[2007fa:726]

Term Paper 699: Essay about Chapter Twenty-Four: Transformation of Surplus Value into Capital

[726] Brian, Qwert, and Ryan: Termpaper submitted on the interactive web site. Division of surplus-value into capital and revenue. The abstinence theory.

According to Marx's writings in chapter 24, surplus-value will act both “as a fund for satisfying the capitalist's individual consumption requirements,” and “as a fund for accumulation.” One part will be utilized for the subsistence of the capitalist and his family, paying for everyday necessities such as food, clothing, hygiene products, etc. The other part will be utilized as a fund for accumulation, which may be reinvested or recapitalized into the firm in order to provide future profits. The reinvestment of funds to provide future profits benefits both the capitalist and the employees. The capitalist will use part of his future surplus-value to pay for the everyday necessities and for reinvestment into the company. The effects of the funds that are reinvested into the firm not only affect the future well-being of the capitalist and his family, but also affect the future of the company and its employees. If the capitalist is greedy now and hoards a large amount of the surplus-value for himself, the lack of funding into the company may cause the company to fail. The failure of the company causes the employees to be laid off, thereby reducing the amount of surplus-value that each employee receives, which will in turn reduce the amount of surplus-value they have to utilize for consumption and accumulation.

The capitalist, however, does not concern himself with the well-being of his employees, but is concerned for his future well-being and the well-being of those closest to him. The capitalist, observing the dual nature of the surplus-value, and understanding that the amounts that will be used for consumption or accumulation are determined by themselves, will utilize a minimum amount of funds for consumption and a maximum amount of funds for accumulation, thereby providing the basis for future accumulation. The drive for future accumulation will cause the capitalist to focus on the means of accumulation, production. Increased production will lead to increased amounts of raw material going into the production of the good, in turn, increasing the cost of the means of production. Increased cost for the means of production will require the capitalist to increase the amount of “funds for accumulation.” Increasing the amount of “funds for accumulation” will require more production, which then restarts this cycle of accumulation, converting the capitalist into a tool of the capital in order to accumulate more capital.

The capitalist is now employed by his capital. Individual consumption driven down, the accumulation of capital is driven up to secure the future of the company. The capitalist now abstains from utilizing large amounts of capital for consumption and personal sacrifices are made to accumulate more, and the accumulation of more will result in more sacrifices. The sacrifices are not always made by the capitalist however, and as an attempt to reduce costs to increase the amount of capital for accumulation, the wages paid for labour-power are reduced. Again, the capitalist ripple effect comes into play; decisions made by the capitalist regarding the use of funds for consumption or accumulation will have a ripple effect on the wages of the workers. A reduction in the wage paid for labour-power limits the amount of funds that the worker has to utilize for his consumption and for his accumulation. Because the overall income of the worker is reduced, but the price for consumption commodities stays constant, both due to the avarice of the capitalist, the funds available for accumulation are reduced. The amount spent on consumption commodities will deplete the amount left for accumulation, making it more difficult for the worker to accumulate a sufficient amount of funds that can be expended on the “enjoyments of life.” The worker, observing that he has fewer funds that can be employed for accumulation, will work more hours or more jobs in order to increase the funds for accumulation. The capital, acting through the will of the capitalist, will transform him into less than a miser and closer to a usurer or money-glutton. As the capitalist, gluts himself on more funds he begins to develop “[t]wo souls, [which] alas, do dwell within his breast; The one ever parting from the other.” These two desires push him to both the accumulation of more funds and to the expenditure of funds for enjoyment.

The developing appetites of the capitalist cause him to shout from the rooftops, “Accumulation for the sake of accumulation, production for the sake of production,” believing that only by increased accumulation and production can the funds for consumption and accumulation increase. In addition, only by increased production can the capitalist satisfy both his appetites for accumulation and his appetite for expenditure. The worker is now diminished in the view of the capitalist from a human being to a human doing, a machine. The machine of labour-power is therefore exploited in order to increase the amount of surplus-value, thereby increasing the coveted surplus-capital. Malthus, as noted in Capital, found that even if it was not necessary for all of the capitalists to be both accumulators and enjoyers of accumulation, it was still necessary to maintain the wages of workers at a minimum in order to keep them ‘industrious.’ In addition, by limiting the wages of the worker, the capitalist guarantees that he will be able to receive a higher surplus. Take for an example the worker, now earning less, is unable to purchase all of the goods that are being produced by his own hands and those his fellow workers. Due the reduction of wages, the consumption of the community that the workers live in will fall, but, due to efficiency, production will increase, and the amount of surplus commodities that can be sold to neighboring communities will increase. Taking into account the fact that the neighboring communities that are purchasing the commodities are not employed by the capitalist, so no wages are being paid to these consumers, he will experience a higher amount of return for his investment, thereby increasing his funds for both accumulation and consumption.

During all of this process, the capitalist views himself through gilded glasses. He seems himself near a saint, viewing his abstinence from all of the luxuries in life for the sake of his creation and its employees and their well-being. The capitalist observes the sacrifice that is made both by himself and by his employees, but views both as an abstinence for the greater good, for the furthering of the creation and the increasing of capital for accumulation and consumption.

The circumstances which, independently of the proportional division of surplus-value into capital and revenue, determine the extent of accumulation, namely, the degree of exploitation of labour-power, the productivity of labour, the growing difference in amount between capital employees and capital consumed and the magnitude of the capital advanced.

Surplus value, the lifeblood of capital, grows as long as the value of products decreases more slowly than the productivity grows. When productivity increases, it takes less time to produce a given item and thus there is less value in that item. As long as the productivity increases proportionately faster, that is so long as they are producing enough that the profits continue to rise, then surplus value increases; earlier in Das Capital we named this relative surplus value. Inherent in this process is the fact that wages will never increase proportionately to productivity. Yet again, accumulation is only increased by robbing the laborer of the value he creates. Productivity is often increased through the introduction of a new technology or innovation, perhaps a machine. Old capital is replaced by new more productive capital each time the former reaches the limits of its use, or when the introduction of the new machine can lead to sufficient increases in productivity to persuade the capitalist to invest. By increasing production in multiple spheres, technology and science cause increases for capitalists throughout the system. Also, these innovations incorporate the social advancement made during the depreciation of the old capital. Depreciation theoretically becomes negligible, however, should it be felt, Marx explains that the cost will be immediately passed on to the worker.

Marx uses the example of an Englishman and a Chinaman spinning wool as an example of the difference that technology makes, and then takes that example to make broader statements about how classical economists have been led astray. The Englishman spins much more in a given time, although they produce the same value. This means there is much more capital to be used by someone else in England than in China. The natural property of living labor to transmit old value while creating new; along with the productive forces of social labor appear to be intrinsic qualities of capital. As the stages of accumulation increase, the complementary service of past labor increases. The past labor embedded in the commodities disguises itself as capital, and thus the classical economists believe it should be rewarded. And thus the owners of capital reward themselves through the use of unpaid labor from the past. As capital increases, there are ever more buildings and machines and such, which wear out slowly, thus the difference between capital employed and capital consumed decreases. This accelerates accumulation further.

Earlier in the chapter Marx discussed the idea of abstinence on the part of the capitalist. Given a degree of exploitation, the surplus value is determined by the number of laborers being exploited in proportion with the magnitude of capital employed. As capital increases through continued accumulation, both the accumulation-fund and the consumption fund can increase. Therefore it is possible for the capitalist to live a more luxurious life while being more abstinent. Marx thus shows the absurdity involved in the idea of abstinence.

Marx takes great offense to the idea of what he deems the “so-called labor-fund”. The idea developed out of the misconception that capital is a fixed magnitude, along with the dogma of capitalist such as Jeremy Bentham. It is not fixed; it is an elastic constantly fluctuating portion of social wealth. The labor power, science, and the land embodied in the capital make up its elastic powers. Land in this sense is according to Marx, all the conditions of labor furnished by nature and not man. For Bentham, the labor-fund, the means of subsistence for laborers (their wage), is fixed by natural laws and is unchangeable. Not only the fund, but also the number of workers required is given and a level of efficiency is also given. Marx points out, however, that the number of laborers is not fixed, the number of laborers required to produce a given value is not fixed, and the price of that labor is not given. In fact Marx showed in the preceding section how the capitalist can bypass these assumed givens, to increase the percentage of the value created that flows into his accumulation fund. The facts of this dogma, as they pertain to the plight of the workers are as follows: the laborer has no right to interfere in the process, and only under very special circumstances does he have the right to enlarge the fund at the expense of the capitalist. Marx uses one more apologetic to illustrate this fallacy. Prof. Fawcett claims that the circulating capital of a country is its wage-fund. If one would like to find the average wage of a worker he need only to divide the capital by the number of workers. Marx decries this as a silly tautology. Prof. Fawcett further claims that very little capital remains in the country, but rather that most of it is exported to other countries. Marx concludes the chapter with the observations that in this paradigm, not only are the workers being exploited, but the products of their labor, which was stolen from them, is shipped overseas. And that if such a large proportion of capital is being shipped overseas, then a portion of their so-called labor-fund is also being shipped abroad.