This page will feature Mandel’s Introduction, and
The plan Of Capital 1
Earnest Mandel’s Introduction
Before launching into Capital 1 itself, it is worth considering the Introduction by Ernest Mandel. The introduction involves 75 pages so it is necessary to consider nly the most relevant parts.
It starts on Page 11, and on the next Page, Mandel looks at the Purpose of Capital 1.
Mandel starts by saying that ‘Marx’s fundamental aim was to lay bare the laws of motion which governs the origin, the rise, the development, the decline and the disappearance of ……. The capitalist mode of production.” (12).
He goes on to say that “if one tries to discover working hypotheses for all economic systems, one passes from the realm of economic theory to that of the science of social structures: historical materialism” (13).
However, Marx’s Capital does not deal exclusively with the capitalist mode of production, although the laws that govern that mode of production is its main objective. Thus Capital 1 does not start with modes of production or with other types of relation within capitalism.
All such categories hinge upon an analysis of the commodity and commodity producing labour, with which Marx starts.
Mandel then digresses into the origin of capitalism and the role of commodidies.
At the end of the section though Mandel returns to Marx’s position. He points out that Marx remained a revolutionary all his adult life from 1843; and he saw it as essential to base socialism and communism on a scientific foundation.
He strove in line with his intention to analyse capitalism in an objective and strictly scientific way. (17) He sought to discover objective laws of motion.
Because Marx was convinced that the cause of the proletariat was of vital importance for the whole future of mankind, he wanted to create a rock like foundation of scientific truth. (17).
Mandel then turns to Marx’s method, a lot of which is about dialectics – already covered in the introductory page.
But Mandel introduces another aspect of the dialectic method. Because Marx’s dialectic is materialistic, he says, one does not start from intuition; one starts by gathering empirical facts followed by a dialectical reorganisation of the material in order to understand the totality.
The distinction between ‘appearance’ and ‘essence’ is part and parcel of the dialectic method and a constant attempt to piece together further and further ‘through successive layers of phenomena, which explains why these phenomena evolve in a certain direction and in certain ways’(19).
Marx’s method has been criticised by numerous opponents, but Mandel argues that,
“It is sufficient to compare the real history of the period since 1867 on the one hand with what Marx predicted it would be, and on the other with any such alternative ‘laws of motion’, to understand how remarkable indeed was Marx’s theoretical achievement and how strongly it stands up against the experimental test of history” (25).
The Plan of Capital
Mandel describes how Marx was determined from the 1840’s when he became a communist to write his fully fledged economic ideas. But of course he was continually diverted by political activity, by poverty and by illness.
Nevertheless he wrote up a plan for Capital in 1957, and a final plan was drawn up in 1865-6. The two plans were divided by intense study, by financial problems, the deaths of some of his children, by work with the International Working Mens Association, and finally by his illness and bad health.
As a result his first elaborate plan was super ceded by the final plan which is all the more striking (31).
Volume 1 of Capital, Mandel says begins with the commodity and money. Also Capital1 he says is centred around his basic discovery of surplus value, which Mandel explains like this.
Absolute surplus value is produced by lengthening the working day beyond the hours needed to pay the workers their wages.
Relative surplus value is produced by increasing the productivity of the workers, so that the equivalent of their wages is produced in a shorter part of the working day. (33-4).
Mandel then gives this potted description of Capital1 (36-37) before going into more detail.
1 – The commodity
The process of Exchange
Money, which enables the circulation of commodities
2 – Money transformining into Capital
3 – Absolute surplus value
4 – Relative surplus value
5 – Relations between wages, productivity of labour and surplus value; the rate of surplus value.
6 – How the value of labour power is transformed onto wages and their different variations
7 and 8 – The accumulation of capital and its consequences fo labour; the origins of capitalism.
Before his more detailed work Mandel describes the Plan of capital 1. What follows is a very much shortened vesrsion.
The Plan of Capital 1.
As we know Marx starts with the commodity, exchange and money (32)
The whole volume is a lengthy analysis of capitalist production (33)
But Capital1 centres around Marx’s discovery – the secret pf surplus value (33)
The process of production is essentially the Process of Production of Surplus Value (33)
Mandel now turns to Absolute and relative Surplus Value (33)
In part Four comes the production of Relative Surplus value (34)
With the industrial revolution and the modern factory, the submissiom of labour of labour to capital is rooted in the production process itself. (34)
The potential of modern machinery are the main wepon for subordinating labour to capital in the process of production (35)
Machines are the main weapon for increasing the production of relative surplus value and spurring on the accumulation of capital (35)
The labour saving machines too are the main weapon for producing and reproducing the ‘reserve army of labour, while wages fluctuate around the value of commodity labour power, guarantee the appropriation of surplus value for the capitalists (35)
These machines instead of making work easier for the workers, become instruments that develop class struggle between labour and capital (35)
Mandel adds,
“At the end of Volume 1 we are back where we started from: capitalist wealth. But we no longer understand it simply as a sum of ‘elementary elements’, a mountain of commodities. We see it also as the result of a gigantic process of value production, of surplus value extraction out of living labour” (36)
He concludes this opinion by saying that,
“We thus understand more fully why an analysis of capitalism has first to clarify everything which happens in the course of the process of production” (36)
He then digresses shortly regarding Marx’s attitude to technology, machinery and the factory system. He points out that a reading of Chapters10, 15 and 25 of Capital 1 will enlighten Marx’s indictment of these matters.
Nevertheless Mandel seems undecided whether Marx was some sort of Luddite towards these matters , or whether he had long term hopes that technology would be capable of reducing the work load and fatigue to which working men were then condemned.
He finishes this discussion by pointing out that capitalism subordinates men to machines instead of liberating men from the burden of mechanical and repetitive work. As a result capitalism is not overthrown once it has created the preconditions of a classless society and this contradiction implies a steadily transformation of the forces of production into forces of destruction in the most literal sense.
Mandel then starts his more detailed presentation with,
Marx’s Labour Theory of Value
This theory has been the major target for the mainstream Academic world. But their criticisms, says Mandel, are based on a basic misunderstanding (38).
The theory recognises two aspects of value, the first being quantitative. From this perspective the value of a commodity is the quantity of simple labour necessary for its production at a given average productivity of labour (skilled labour can be reduced to simple labour).
Secondly, from a qualitative perspective the value of a commodity results from abstract human labour. Commodities that have been produced by private labour become commensurate only inasmuch as society abstracts from concrete labour and the specific aspects of their production, and equalises all these labours as abstract social labour – without regard to the different use values of each commodity. (38).
To understand this, says Mandel, in a given society the way that the labour of all producers is divided into different branches of production determines the extent to which all different needs can be met.
In capitalism where labour becomes private labour where thousands of producers output commodities independently, equilibrium can only be reached by accident via the operation of blind economic markets.
Price fluctuations, to which mainstream economists are glued, are the best signals that indicate whether this equilibrium is being shaken and in which direction. But they do not explain what causes these fluctuations. It was, says Mandel, this that Marx tried to explain with his perfected labour theory of value (39).
It is clear that, contrary to what many of Marx’s critics assumed, he never intended to explain short term market price fluctuations. What he tired to discover was the hidden key behind these fluctuations; he moved the whole analysis to a higher level of abstraction. His question was not how does a man run, but what makes a man run.
Mandel adds that Marx’s labour theory of value was never a ’micro-economic theory’, but in Capital 3 it was clearly a ‘macro economic theory’.
It follows, according to Mandel, that 99% of criticisms aimed at his labour theory of value are entirely beside the point (40). To say that commodities have qualities in common, other than that they are products of social labour, is not relevant because these other qualities do not make commodities commensurable.
Such critics also ask why bother with this type of analysis. Why not restrict economics to the surface day to day ups and downs of prices, wages, interest rates, and profits etc. Why bother to try to discover underlying forces beneath the surface of the economy that are supposed to govern actual economic events?
This approach, says Mandel is a curious and typically unscientific; no one in medicine or other physical sciences would dare to ignore deeper causes.
Clearly he says the basic movement of prices in the long run has something to do with the long term productivity of labour in the various consumer industries, as well as in the gold mining industry; that is with the laws of value as formulated by Marx (41).
Once we understand, according to Mandel, that the famous ‘invisible hand’ of Adam Smith which is supposed to regulate market supply and demand, is nothing but the operation of the same law of value. Also we can join a whole series of economic processes with the law of value, which otherwise remain disconnected pieces of analysis (41).
Monetary theory becomes reunited with the theory of value and the theory of capital accumulation. The fluctuations of the trade cycle appear as the mechanism through which the value of commodities diminishes and the mass of finished consumer goods are sold on a daily basis, but also for large scale machinery.
The theory of economic growth, of the trade cycle, of capitalist crises and the tendency of profits to decline; all this flows from the law of value. No coherent analysis of the capitalist economy explaining the basic laws of motion of the system, is possible without elementary principles organised around the value of commodities. (41).
In Marxian theory the law of value serves a triple function. (41 and 42).
First it influences long term changes in relative prices of commodities.
Secondly, it determines the relative proportions of total social labour devoted to the output of different groups of commodities.
Thirdly it rules economic growth, by determining the average rate of profit and directing investment to those firms and sectors where profit is above average, and away from those firms and sectors where profit is below average.
Mandel then expands on the labour theory of value. Marx, he says, perfected the theory and was definitely not a follower of Ricardo.
One development was especially decisive where he made the concept of abstract social labour as the foundation of his theory. The distinction between concrete labour which determines the use value of commodities, and abstract labour which determines their value is a revolutionary step of which Marx was very proud. He considered it, along with the discovery of surplus value, his main achievement.
For Marx the commodity was understood as both a unity and a contradiction between use value and exchange value. Again, the law of value expresses the fact that in a society of private property and private labour, where decision making is fragmented between thousands of independent firms and millions of independent economic agents, social labour cannot be immediately recognises as such (43).
Mandel then describes a firm that produces 100,000 commodities. If all commodities are sold and the average rate of profit is received, then it is realised that the workers labour was truly socially necessary labour.
On the other hand though, if part of the produce is not sold, or is sold at a price where profit is significanty less than average, then part of the labour has not been recognised as socially necessary labour, and has been wasted labour from the perspective of society as a whole.
Mandel then spends a few pages clarifying the labour Theory of value. First he points out that the theory has nothing to do with the usefulness of things.
He then covers products of nature upon which no labour hase been used; but they can get a price through their privatr appropriation. Land that has never been worked upon has no value, exept when it is fenced in and a notice is erected saying’Private property, trespassers forbidden’, but if someone wants to buy the land, then the price will go to the current owner. (44)
It is true says Mandel. that it is difficult to know how much labour has been spent on commodities. But to know that it would be necessary to know what resources had been imported from different countries, and then it would needed open the books of all inputs to verify the figures based on shop floor evidence to approach the maesuremtn of of the labour content of commodities in capitalist coutries.
Mandel then turns to Marx’s discovery of the theory of surplus value.
Marx’s discovery of the theory of Surplus Value
Mandel runs through some different ideas of the source of profit, before considering Marx’s view.(46 – 47)
He starts with the classical school of political economy, including Ricardo. They saw profits as aresidual net income, once wages had been paid. Ricardo thought that only production costs falling or rising in the wage good industries could influence the rate of profit.
Nothing that happened to the luxury goods industry, or to raw materials would affect the global rate of profit.
Mandel saw this view as incomplete and therefore incorrect, but saw it as an attempt to solve the problem of income distribution between the social classes as a function of whay happens in the course of production.
The post Ricardo ‘vulgar’ economists simply saw factors of labour, capital and land getting different rices on the markets and limited themselves to a study of how these prices fluctuate. When considering the origins of profit, interest and rent they ask whether workers must abandon part of the product of their labour when they work for an alien entrepreneur.
To examine the mechanisms involved without any cheating or plotting, it was left to Marx to unravel the basic questions about the capitalist mode of production.
Considering pre-capitalist societies from an economic point of view, profits resulted from the appropriation of parts of the labourers produce by the nobles or by the church. In sum the medieval serf worked half a week for his own livelihood, and the other half, without remuneration, went to the ruling noble (or the church). But his arrangement could not be confused with what happens in the market place.
In the case of slavery, the miserable pittance of the slave was provided by himself on the seventh day of the week. Even the most sceptical critics of historical materialism would find it hard to doubt that the whole product for the master and for the slave had only one origin; the social labour expended by the slave.
Looking again at capitalism, there is no brutal force included. The worker appears to have an equal relation ship with the owner. The worker seems to sell his labour in exchange for a wage. The capitalist combines that labour with machines and the labour of others to produce finished products. So the capitalist owns the machines, the raw materials, the factory and the money for wages, it appears ‘natural’ that he must own the finished products.
While this appears to e the situation under capitalism, Marx probed beneath the surface and came up with a number of striking observations.(47 to
First was the institutional inequality between capitalists and workers. The capitalist is not forced to continually buy labour power from workers. He does so when it is profitable to him. If not he can wait, he can lay off some of the workers and even close down his factory until better times arrive.
By contrast, the worker is under economic compulsion to sell his labour power. He has no access to the means of production or to land, he has no large scale stock of food, and he has no saved up money to allow him to survive while doing nothing. He must therefore sell his labour power continually at the current rate. Without such economic compulsion capitalism must remain in a dwarfed state, unless the capitalist class can suppress access to free land.
Marx covers this situation with regard to colonisation. If the colonists live under no necessity of economic compulsion to sell their labour power, then juridical or political compulsion has to deliver workers to the capitalist employers; otherwise capitalism could not survive in colonial situations.
Mandel then covers trades union (48). Workers who combine in a union can set up a reserve fund and can be freed from the compulsion to sell their labour power for some weeks. Capitalists did not like this at all, and under robust capitalism trdes union were simply banned.
He adds that at the time he was writing (about 1970) it was gradually becoming denied to workers the right to strike. All these moves says Mandel add up to a situation where labour is fundamentally ‘forced labour’. Capitalists like to hypocritically cloak this situation by calling it ‘equal and just exchange’. When this cloak is not possible they revert to naked coercion.
Mandel then describes (49) the background arrangements that are necessary for capitalist production; these are land, buildings, energy, roads and water, machinery, a given fabric of organized society, means of communication etc. It is clearly absurd, says Mandel, to presume that, as factory production is not possible without these conditions, canals and roads therefore ‘produce value’.
Of all these factors it can only be said that their given value has to be maintained and reproduced through part of it incorporated in the current output of living labour during the production process.
Closer to the truth we become when we note that property titles to land and machinery lead to a situation where these factors will not be incorporated into production without their owners receiving a payment over and above the cost of wear and tear of the factors. While this is clearly true, it does not follow that such returns are then produced by the property titles.
Mandel then moves gradually to his introduction of surplus value. Here we go straight for it.
So the worker does not sell his labour to the capitalist, instead he sells his labour power, his capacity to work, for a given period of time. The labour power becomes a commodity under capitalism, and as such it has a specific exchange value like all other commodities.
So, in producing enough social labour to produce the commodity necessary to the capitalist, the wages of the worker also provides him with enough consumer goods to keep him and his family well enough for the worker to continue working at a given level of intensity of effort.
But his work has a double capacity; as he produces enough to furnish the capitalist with the necessary commodities, he can the continue working and produce more value over and above that needed to produce the capitalists commodity.
That extra value, the surplus value, can be transformed into additional capital, and can be the source of profit, of rent and interest payments.(50 to 51).
Marx considered this discovery of surplus value as his main theoretical discovery. (51). Once we understand that surplus value is produced by workers, it is the age old surplus produced by workers through the ages (52).
Marx’s Theory of Capital
Mandel explains that Capital flows logically from Marx’s labour theory of value and his theory of surplus value. Marx rejects the idea expounded by academic economists that capltal is just any stock of wealth, or a means to increase labour productivity (54).
For Marx then, capital is a social relation between men which appears as relation between things or between men and things (54).
Mandel continues that”capital presupposes that goods are not being produced for direct consumption by the producing communities, but are sold as commodities; (and) that the total labour potential of society has become fragmented into private labours conducted independently of each other; (and) that commodities therefore have value; (and) that this value is realised through exchange with a special commodity called money” (54 to 55).
Thus an independent process of circulation can start, where property of a given class of society whose members are owners of value looking for more increments of value.
Marx was charged by Schumpeter with being unable to explain the origins of capital. Mandel completely rejects this charge, saying that Marx understood the origins and development of capital in pre- capitalist modes of production (55).
Mandel then charges the ‘vulgar’ economists with unscientific handling of categories, for example they tended to see capital and capitalism as more or less synonymous. In fact he adds that capitalism is the capitalist mode of production, with the seizure of the means of production. And capital is value initially in the form of money, then becoming an independent operator in the sphere of production. Capital appears as usury and merchant capital, and after a long process and under specific social conditions capital can penetrate production in the form of manufacturing capital (55).
Mandel then spends a page or so looking at capital in pre capitalist production; this aspect will be skipped for now.
Under capitalism itself and its mode of production, capital is value constantly increased by surplus value, which is produced by labour in factories and appropriated by capitalists as they take ownership of the commodities produced by workers in factories owned by capitalists.
The way that capital and capitalism hinges on the institution of private property has often been misunderstood or misrepresented by supporters of capitalism and also by followers of Marx (57).
Mandel then outlines more about the results of private property,
“Historically and logically, capitalism is tied to the private ownership of the means of production, which allows private appropriation of produced commodities, thus private appropriation of surplus value, and thus private accumulation of capital. It is surely not accidental that the ‘rights of private property’ are thus at the bottom of the whole constitutional and juridical superstructure which centuries of law making have erected upon the basis of commodity production” (57).
But, says Mandel, when we examine the social relations which lie behind these juridical forms, we confront something which is not simply formal private property.
Mandel then turns to Marx (57), who stated that commodity production was only possible because social labour was fragmented into private labour conducted independently from each other; he thus refers to a social economic reality and not a juridicial reality.
Therefore capitalism is about a special relation between wage labour and capital where social labour is fragmented into firms independent of each other, and who take independent decisions about investment. prices and financial growth – and who compete with each other for shares of markets and profits and therefore buy and exploit wage labour under specific economic conditions compulsions and constraints (58).
The basic element of private capital is then the independent firm, small or extremely large. The vital economic decisions are taken by all those independent firms.
“ The basic fact of life of the capitalist economy is the fact that these vital decisions are not taken by society as a whole or by the ‘associated producers’.” (58).
While the individuals who make those decisions may vary between owners, stockholders or managers, they are all working under the same economic compulsion.
Some economists, such as Galbraith, argue that some giant corporations have freed themselves from these economic compulsions. But this, says Mandel, is an illusion born of conditions in long term economic booms. However regardless of the giant size of such corporations, experience shows that even such firms still suffer from economic uncertancy. (58).
Galbraith again (59), contends that a distinction occurs between compulsion to profit maximisation and compulsion to growth maximisation. But Mandel points out ths view is lacking in practical long term significance once it is understood that growth remains a function of profit, and that capital accumulation can finally result nly from surplus value and realisation.
The only remaining issue is the difference between short term and long term profit maximisation based on one of the basic differences between competitive capitalism and monopoly capitalism.
Another issue on the nature of capital has arisen from the work of Piero Sraffa and the Cambridge school. But Joan Robinson (1956) showed that the measurement of capital inputs in th neo classical ‘production function’ is based on circular reasoning,
Mandel continues that marginal increases or decreases of capital inputs upon ouputs can only be measured in money terms given the complicated nature of so called ‘capital goods’. The way out of this dilemma , says Mandel, is to look for a common substance in all the ‘capital goods’ that is independent of money. That he says is to return to socially necessary labour as the measurable substance of all commodities.(59).
Marx’s Theory of Accumulation of Capital
Capital, says Mandel (60), is value looking for accretion, for surplus value. But as capital produces surplus value, surplus value produces more capital. Under capitalism economic growth therefore appears in the form of accumulation of capital. The capitalist mode of production is basically the production of more capital.
This is not due to some inclination among capitalists, but the result of competition. Marx states that without competition, the ‘driving fire’ of growth would die out and capital would become stagnated.
And competition is combined with the replacement of labour with machinery (dead labour). With just living labour a physical limit would soon be reached and following would be a profit limit. Under full employment capital accumulation and economic growth would gradually disappear.
But under capitalism there is a heavily bias in favour of labour saving devices. Capital accumulation is aided by a constant increase in plant and equipment. This has the effect of increasing the productivity of labour.
Capital accumulation supports an increase in the value of plant and equipment as well as the stock of raw materials. The value of all non farm produced durables was multiplied at least 10 times between 1900and 1965 in USA, and this may be low for reasons of tax evasion.
Mandel mentions pre capitalism where all surplus value was consumed in the form ofluxury goods, with the result that capital remained at the level it had already reached. Marx called this ‘simple reproduction’.
Of course in capitalism some luxury goods are consumed but enough surplus value remains to accumulate capital and the buying of more plant and equipment – known as ‘enlarged production’ (61).
Mandel then considers the origin of capitalist accumulation. He dismisses the idea that a few people with ‘frugal habits’ somehow started capitalism.
He favours the sudden appearance of ‘capital’ in the form of precious metals and other treasures, these being the result of large scale piracy, robbery, violence, theft and slavery (62). He then describes West European usury and merchant capital between the tenth and thirteenth centuries; he names piracy in the Mediterranean, the plundering of Byzantium by the fourth Crusade and the regular plundering of the Slav territories on Central and Eastern Europe.
He then returns to Marx, who examines the nature of Capital in general and the flows from the exchange between wage labour and capital. He found that wages were higher when capital accumulation was progressing fastest. But once again he tried to examine the modifications in value terms that capital accumulation would exrcise on labour (63).
It became his opinion that the way in which capital accumulation proceeds – the development of fixed capital (machinery) – contains a powerful dynamic that reduces the value of labour power. As this value is equivalent to the value of consumer goods for the worker to enable him to labour at a given level of intensity; a decrease in the value of these consumer goods leads to a decrease in the value of labour power. This argument does not imply a decrease in the worker’s wages or any trend towards ‘growing absolute misery’ (63).
Mandel then describes Marx’s prediction that capitalism spread by ceating new jobs and also by creating new unemployed by destroying employment of previous workers and especially of previous self employed small farmers and handicraft workers (63). Also, since the 1870’s the West began to swamp the rest of the world with cheap mass produced commodities, a divergent trend has appeared in the world economy – in the West a long term reduction in unemployed workers has resulted, and in underdeveloped nations there has been a rise in unemployed workers.
The situation of capital accumulation has to be seen as an organic whole, and not just as the activity ina single nation. The world market operates as a giant siphon at the root of the imperialist system, transferring value from the south (countries with lower productivity) to the north (counties with higher productivity).
While the operation of this phenomenon is still under debate (when Mandel was writing), one must note that the phenomenon is based on uneven movements of capital and labour and features all those aspects of capitalism that Marx planned for the never written Volumes 4,5 and 6 in his original intention (64).
Mandel continues to say that thefor work itself. accumulation of capital is the accumulation of wealth in the form of commodities, of value. Value production becomes a goal in itself. Work id degraded to the level of a means by which to receive money incomes. A striking aspect of Capital 1 is that which examines the inhuman consequences of capital accumulation for the workers and for work itself.
Marx added a note to the second German edition of Capital 1; the note said that under capitalism labour power becomes not only a commodity for the capitalist but also receives this form for the worker himself, implying that this degradation of work is the fate of the industrial proletariat. It took, says Mandel (65), official political economy a long time to discover what Marx had anticipated from a thorough understanding of the fundamental mechanisms which govern the capitalist mode of production.
Then he says, because capital accumulation presupposes production for profit, it has profit maximisation as its very rationale; exact and minute cost calculations entail costant reorganisation of the production process with the single purpose of reducing costs.
From this point of view a worker is not seen as a human being with rights, intelligence, dignity and needs to develophis personality. The worker becomes a cost element that must be constantly measured in money terms in order to be reduced as much as possible. Even when human relations and psychological considerations are introduced, they are all centred into economies of cost alongside excessive labour turnover, too may work interruptions, absenteeism and strikes etc, etc.
Capitalist economy therefore is a gigantic system of dehumanisation, transforming human beings from their own goals and opportunities into instruments and means for money making and capital accumulation. It is not the technology that transformed men and women into appendices and slaves of monstrous equipment.
It is the capitalist pursuit of profit maximization which unleashes this terrible trend. Mandel ends this section by saying that other types of technology and machinery are perfectly conceivable – providing the guiding principle is not competitive cost saving, but the optimum development of all human beings (65).
Marx’s Theory of Wages
These last two sections will feature less detail.
Mandel makes it clear that Marx never supported a theory of absolute impoverishment of workers under capitalism which implied a falling value of labour power and even of real wages.
Marx’s own theory (66 to 67) begins with his appreciation of labour power, a feature of human beings. So workers are endowed with muscles and a stomach, with consciousness, with nerves, desires hopes and ambitions.
The physical capacity to work needs a calorie input to replace the losses of energy form the days work. That is a level of consumption considered by the working class, a habitual standard of living. But Marx notes that these expectations vary in different countries where standards are higher in those countries where industry is advanced and developed.
According to this aspect of Marx’s work, Mandel concludes that real wages would have to be higher in the more advanced countries, and lower in in less developed nations. As their level of industrialisation reached an advanced level, real wages would accordingly need to be higher.
Marx of course was able to point out that wages would fluctuate as the trade cycle changed. Real wages would tend to rise in times of economic boom, and decline in times of depression and large scale unemployment. But again he noted that none of this would be automatic, and that class struggle – including trades union action – would enable workers to increase their wages in boom times, and resist wage lowering in recession times.
Mandel says,
“We can thus formulate Marx’s theory of wages as an ‘accumulation of capital wage theory’, inopposition to the crude demographic wage theory of the Malthus-Ricardo-Lassalle school” (68).
Marx’s Theory of Money
Improving on Ricardos attempts (74), Marx integrated his theory of money into his generalexplanation of value. Value production and autonomous vale circulation, on the basis of a rigorus application of the labour theory of value.
Under conditions of generalised commodity production, social labour cannot be immediately recognised otherwise than through its exchange against money. Money born from the process of exchange, from the circulation of commodities only because it itself has value.
The circulation of commodities producesthe circulation of the medium of exchange, money. Money is the necessary materialisation of abstract social labour. That is the qualitative determinant in Marxist monetary theory.
Marx’s theory of money is therefore above all a ‘commodity theory of money’ in which the monetary standards – precious metals – enter the rocess of circulation with an intrinsic value of their own (75).
Mandel then deals with the treatment of paper money, related to metallic money.
Capital and the Destiny of Capitalism
This short conclusion is taken from Mandel.
Capitalism (81) is neither a society of ‘perfect competition’, nor a society of ‘increasing pauperism’, nor a society where private entrepreneurs rule the factories, nor a society where ‘money is the one anf only master’.
Such vague definitions allow evasion of the basic issues.
Capital 1 shows that the capital mode of production is determined by only three conditions.
1, the mass of producers are not owners of the means of production in the economic sense of the word, but have to sell their labour power to the factory owners.
2, the owners are organised into separate firms that compete with one another for shares in the markets where commodities are sold for profitable fields of investment for capital.
3, these owners are compelled to extort the maximum surplus value from the producers in order to accumulate more and more capital. (82).
The social catastrophes that have happened since Auschwitz and Hiroshima, express a clear a clear insight into the terrifying potential of exchange value production, capital accumulation and the struggle for individual enrichment as ends in themselves.
It is impossible that capitalism can go forward for ever; it is most probable that capitalism will be replaced by a classless society of associated producers (86).
The plan Of Capital 1
Marx’s Capital1 seems to have 33 Chapters. But it also divides the book into 8 parts.
David Harvey follows Marx by dividing his book into 8 Parts; but he names the parts in a different way to Marx.
Part 1. – Commodities and Money
This part only covers Chapter 1to 3; the sub headings are as follows;
Chapter 1– The Commodity
The Commodity
The Dual Character of the labour Embodied in Commodities
The Value-Form, or Exchange Value
The Fetishism of the Commodity and is secret
Chapter 2 – The Process of Exchange
Chapter 3 – Money or the circulation of Commodities
The Measure of Values
The Means of Circulation
Money
Harvey heads Part One as 1) Commodities and Exchange, and 2) Money
Part 2 – The Transformation of Money into Capital
This part covers Chapters 4,5 and 6
Harvey calls Part Two, From Capital to Labour Power
Part 3 – The Production of AbsoluteSurplus Value
This Part covers Chapter7 to Chapter 11
Part 4 – The production of Relative Surplus Value
This Part covers Chapter 12 to Chapter 15
Part 5 – The production of Absolute and Relative Surplus Value
This Part covers Chapter 16 to Chapter 18
Part 6 – Wages
This part covers Chapter 19 to Chapter 22
Part 7 – The process of Accumulation of Capital
This part covers Chapter 23 to Chapter 25
Part 8 – So Called Primitive Accumulation
This part covers Chapter 26 to Chapter 33
This concluding part is followed by an Appendix
Pages 943 to 1138
Profit, Wealth and Value 