and only 842,000 (11.1%) in manufacturing. To this we must add 125,000 people working in financial services 497,000 in real estate and rental activities, 521,000 as home advisers, a total 1,143,000, another 15.1 %! See www.ine.cl.
- Note that in many Spanish-speaking countries the term "tertiarizing" is used for subcontracting labor (in English, out sourcing), which in Chile is designated as "externalizing". I will follow the terminology choices that I point out in the text because they seem more natural and less ambiguous.
- According to the ILO classification, have met figures as follows: 1st Agriculture, fishing, forestry (sector 1); 2nd mining, manufacturing, energy, construction (sectors 2, 3, 4 and 5); 3rd trade, transport, communications, financial, social and personal services (sectors 6, 7, 8).
- This is what is tragically shown in alcoholism, family breakdown, loneliness, life and cultural impoverishment, in sectors of workers in accommodated countries most proudly developed such as Sweden, Norway, or the middle class in England, France and the United States.
- At the time that goes from 1880 to 1980, the relationship center-periphery has been on a clear geographic base, and this is expressed in the formation of a "first world" (the developed capitalist countries), a "second world" (the area of socialist countries), and a "third world" the dependent periphery. Since 1980 the relationship center-periphery remains, but has lost that geographical basis. There are mobile functional centers, and in countries that were once peripheral, and there is periphery (poverty, overexploitation) installed at the core of countries considered central. A geographical relationship has become rather a functional relationship: blatant inequality still holds.
- This is a phenomenon that has been repeatedly observed and described in the rapid spread of the financial crisis, which are supported in information systems that are in some sense "excessively connected".