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Term Paper 299: Essay about Chapter Twenty-Five

[573] Chocolate, KALISPEL, and Punani: The fate of the working class!! This essay will show the importance of the composition of capital, and the changes it undergoes in the course of the process of accumulation. IT will show how the accumulation of capital has an adverse effect on the wages of the working class. This essay will describe how the drive to produce more is not necessarily good for the working class. On the other side of the coin we will discuss how mainstream economics claims that this drive is essential to economic prosperity.

I. A growing demand for labor-power accompanies accumulation if the composition of capital remains the same.

All capital is divided into means of production and living labor power. Labor power is called the value composition and means of production is the technical composition. Value composition is dollars divided by dollars and technical composition is capital divided by hours of labor. These are the two parts of capital accumulation; the value side and the technical side. An overall look at value and technical composition is referred to as organic composition, by Marx. Marx points out the relationship between value and technical composition.

The issue, however, is important since the dynamics of the composition of capital in value terms are central to Marx's analysis of the industrial cycle and wage movements, of unemployment, and of the rate of profit. A change in the OCC (oraganic composition of capital) is simply a value change in the TCC. Changes in OCC are proportional to changes in TCC. Thus, a rise in the TCC always produces a rise in the OCC. The total effect is found in the VCC (variable cost of capital) which may or may not rise.

These compositions are important because they all have the ability to valorize themselves. Capitalists seek profits and in doing so introduce machinery. Workers are able to produce more and more in the same amount of time. The value of the outputs fall and this creates more profits for the capitalist. Because adjustments to this process take time discrepancies appear. Old values must be adjusted to current values. This can cause an economic crisis. Marx point out that adjustment of these compositions can be abrupt and continuous.

These relationships lead to an increase of the working class. Marx points out three points here. 1- “Capital can only increase by exchanging itself for labor-power, by calling wage-labor to life.” In other words, in order to be able to accumulate, capital needs more and more wage labor. This may cause an excess demand for labor, higher wages, better working conditions. 2- “The labor-power of the wage worker can only exchange itself for capital by increasing capital, by strengthening the power whose slave it is.” In this second aspect of the relation between wage-labor and capital, the relationship or power between the two is reversed: Wage labor is only then usefl for capital if its price is low enough. 3- “Hence, increase of capital is increase of the proletariat, that is, of the working class.” This is to be understood in the sense: accumulation of capital can only go on if the size of the working class increases as well.

II. 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.

It is here Marx points out a qualitative change in the compositon of capital by rising the organic composition. He presents the following arguments: 1- Capital accumulation leads to higher technology 2- higher technology leads to higher organic composition. This is like a big snowball to who knows where. The reason for doing this is to make it so a smaller quantity of labor is needed to produce a greater quantity of work.

This capitalist accumulation leads to a concentration of production sites. This concentration leads to producting even higher forms of technology. Higher technology leads to higher technical composition and is reflected in a higher value composition.

Marx makes an important point. ....A POINT is regularly reached in the course of accumulation at which the development of the productivity of social labor becomes the most powerful lever of accumulation.

Here we can see a contradiction. The accumulation tends to increase wages, but on the other hand it sets laborers free and therefore tends to reduce wages. Ultimately, the point is that labor is subjective and never will be objective as it is claimed to be by capitalist society.

III. The progressive production of a relative surplus population or industrial reserve army.

This section discusses the effect of both kinds of accumulation on the working class, the creation of a relative surplus population, and the reaction of the surplus-populationon the accumulation of capital.

Here Marx adds the point that the organic composition will outpace accumulation and thus create a relative surplus-populaton. Why?

1- Centralisation of individual capitals, and the technical progress which this increase of the individual firms enables, can take place even if the total mass of capital does not increase. 2- Technical innovation in the additional capital forces also the original capital to innovate, which may result in an absolute loss of jobs. 3- Number of industries which are seized by increasing organic composition increases. 4- Intermediate pauses in which accumulation takes place with constant composition of capital are shortened.

The qualitative change of capital succeeds at the expense of its variable component (workers).

Marx points out here that the demand for labor is determined by its variable constituent alone. Demand falls progressively with the growth of the total capital, instead of rising in proportion to it as was previously assumed and put forth as doctrine by mainstream economists. This makes sense because if you remember where profits come from; gathering of surplus value. This the variable value is really the bottom line or foundational value of the economic picture.

Marx points out that the wages fall at an accelerated rate as the magnitude of capital increases.

This looks as if the growth of the working population outpaced that of capital. In other words, it looks as if it wsa the laborers' own fault that they do not get high wages; they are too many.

This is an accelerated process. The variable component accompanies the increase of the total capital and moves more rapidly with this increase. The increase of the TCC component is faster than the increse of the VCC component, but the TCC component does speed up the VCC component.

Thus, workers lose jobs and wages in response to capital growth. This shows that it is obvious that the capitalist aim to grow is not goint to create a better society.

IV. Different Forms of Existence of the Relative Surplus Population. The General Law of Capitalist Accumulation.

Relative surplus population? Capital accumulation forces people to accept less desirable work because of the threat of starvation, homelessness etc. Marx calls these workers repelled by the accumulation of capital. This is because there may be no alternatives available.

There is a floating surplus population. The repulsion of old workers is outweighed by the attraction of young workers, what is why they are part of the floating surplus-population.

Marx points out that capital accumulation needs young workers. Once you reach maturity only a very small number continues to find employment in the same branches of industry, while the majority are regularly dismissed. This majority grows with the branches of that industry. Some emigrate following capital. The natural increase of workers does not satisfy the requirements of the accumulation of capital and at the same time exceeds those requirements. On the one hand there is complaining of a shortage of workers and on the other hand there are many out of work. The division of labor has chained workers to individual industries. Each individual industries reserve army of labor is the bargaining tool capitalists need to obtain profits.

One interesting sidenote Marx points out that the upper-class lived to be 38 years old and the proletariat only 17. Industry takes the toll of life.

Here is an example that will conclude and simplify chapter 25. Bill and Ted have just become owners of a new shirt factory. They have invested a lot of money in the factory and need workers desperately. It is like hot coals in their hands. It must produce. They hire workers and train them. These workers are paid at subsistence level wages. As production increases they buy more plants and more capital. Their new type of shirt manufacture requires special training. Wages begin to rise because there is more capital to be manned than workers available. This causes more workers to come to the industry. Then, as technology increases and productivity increases then the workers are able to produce much more commodities with less labor hours. This causes layoffs of workers. The company now has a reserve army of labor because of the workers training and maturity level. This now makes it possible to lower the wages of the workers because those on unemployment are paid so much less (i.e. barely surviving). This accumulation has helped the worker in the beginning, but has actutally been a chain to drag the majority down to lower levels of living. People actually give their lives to the capitalist's desire for profits.

Hans: Good work! There are a few minor glitches: your definition of organic composition is not quite right, and you are not really explaining the snowball effect, and you are also not quite presenting the argument why unemployment is not a sign that there are too many workers. But overall you got the thrust of it. I also like the following sentence, which is not a point Marx makes in Chapter 25, but which is an important point nonetheless:

Ultimately, the point is that labor is subjective and never will be objective as it is claimed to be by capitalist society.