Introduction to Karl Marx’s Capital Ruthless Criticism

Introduction to Karl Marx’s Capital

1. Some strange aspects of the capitalist mode of production that are often disturbing

Many people find the peculiarities of the capitalist mode of production humanly destructive and irrational. Pastors, social workers, trade unionists, politicians, etc. – they all notice the juxtaposition between poverty and wealth in capitalism. In the USA, we see millions of people who can’t support themselves by their economic means or find a way to make a living. Around the world, there are hundreds of millions who can’t find a livelihood in this economic system. Many go hungry, others scramble for a dollar a day. It’s no secret: enormous wealth and the harshest poverty exist side by side. Even in the few successful centers of the world economy, it is taken for granted that the rich get richer and ordinary workers are relieved if their real wages don’t continue to fall.

The second absurdity is that the productivity of labor is enormous. Twenty-five years ago, it took a lot more people to work the same factories than today. And these fewer workers do not produce less, but a lot more than workers did before. The development of the productive power of labor is enormous; it is said to be about 5% a year. Every twenty years it doubles. And yet work does not decrease. The productive power of labor skyrockets, and work is never reduced for those who do the work; for them, labor never becomes more productive. Right next to each other, there are people who are overworked, who suffer from stress and psychological illnesses, and people who have no work. And they can’t split the work between themselves.

The third absurdity is the way the economy runs, so that everyone is streamlining in the effort to make more money, when this universal striving for growth reaches the point that nothing works any more. Not in the sense that an individual company loses money because the competition became more productive and forced it off the market. But in the sense that all firms strive to make more and more money, and it turns out that they make less and less money. A crisis becomes generalized. The economy does the opposite of what everyone is striving to achieve. The economy stagnates or slides into recession, although everyone is trying to make sure that there is always more of everything.

These absurdities are noticed by everybody. You don’t need Marx to discover them. Marx doesn’t join the complaining, but tries to explain the reason. He gives an answer to the why? of these peculiarities. He is interested in something that few people are interested in. Because people in bourgeois society have the problem that they want to earn an income; they don’t care what money is, rather: how much of it do I have? Their point of view is to get as much as possible so they can buy stuff. Marx is concerned with the question: what do you actually have in your hands when you have money? What is “money,” really?

Marx maintains that the above-mentioned absurdities are not due to a “malfunctioning” of this type of economy or the results of “mismanagement” by some members of this society, but that they are necessary consequences of this type of economy. And that’s also why he doesn’t begin Capital with the intentions and motives of the people who participate in the economy, as bourgeois economics does. Its about something more trivial: why does someone go to work? Because they want to earn a living and because they want to live as best as they can. When you look at the motives here, they are very rational. If this is assumed, the capitalist economic mode should be based on the satisfaction of needs. Marx does not address the motives of people, but the social forms they have to get involved with in order to pursue their motives. That’s why Capital does not begin with people, but with the commodity. Marx starts by referring to the objectified form of social wealth, and this already tells us what people have to do. People’s intentions, good or bad, do not matter when they have to deal with commodities; then their purposes are already set.

2. Use-value and exchange-value: the two qualities of the commodity and what they tell us

“The wealth of societies in which the capitalist mode of production prevails appears as an ‘immense collection of commodities’; the individual commodity appears as its elementary form. … They constitute the material content of wealth, whatever its social form may be. In the form of society to be considered here they are also the material bearers of … exchange-value.” (Karl Marx, Capital, Vol. I, p. 125-126)

What is Marx telling the reader in this first sentence? The wealth of this society, that which constitutes its prosperity, appears as a collection of commodities. The single element of this wealth is the individual commodity. And what is a commodity? A useful thing and, secondly, a thing with a price that is exchanged for money. This wealth does not simply consist in being a useful thing that you can use to satisfy a need. If you have cooked your own food, then you have not produced a commodity but a good meal. In this society, wealth does not come from useful things that can satisfy needs. The useful thing is simultaneously something else, namely: a thing for sale.

From this commonplace observation, Marx draws a conclusion:

“Exchange-value appears first of all as a quantitative relation, the proportion, in which use-values of one kind exchange for use-values of another kind. … x boot-polish, y silk, or z gold, etc. each represent the exchange-value of one quarter of wheat. Therefore x boot-polish, y silk, z gold, etc. must, as exchange-values, be mutually replaceable or of identical magnitude. … [T]he valid exchange-values of a particular commodity express something equal … [They] are therefore equal to a third thing, which in itself is neither one nor the other.” (ibid., p. 126-127)

If boot-polish, silk and gold are exchanged for wheat, or wheat is exchanged for the other three things, and these things are counted as equal in exchange, then these things must have the same substance. They must have a third thing in common which does not correspond to the use-value of the boot-polish or the use-value of the silk. The common third thing is well known to everyone. When people exchange and/or buy, they are aware that they must be careful to see how much they get in the exchange. There is the idea that you can make a good exchange or a bad exchange. If this is true, then one also has the idea of a “fair” exchange ratio. What is the idea of the fair exchange? That someone has gained nothing and lost nothing as an owner. From the standpoint of use-value, one always gains from an exchange. One gets what one needs, and one is willing to give something up for it. But if one has the idea of the “fair exchange,” then this does not apply to the use-value; then one is thinking of the quantity: how much do I get for my money? The idea of “fair” exchange refers to the value that one holds in one’s hands. The valid exchange-value of commodities expresses a match which is neither this or that commodity, but something all commodities have in common. Then Marx makes a conclusion that has caused a lot of surprise:

“If then we disregard the use-value of commodities, only one property remains, that of being products of labour. … All these things now tell us is that human labour-power has been expended to produce them, human labour has been accumulated in them. As crystals of this social substance, which is common to them all, they are values – commodity values.” (ibid., p. 128)

Marx’s conclusion about labor is famous for having the status of: what else should it be? All the other characteristics of commodities relate to the commodity’s use-value side. The weight, the odor, the solidity, whether it can be used for listening to music, whether a piece of wood can be sawed with it, etc. – in these respects, commodities differ. And it would indeed be absurd to exchange things that are the same. Nobody exchanges a kilo of salt for a kilo of salt. What do commodities have in common when one puts aside everything having to do with their natural qualities? Only that they are products of labor. [1]

Here you might say: so what? This is trivial; of course, material wealth only comes into existence because of labor. This is true in all societies. But its not that simple. The labor that forms the substance of value, thus that the things exchanged are products of labor, is actually not the labor of individuals:

“ … [T]he labour that forms the substance of value is equal human labor … The total labour-power of society, which is manifested in the values of the world of commodities, counts here as one homogenous mass of human labour-power.” (ibid., p. 129)

The labor that constitutes the substance of value is the socially necessary average labor time. The issue is not whether the labor is fairly rewarded or if one gets more by working more. At this point, Marx maintains that the value of the labor product never depends on the individual labor that has actually been expended. Vice versa, the individual discovers how much socially valid labor has been realized with his individual toil from the price that his commodity wins on the market.

Critics from bourgeois economics have long argued that goods rarely exchange exactly according to the labor hours incorporated in them. This is supposed to be a criticism of Marx, though Marx clearly says that it is not the real individual labor that forms the substance of value. Its not as if Marx wanted to calculate the prices in which working hours are measured, only to realize that there is a divergence between the real amount of work and the price. This is not a rebuttal, but consistent with what Marx has claimed! Marx was not interested in calculating prices. He wanted to say something different, and he dealt with these objections in a letter to Kugelmann. The economists say to Marx: prove your concept of value; prove empirically that working hours are the substance of value and can therefore be used to calculate prices. Marx, however, contends that value and its substance are not in need of proof:

“The nonsense about the necessity of proving the concept of value arises from complete ignorance both of the subject dealt with and of the method of science. Every child knows a nation which ceased to work, I will not say for a year, but even for a few weeks, would perish. Every child knows, too, that the masses of products corresponding to the different needs required different and quantitatively determined masses of the total labor of society. That this necessity of the distribution of social labor in definite proportions cannot possibly be done away with by a particular form of social production but can only change the mode of its appearance, is self-evident. … And the form in which this proportional distribution of labor asserts itself, in the state of society where the interconnection of social labor is manifested in the private exchange of the individual products of labor, is precisely the exchange value of these products.” (Marx to Kugelmann, July 11, 1868, Letters to Kugelmann, p. 73)

In every society, even on a medieval farm, there are many needs, and the needs have to be satisfied through the many different labors that produce the goods – shoes must be made, grain cultivated, threshed, baked into bread, etc. Every society needs a distribution of labor among these different branches of production to meet the various needs. In addition to the various needs, the amount of work they require must be considered as well. How much work must be spent on cereal crops and how much on manufacturing other products? These decisions must be made. In every society there is a proportionality of the various labors. In a planned economy, this is done according to a plan. On a medieval farm, the farmer knew that he must divide his labor into feeding, sowing, reaping, threshing, etc. The labor must be divided and that happens in our society as well. But in a society in which no collective will exists; in which no overall plan exists; in which no intentional distribution of work between the different branches of production of goods exists; in a society in which the interrelationship of the labors of society exists as a private exchange of individual products of labor, the proportionality of the different labors asserts itself by the fact that one finds out on the market how much one can get for one’s product. If one gets nothing for one’s product, one has to offer something else. The proportionality of the amounts of labor asserts itself by the fact that the society counts the individual effort as socially necessary labor and rewards it with an equivalent amount. This is how it is determined whether the individual has done necessary social labor.

What is meant by “average” and “socially necessary” labor? Within an industry that produces the same product, “average” means the average amount of labor which is necessary in this society to produce this good. If someone produces more than the average in the same time, then more value is objectified in his labor product than in the same commodity by other producers. If someone produces less, he objectifies less socially necessary average labor and therefore value. In competition – and only in competition – what is called “average social labor” asserts itself. At the same time, how much socially necessary total labor time is generally used in picking strawberries or in producing electric clocks is asserted. So if all producers in the clock industry only need the average working time in order to make their clocks, but overall too many clocks are made, what one learns after the fact then asserts itself against all clock manufacturers: too much social labor has been used in this sector. Then the producers of clocks are not able to obtain socially necessary average labor because too much labor has been used in making clocks. Each then has used less socially necessary labor time than he has individually put into it – regardless of the fact that his labor attains the average within that industry. The purpose in this society is not to produce necessities; but nevertheless, social necessities assert themselves through the willingness of customers to pay money for products. [2]

What are the consequences for the division of labor? It is social production; each producer takes a social need into consideration. Each one produces for all the others. In this society, there is a division of labor in production, but the labor is not divided in a rational way. Each one produces for the society, but only learns after the fact on the market whether he has produced a good needed by the society – or has not. Then he learns whether the society rewards his effort as socially necessary labor. In this society, one’s labor is not remunerated, but rather a fight takes place over how much one can get for it. Each one must make sure to get as much in competition as possible, and in fact at the expense of the others, who want to pay as little as possible.

What is the role of needs in this society? Production is for the society’s needs, but not in order to satisfy them, but to take advantage of them. Needs are the weakness that the producer wants to exploit in order to get as much as possible from the person who is dependent on his commodity. Needs are not the purpose of production, but the means of profit. Production is for social needs and the use-values that others need are produced, but not so that the others are able to meet their needs, but so that one can use the product to take advantage of their needs. This implies that needs count to the extent that they are able to pay; insofar as they can satisfy the property demands of the producers. Needs that aren’t able to pay don’t count in this society. The needs of people who have no money are economically irrelevant. We hear from the media that the pharmaceutical industry has no reason to develop costly drugs in order to fight diseases in the third world because the ability to pay is so low there. That is the role played by needs in this society. Vice versa, if a need is endowed with money, any quirk finds a commodity and a producer. For every kind of nonsense, there are products, while the most urgent needs are not satisfied if they are not endowed with money. A rational system of production based on the importance of needs and satisfying them is out of the question in capitalism.

What is production actually aiming for? The producer does not view the use-value as the goal of production. The use-value is the means to produce exchange-value. The producer of commodities wants to get rid of the use-value. He wants the value, to realize the exchange-value of his commodities, by getting money from the sale. As long as the commodity is not sold, the value is not realized. Only through sale is the use-value of the commodity handed over; after the producer receives the value of the commodity in an independent form separate from the use-value, as a monetary amount. Whether he is successful in this is his private risk. He competes with other suppliers and must see whether the society rewards his individual labor by customers paying money for it. The idea that someone gets his labor remunerated is nonsensical.

So what does one have if one sells a commodity? Money; or: value. What really is money, value? Everyone knows that one can’t eat money. Economists say: money is not an insanity of this economy; its just a medium of exchange for getting hold of use-values; in the end, everything revolves solely around needs. In fact, money sets a new purpose in the world. The wealth in this society existing in the form of commodities is not the useful things, but the power of disposal over the useful things. Power of access to the property of others is the real purpose of production. Wealth is the social private power to use property to get things that belong to others. Wealth in this society is not the useful things, but power over the work and wealth of others. Power of disposal over social wealth is a very different goal than, say, sausage or bread. Its a goal that in principle is limitless. The rich are those who have a lot of money, and that does not mean they can afford more sausage and bread. This power of disposal never translates back into consumer items. The wealth which is increased is not the means of consumption, but the whole goal is the accumulation of social private power in itself. And that is already included in the product insofar as wealth in this society does not consist of use-value, but has a social form that abstracts from use-value. [3]

3. Abstract labor – the substance and measure of wealth is expended labor only in an economy based on exploitation

Marx didn’t consider it a great discovery that the substance of exchange-value is labor; he was interested in explaining the role played by labor in forming value. Economists long before him had figured out that products are products of labor and that they exchange because they are products of labor. However, in Marx’s view, earlier economists like Smith and Ricardo hadn’t seen what this shows about the character of labor:

“Initially, the commodity appeared to us as an object with a dual character, possessing both use-value and exchange-value. Later on it was seen that labour, too, has a dual character: in so far as it finds its expression in value, it longer possesses the same characteristics as when it is the creator of use-values. I was the first to point out and examine critically this two-fold nature of labour contained in commodities … this point is crucial to an understanding of political economy … ” (Karl Marx, Capital, Vol. I, p. 132)

If commodities are equated in exchange, if boot-polish and silk are exchanged in a certain ratio, both are products of labor, and both include socially necessary labor which is recognized (or not) in exchange as socially necessary labor. If products of labor are exchanged, then the labor which has been performed in producing boot-polish and silk are still quite different tasks. So the specificity of the work can’t be the common quality of the goods, the third thing, because the types of labor in them are qualitatively different. If various types of labor are equated, what then is the the thing that makes them equal? Now the question of abstract equality shows up again, and in the labor itself:

“If we leave aside the determinant quality of productive activity, and therefore the useful character of labour, what remains is its quality of being an expenditure of human labour-power. … expenditure of human brains, muscles, nerves, hands, etc.” (ibid., p. 134)

Labor only forms value in the sense that it requires sacrifice: in that brain, muscle, and nerves are expended. The nasty side of labor, that one loses time for living in the process, this negative side of labor is what constitutes the social validity of labor in this society. From a rational point of view, the social accomplishment of labor is the benefit that the labor contributes; the use-values that are produced, not the toil that the labor requires. This is a negative connection to benefit.

“In itself, an increase in the quantity of use-values constitutes an increase in material wealth. … Nevertheless, an increase in the amount of material wealth may correspond to a simultaneous fall in the magnitude of value. This contradictory movement arises out of the twofold character of labour. By ‘productivity’ of course, we always mean the productivity of concrete useful labour; in reality this determines only the degree of effectiveness of productive activity directed towards a given purpose within a given period of time. Useful labour, becomes, therefore, a more or less abundant source of products in direct proportion as its productivity rises or falls. As against this, however, variations in productivity have no impact whatever on the labour itself represented in value... [T]he same change in productivity which increases the fruitfulness of labour, and therefore the amount of use-values produced by it, also brings about a reduction in the value of this increased total amount, if it cuts down the total amount of labour-time necessary to to produce the use-values.” (ibid., p. 136-137)

The message here is: the more productive the labor is, the more that labor produces in an hour, the more material wealth that it churns out, the more use-values that are available, the richer a society is. But in a society which is about value, money, about acquiring the social power of disposal over wealth, toil is the measure of wealth. This means that if producing a commodity takes less labor time, then less value has been produced; less money value has been created. Material wealth increases, but not money wealth. On the contrary: when the amount of work decreases, then the value materialized in a given mass of use values can decrease.

This has huge consequences. Society becomes ever richer as labor becomes more productive and work becomes relatively more superfluous; that is the real blessing of productivity: that the toil of labor decreases, or could decrease. The satisfaction of needs is met without more labor needing to be exerted. But once it is about money, about the power of disposal over wealth, the wealth measures itself in the effort, in the sacrifice that must be made in order to produce the product. If the effort necessary for it is therefore reduced, the monetary value of the product is reduced. Everyone knows the means of life have become ever cheaper. A cell phone is produced and a year later it costs a lot less because the productivity has increased. The wealth which is measured in money can only grow in proportion to the increase in toil. Wealth measured in use-values would be huge, and there wouldn’t need to be so much work, but once it is about money it’s different. In a society in which the purpose of production is money, in which labor produces money wealth, there can never be too little work. If the measure of value consists in the labor that is done, hence in toil, then wealth increases to the extent that the sweat and tears increase.

Even before Marx says that the producer of commodities in modern society is not simply somebody who works on his own, but divides into the entrepreneur who organizes the commodity production and owns the product of labor and the worker who does the necessary work and gets a wage for it, it is clear that this type of wealth can never be the wealth of those who create this wealth through their labor. This form of wealth, money wealth, is the wealth of a society based on exploitation. The wealth whose substance only grows when toil grows is an irrational form of wealth. A rational form of wealth would consist in labor making itself superfluous, not in the effort which generates the wealth. Here is a quote which is not from Capital, but where Marx makes the point:

“For real wealth is the development of the productive powers of all individuals. The measure of wealth then is not any longer, in any way, labour time, but rather disposable time. Labour time as the measure of wealth posits wealth itself as founded on poverty, and disposable time as existing in and because of the anithesis to surplus labour time; or, the positing of an individual’s entire time as labour time, and his degradation therefore to mere worker, subsumption under labour. The most developed machinery thus forces the worker to work longer than the savage does, or than he himself did with the simplest, crudest tools.” (Karl Marx, Grundrisse, p. 708-709)

People now have to work longer than the primitives who were masters of their own labor and worked with the crudest and most rudimentary tools. For those who work, the work never becomes more productive. This is another way of saying: if labor effort defines wealth, then wealth can only increase to the extent that effort, toil, increases. There is no rational determination of social wealth if this wealth has its measure in expended labor. A rational social wealth wouldn’t be necessary labor, but would make labor relatively superfluous. This would mean more leisure time; having more free time and the things you need to live are the rational measures of wealth.

The wealth in our society has its measure in toil, in sacrifice. The following sentence shows that Marx is already thinking of wage labor and capital, which are not even mentioned in the first determinations, which are about the commodity and money. And yet the social form of wealth already points to a social antagonism. In developed capitalist economies, the wealth of the few is based on the poverty of the many. This form of social wealth, which increases with toil, can only exist in a society where the result of labor and the carrying out of labor go to different people. The beneficiaries of labor and the laborers are not the same people. Because the disposable time of the rich is based on the fact that others work all the time. This is the meaning of the phrase “labour time as the measure of wealth posits wealth itself as founded on poverty.”

4. Concluding remarks

In reading the first chapters of Capital on the commodity and money, many think there is no criticism of these methods. They pick up criticism only when he talks about wage labor and capital, surplus labor and exploitation. On the contrary: the first pages already provide a fundamental critique of the irrationality of this mode of production in which the production of wealth takes place through the sacrifices of the vast majority. The criticism is also not that everything is unjust. No, here Marx would say that justice is already in line with the economic laws. If you recall the initial comments on the absurdities of the bourgeois economy which pose so many questions – the juxtaposition of wealth and enormous poverty, the phenomenon that labor is ever more productive but there’s no less work as a result, the phenomenon of crises in which everyone tries to earn more and more and then all of a sudden no longer earn anything – then what has been said already provides half the explanation of why these peculiarities exist.

The juxtaposition of poverty and wealth is no mystery if the satisfaction of needs is not the purpose of production. If needs are satisfied only insofar as they are backed by money, then needs are left unsatisfied. And not because it isn’t possible to produce the goods which could meet these needs, but because the satisfaction of needs depends on a business being made from them. If one has no money, one’s needs are economically irrelevant in our society. In the course of the book, it then explains why money concentrates so one-sidedly.

The second question is already answered in the opening sections. Labor becomes ever more productive, but not reduced as a result. If the social purpose of production were to consist in producing use-values to satisfy needs, then labor would be reduced to the extent that labor becomes more productive. Then disposable time would increase to the extent that more stuff is produced in the same time and indeed without consumption having to decrease. On the contrary. But if money, value, is the economic purpose, then there can’t ever be too little toil. Then labor can be more productive, but never less.

On the third question, no answer has been given. But that’s ok. It was only the abstract starting point of reflections which take a thousand pages to explain crisis. There’s still a lot to explain between the capitalism we see and the starting point of the explanation, that the commodity is the elementary form of wealth in our society.

Footnotes

[1] This conclusion about labor as the third thing that commodities have in common, the thing that constitutes the substance of value, is not shared by bourgeois economics. The economists would say: “One person exchanges boot polish for gold, the other person exchanges gold for boot polish. Why did they exchange them? Because one person values boot polish higher than gold, the other person values gold higher than boot polish. There is nothing in common. If there is an equalization, then it is the equalization of the benefit weighed by both sides.” The thesis is that the benefit is equal. Here Marx would reply that this is a mistake because the benefit always depends on the concrete use-value. The benefit of the bed and the benefit of a bottle of beer are not comparable. It does not make sense to ask: is the beer more useful than the bed or is it the other way around? The utility of a thing is a predicate that expresses a thing is good for a particular need and/or satisfying a particular need. An “abstract” benefit does not exist. By the way, economics itself doubts whether one can compare the utility of different things and then comes up with the idea that if one can’t compare the utility, then one can still compare the utility of bundles of goods: 17 beds and 1 bottle of beer and 17 beers and 1 bed; economics asserts that one should be able to compare these in terms of utility. As if this comparison would be possible without maintaining an abstract utility of goods; one can only say: no such thing exists.

[2] Modern economists argue that Marx did not realize that the price of commodities depends on supply and demand. But Marx did not deny that a price is not obtained without demand, but explained the substance of what is taking place in the market. The market proves whether individually performed labor counts as socially necessary average labor or not. But this is only one side of it. It still has to be explained that value determines supply and demand. In price, the substance of socially necessary labor is asserted. On the other hand, the socially necessary labor in the long term must also be paid or else the product does not exist. If something is needed but doesn’t obtain a price which compensates the producer’s expense, then he stops making the product available. Only when a price is paid that allows the producer to reproduce the product is the product produced and offered. It is noticeable that value is the law of exchange, which does not contradict the fact that everyone wants to pay as little as possible and get as much as possible. This is precisely how socially necessary labor as the measure of exchange is carried out in a society in which no one can say how many products of a certain type are needed or what the social average labor for a pound of bread is because there is no collective decision-making.

[3] The conclusion Marx draws from these qualities of the commodity and the form of social wealth about the relation of the subjects of this economy to the products of their labor is often misunderstood. He talks about the “fetishism of commodities.” The commodity is the objectified form of a social relation in the sense that it is not realized in its use-value, but in its exchange-value. The social relation between the producers appears in this society as what it is, namely: a relation between things. A matter that is really between people who make arrangements between themselves appears to them as a relation between things that have their own autonomy and subordinate the people. One day somebody produces a commodity and it is in demand and they get a price for it which they can live with; and the very next day they produce the same commodity and finds no one buying the commodity. Marx says: instead of people controlling their social relations, people are controlled by their social relations. The abstract point of the fetish section is that people do not control their circumstances. People turn themselves over to being instrumentalized by relations which are not under their own control. They use the social institutions – commodity, money, capital – but do not understand what they are using and do not have control over the institutions they are using.