Exertion is separated from its recompense
If the market is unfettered, it moves from competition to monopoly; consolidation as things get bigger and bigger to derive the benefits of scale. The worker does not benefit, the rich get richer as they accumulate and the poor become more and more dependent on the capitalist as it’s the only work in town.
Marx starts out with three concepts
- technical – physical productivity
- value composition – how much the capitalist lays out for means of production versus labour
- organic composition – value composition as affected by changes in productivity
“Growth of capital implies growth of its variable constituent, in other words, the part invested in labour-power” (page 763). In order to grow, some of the surplus capital must always be reinvested into labour. that surplus capital then produces more surplus capital in a virtuous circle of growth.
That growth, in turn, demands more labour to work on the newly reinvested capital, meaning a reserve of labour is required. But as growth continues, that reserve is likely to be used up.
Not a problem for capitalism as there is also a limiting mechanism in that if wages start to rise, there is less surplus value produced and so demand for labour will fall off, and with it wages. So when wages go up, it’s likely to lead to stagnation, which is positioned neatly as the fault of the worker.
The Danger of a Good Wage
If a labour force has too much money or leisure is not good for the capitalist. If this happens, “those that get their living by daily labour…have nothing to stir them up to be serviceable but their wants…the surest wealth consists in a multitude of labourious poor” (page 764-5).
A relative diminution of the variable part of capital occurs in the course of the further progress of accumulation and of the concentration accompanying it
A horrible sounding title for a chapter section, but basically relating to the impact of technology improving productivity, meaning both less labour is required for a given output and more technology is required (more, and more expensive, technology).
In short, capital becomes increasingly capital intensive over time, so capital becomes concentrated and centralised as the large takes over the small in an attempt to get scale.
The cheapness of commodities depends…on the productivity of labour, and this depends in turn on the scale of production. therefore the larger capitals beat the smaller.
Capital, page 777
The credit market is introduced here, but not taken up, though a few comments around centralisation and credit as the two powerful levers of credit. Accumulation is a powerful force for growth, but centralisation is much faster, occurring as companies come together (M&A).
But this does not solve the problem of less labour being employed. There is still the contradiction of increasing amounts of capital requiring fewer people to work on it.
The progressive production of a relative surplus population or industrial reserve
Labour in effect makes itself redundant.
The working population…produces both the accumulation of capital and the means by which itself is made relatively superfluous; and it does this to an extent which is always increasing” (page 783). This is the idea of a disposable workforce.
In contrast to Malthus who tied together the idea of an increasing working class in scarcity in nature meaning poverty is natural, Marx believes poverty is a result, or even a requirement of the capitalist system. “It creates a mass of human material always ready for exploitation by capital in the interests of capital’s own changing valorization requirements” (page 784).
“This increase is effected by the simple process that constantly “sets free” a part of the working class; by methods which lessen the number of workers employed in proportion to the increased production” (page 785).
Unemployment is a threat, or lever, for getting people to work harder. So people already in work are forced to work harder, while the number of people not in employment grows. Power has taken a political turn and capitalism has hold of the levers.
The demand for labour is not identical with the increase of capital, nor is supply of labour identical with an increase in the working class. (page 793)
Surplus labour exists in a number of forms.
- Floating – the unemployed
- Latent – people who can be forced into labour, originally women and children, but can also be looked at geographically. People can be forced off land and into the cities (where capital tends to congregate), migrants can be forced (or incentivised by wage differences) to move location, even countries.
- Stagnant – the (almost) unemployable
This is the end
So, in an unfettered, free-market economy, the end game is centralisation, with an accumulation of capital and a labour force ever-more dependent on that capital for money to live and ever-more exploited by it. Or, as Marx put it more strongly,
Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery, the torment of labour, slavery, ignorance, brutalisation and moral degredation at the opposite pole.
Capital, page 799.
And this condition is necessary for people to have an incentive to keep working.
“Thanks to the advance of science,” says Sismondi, “every worker can produce every day much more than he needs to consume. But at that same time, while his labour produces wealth, that wealth would, were he to consume it himself, make him less fit for labour.” According to him, “Men (i.e. non-workers) would prefer to do without all artistic perfection, and all the enjoyments that industry procures for us, if it were necessary that all should buy them by constant toil like that of the worker…Exertion today is separated from its recompense“
Capital, page 801
Written well over 130 years ago, the things Marx predicted are still playing out, both in emerging markets, with all the issues of labour exploitation, and in developed countries, with equal labour issues and migration etc. The same forces and themes are coming through in “rhymes” as we hear reports about the consumer and what consumers are and are not doing and how the reason businesses (and by extension our country, ourselves) are struggling is because of the consumer.
What few question is the end game – if we are producing more than we need, why is everyone working so hard?