The following text is a reply to Mcl (Controverses) who criticized what IP wrote on the trajectory of capitalism. His main points were:
-how can you claim that capitalism’s decadence, or social retrogression, began in 1914 when, overall, the 20th century was an era of rising growth, rising productivity and rising living standards?
-how can you claim that the transition to real domination is a still ongoing process, while my stats show that the transition from absolute surplus value extraction to relative surplus value extraction was completed by 1850?
His own text can be found HERE
A debate on the trajectory of capitalism
A REPLY TO MCL
Dear Mcl,
to analyze the periodization of capitalism, you start from Marx’s words: “Here the capitalist mode of production is beset with another contradiction. Its historical mission is unconstrained development in geometrical progression of the productivity of human labour. It is unfaithful to its vocation whenever, as here, it checks the development of productivity. It thus demonstrates again, that it is becoming senile period and that it is more and more outlived.” 1 You add: “Capitalism fails in this mission when it no longer manages to fulfill it, that is, when capitalism no longer manages to develop this productivity of labor.” Already, we are in disagreement. This quote reflects a teleological and productivist vision of human history, from which Marx had not entirely freed himself. A mission, a vocation, but from whom or what? From a God or from the holy History which can only take place in a predestined way?
In our view, history is more complicated than that. Productivity, its growth or decline, is not the universal motor that determines the passage of one social formation to another. The human tendency to improve material conditions and thereby develop knowledge and thus also productivity may be universal but it is but one of the factors that have shaped the course of history. However, capitalism is different from previous social formations, in that it is governed by the law of value and thus subjected to its contradictions. Capitalism has the obligation to grow value, to be profitable but the hunt for profit tendentially erodes the conditions for profit to be made. Its insurmountable crisis is caused, not by a lack of productivity development, but by this very development.
Productivity
Capitalism doesn’t have a mission to raise productivity but it does have a constant goal and obligation: to extract surplus value, to make a profit, to accumulate capital. But growth of productivity and growth of value are not identical. That is a key insight that separates Marxian value analysis from bourgeois economy. For the capitalist, they seem to be the same thing: if the productivity of his company increases, thanks to new technology, he can sell more commodities, so his profit increases as well. But does his increased profit mean more value for the social capital? Not according to Marx. Labor productivity cheapens the value of commodities and thus their price. “In and for itself, however, this reduction in the prices of commodities introduces no change either in the mass of the surplus-value produced by the same variable capital, or in the proportional division into paid and unpaid of the labour added to each individual commodity, or in the rate of surplus-value valorized in each individual commodity.”2 If less labor power is used to produce more commodities, the general rate of profit falls, unless this is checked by other factors. Because value is (abstract, socially necessary) labor time and profit can only be a part of that in an entirely capitalist economy. On the surface, Marx wrote, “it appears as if the capitalist adds less profit to the price of the individual commodity (…) and makes up for it through the greater number of commodities he produces.“3 But (assuming other factors are constant) “The mass of profit on the individual product decreases proportionately to the increase in the number of products. The mass of profit remains the same, but is distributed differently over the total amount of commodities” 4. The rise in labor productivity is seen by Marx as cause of capitalism’s tendential fall of the rate of profit. He realized it is at the same time a check on this tendency, as I will explain further. But he noted : “It might be asked whether the factors that check the fall of the rate of profit, but that always hastens its fall in the last analysis, whether these include the temporary, but always recurring, elevations in surplus-value above the general level, which keep occurring now in this and then in that line of production redounding to the benefit of those individual capitalists, who make use of inventions, etc., before those are introduced elsewhere. The question must be answered in the affirmative.” 5
So in his view, the source of the surplus profit of the capitalist who produces more with less labor power than average, is not the surplus value he directly extracted from his workers, but the redistribution of surplus value that occurs in the phase of circulation of capital. He profits from a favorable market position. No new value is created in circulation but surplus value passes from the capitalists using more labor power to those using less.
Technological innovation can accomplish this in two ways. First, it may open the door to the production of a new commodity, or one that is qualitatively better (real or perceived) than existing ones with the same function. In that case, the capitalist has a monopoly. Since he has no direct competition, the price of his commodity is no longer determined by the law of value, it is “what the market can bear”. But the extra sv he obtains in this way, diminishes the value his customers have available to buy other commodities, so for the social capital, there is no surplus profit. But there is for the capitalist. Capitalists seek a monopolistic or oligopolistic position all the time, and especially when the general rate of profit is trending downwards. We can see in our times many examples, such as the massive increase of patents to protect these monopolies.6
Second case: the technological innovation leads to the production of existing commodities with less socially necessary labor time (snlt), less value. The sv is divided over many more commodities so to realize it the capitalist must find a much larger market. He does so by lowering its price, tendentially pulling the market value of the commodity down towards the individual value of his own commodity. This means less profit for his competitors, so again there is no gain for the social capital. The competitors have no choice but to adopt the same innovation. When it has become integrated in the general method of production, the average rate of profit settles at a lower level than before the innovation.
True, it is a bit more complicated than that, as I will develop further. The point I wanted to stress here is that, if Marx was right that productivity brings the contradictions of capitalism to the fore, its growth is not necessarily a sign of capitalism’s health. Growth of productivity, or the lack thereof, tells us only part of the story, it is a symptom, not an adequate criterion for the periodization of capitalism, to ascertain when its “ascendance” ends and its “decadence” begins. Nor can its health be measured by the rate of sv (sv/v) as you claim. “The tendency of the rate of profit to fall is bound up with a tendency of the rate of surplus-value to rise, hence with the tendency for the rate of labour exploitation to rise”. 7 This is impossible to understand if you look only at the rate of sv and thus ignore the growing dominance of dead labor over living labor in the production process.
Formal and real domination
Ascendance, decadence, formal and real domination are only concepts we use to try to understand the trajectory of capitalism. They are not the only possible ways to describe its history, which is complex and can be seen from different angles. Many have used a different periodization, as you do with your six stages and four “productive orders”.
But we’re not interested in periodization just for the sake of understanding history, we’re most of all eager to understand the political implications of the changes in the mode of production, how they affect the conditions for its overthrow. In that regard, the concepts of domination of capital (formal and real subsumption of labor) seem to us most relevant.
It is essential to define these concepts, to make it very clear what content we give to them, in order to avoid false debates. It is clear that your definition is much more narrow than ours. For you, the transition from formal to real is limited to the change from a capitalism geared towards increasing absolute sv to one geared towards increasing relative sv. You observe that this transition began in the late 18th century and was completed in the mid-19th century (even though in most of the world, in so far as it was based on capitalist relations of production, the focus was still on absolute sv). You draw no major conclusions in regard to the conditions for crisis and revolution, and the concept of real domination/subsumption seems to be of no further use to you.
In contrast, we define these concepts in a broader and deeper way that goes beyond the technical differences in sv extraction. Real domination, says Marx, does not alter the essential innovation brought about by formal domination (the direct submission of the labor process to capital), “but on this foundation now arises a technologically and otherwise specific mode of production — capitalist production — which transforms the nature of the labor process and its actual conditions.” 8
This means, says Marx, the greatest transformation of the labor process since man fashioned the first tool: a complete subject-object reversal in the relation man-technology. “In handicrafts and manufacture, the worker makes use of a tool; in the (modern) factory, the machine makes use of him. There, the movements of the instrument of labor proceed from him, here, it is the movements of the machine that he must follow. In manufacture the workers are part of a living mechanism. In the factory we have a lifeless mechanism which is independent of the workers who are incorporated into it as its appendages”9
Real domination “not only transforms the situations of the various agents of production, it also revolutionizes their actual mode of labour and the real nature of the labour process as a whole”.
It is a process of dehumanization. “Owing to its conversion into an automaton, the instrument of labour confronts the worker during the labour process in the shape of capital, dead labour, which dominates and soaks up living labour.” 10
The uniform motion of the machine becomes the measuring rod that quantifies every time-segment of the labor process and thereby subjects that every segment, every motion, to pressure to squeeze more surplus value from it. It “confiscates every atom of freedom, both in bodily and intellectual activity”.11 The transition to real domination means not one but many technological revolutions, driven by the thirst for surplus profit and the compulsion to join or perish. It means mass production, an unceasing enlargement of the scale of production, expansion of the specifically capitalist mode of production to all sectors.
That is Marx’s analysis in “Results of the immediate production process”. But according to IP the dynamic he describes, the deep penetration of the value-form, the “confiscation of very atom of freedom” spreads beyond the immediate production process and tends to conquer every aspect of life in the capitalist world. Tendentially, every pore of society is invaded and transformed by the operation of the law of value; all the domains of social existence are reshaped by the value-form. Not just the actual production of commodities, but their circulation and consumption too. Not just the economy stricto senso but the spheres of the political and ideological, science and technology. In its most developed phase, there is no longer any non-economic sphere, everything is integrated into the market and operates on the basis of the law of value (that does not mean of course that every activity is productive, is valorizing capital). This changes both the content and form of all institutions that previously were standing outside the market and occupied a relatively autonomous space. Today, despite all their particularities, all mass parties, trade unions, churches, cultural institutions, hospitals, universities, schools, foundations, interest groups, media, entertainment providers, services of all kinds, operate like capitalist companies or subsidiaries thereof, with the corresponding structures, layers and divisions of labor, competing for their share of their respective markets, conquering or protecting their niche in the global market that the world has become. That is the progress of real domination. That also entails state capitalism, the osmosis of state and economy. It entails a deeper subjectivation of the working class, atomized as individual sellers of their labor power, as consumers, as democratic citizens of nations. But it also tends to push everybody who is not a capitalist into the proletariat, and it connects the working class as never before. “The real lever of the overall labor process is increasingly not the individual worker but labor power socially combined”. 12 Production becomes increasingly complex and global as technology fragments and recombines the labor process. To the global world of capital’s real domination corresponds a global working class, an international ‘gesamtarbeiter’, or ‘collective worker’ who creates through his combined labor the social wealth and the social surplus value on which capital depends.
Real subsumption of labor is a process of alienation. In the production process, it separates the producer from the means of production beyond the fact that he doesn’t own them. He becomes an appendage of the machine. The relative autonomy of the labor process disappears. The same process of alienation and disappearance of relative autonomy spreads to the whole of capitalist society. In that sense, the transition to total real domination is a continuous tendency that is still going on. “What prevents such a totality shaped by the law of value being a totalization from which there is no escape is that the law of value has its own internal contradictions that provide the bases for its overcoming.” 13
For us the term real domination of capital has a double meaning. It describes a process that is still
infinished but it also marks a new period in the history of the capitalist mode of production. By the end of the 19th century real domination had conquered the globe, not in the sense that it was present everywhere nor that its development was completed, but in that it had fashioned an integrated worldwide system of production and circulation in which the different parts were conditioned by their place in the whole, regardless whether their main form of exploitation was absolute or relative sv.
Does that mean that the decadent phase of this mode of production had begun? In Marx’s view, real domination brought the fundamental internal contradictions of the mode of production to the surface.
The relentless expansion of productivity was bound to cause the general rate of profit to fall and the market to become too narrow. The capitalist economy now was inevitably evolving in cycles, in which periods of increasing growth were followed by overcapacity, crisis and a devalorization of capital that renewed the conditions for growth.14 But these crises remained limited as long as real domination had room for expansion.
Absolute and relative surplus value
And real domination opened new doors to profit. It is however too schematic to state that relative sv replaced absolute sv. I disagree with Marx where he writes that under formal domination “surplus-value can be created only by lengthening the working day, i.e. by increasing absolute surplus-value. In the formal subsumption of labour under capital, this is the sole manner of producing surplus-value” 15
Raising productivity has been the obsession of capitalism since the very beginning. This is striking in the accounts of the emergence of capitalist agriculture in 17th and 18th century England by Ellen Meiksins Wood and others. Marx himself describes how formal domination increased productivity by making the labor process less porous, more continual, more intensive etc. 16 All this lead to the decline in value, and thus cheapening, of food and other necessities and thus to a an increase of the population and a decline in the value of labor power. Furthermore, the workers, unexperienced and unorganized, disadvantaged by an oversupply on the labor market, were often paid below the value of their labor power. All this means, according to Marx’s definition17, a rise in relative sv. “Absolute surplus-value is relative”, Marx recognized, “because it requires a development of the productivity of labour” 18 You write: “the real period of formal domination goes up to 1790 only, i.e. the period when the extraction of surplus-value comes from the decrease of real wages and the increase of working time.” But you seem not to realize that a decline of real wages means an increase of relative surplus value (the paid part of the working day shrinks).
Likewise, absolute sv extraction did not disappear from the scene under real domination. Not that Marx claimed that it did. To the contrary, he saw it increase together with real domination. He even called the prolongation of the working day “this invention of modern industry”19 and “a result of large-scale industry”. 20 Of course capitalists always want to make workers work both longer and harder but “a point must inevitably be reached where the extension of the working day and intensification of labour become mutually exclusive”. 21 There is a physical limit. But the shortening of the working day is not something capital’s real domination gave to the proletariat on a silver plate. Resolute, massive struggles were needed to force capitalism to accept it, eventually to 8 hours, where it remained stuck, despite productivity’s progress since. That is, in the advanced countries. In the rest of the world capitalism’s focus on long working hours continued. Even in some parts of the advanced economies this is the case. There it becomes more pronounced in times of crisis (for instance, measures to delay the pension-age). But in general, the resistance capitalism encountered to long working days made it focus more on intensification. Whether that means more absolute or relative sv, I’ll discuss in a minute.
First, on the main source of relative sv. In real domination, capitalism obtains growing relative sv because of the growing productivityof labor. According to Marx’s value theory an increase of productivity does not increase the value of what is produced, even though it consists of many more commodities. But it its reduces the value-content of the individual commodities, including those which the working class needs to reproduce itself. Those goods that together constitute the value of labour power (that meet the needs of the worker and his/her family) are not a static quantity of use-values. Productivity growth changes society, makes the living conditions of the working class more complex. Their needs tend to increase, and there is what Marx called “ a moral component” (an influence of class struggle tradition and public debate) in how society defines them. So workers get more commodities in exchange for their labor time. But this increased quantity of commodities requires less snlt (socially necessary labor time) to produce them. That snlt is an ever smaller part of the total snlt performed, even though the latter has decreased. So in real domination, productivity growth lowers de value of labor power (v), and the rate of exploitation (sv/v) and real wages rise at the same time.
Then there is the rise in intensity. That is indeed a striking characteristic of real domination. Capitalism has shown tremendous creativity in using technology for this purpose. The quest continues every day. This is usually considered to be relative sv extraction but is it? It is, but only in so far as the intensification increases the working day’s output and thereby like productivity growth in general contributes to the general cheapening of commodities and thus to the declining value of wages. Marx defines relative sv as the value gained by the curtailment of the paid part of the working day. But intensifying the labor process also increases the value of the unpaid part. It implies a larger expenditure of labour power per unit of time, which, Marx wrote, is like an increase in the length of the working day, albeit in an intensive sense. So in that sense, it yields absolute sv.
The key difference between these two ways to increase the rate of exploitation is whether there is a decline in the value of labor power. If there is a decline in the value of labour power, then the increase in the rate of exploitation take the form of the production of relative surplus value; if the value of labour power does not decline, then an increase in the rate of exploitation takes the form of the production of absolute surplus value.
Maybe it’s not so important how we classify this important source of sv under real domination but the difficulty to do so shows again the fallacy of reducing formal domination to absolute sv extraction and real domination to relative sv. There is indeed a shift in focus from absolute to relative sv but this should not be understood in a schematic way and cannot be the definition of real domination but rather should be seen as a consequence of the establishment of the “specifically capitalist mode of production” that real domination is.
The possibility and need for expansion
One more essential factor needs to be taken into account to explain the success of real domination. It did not grow in a vacuum. Its relentless technology-based scale-enhancement implied an expanding metabolism with the world around it, that is, with less advanced producers, both capitalist and non-capitalist. The producers of commodities with a lower value-content, real domination, score surplus profits by exchanging commodities with capital with a lower organic composition (c/v), still relying mainly on absolute sv. They get more snlt in exchange for less snlt. The same is true for exchanges between countries: “there is competition with commodities produced in countries with inferior production facilities, so that the more advanced country sells its goods above their value (..) Just as a manufacturer who employs a new invention before it becomes generally used, undersells his competitors and yet sells his commodity above its individual value (..). He thus secures a surplus-profit.“22
In regard to the metabolism with the non-capitalist world the above is true as well. But furthermore the plundering, murdering and land stealing that were part of what Marx called “the primitive accumulation of capital”, continued and expanded. With “primitive accumulation”, Marx meant capital formation not yet based on the contractual exploitation of wage labor but accomplished through brute force, creating the conditions for the industrial take-off. Real domination expanded such practices, because it made them cheaper and technologically more feasible. It can be argued that in that sense, “primitive accumulation” is still very much alive.
The expansion of real domination went inwards as well, turning every activity into a means to produce capital. The service industry is a good example. In our life time we have seen all sort of functions that stood outside the capital-labor relation be integrated into it, creating new masses of sv-producing workers. The fact that you take a classical concert rather than, say, Amazon as an example of the service-industry makes me wonder whether you have grasped the importance of this massive change. Because of its (so far) relatively low organic composition, the exchanges of this sector with others that are less labor-intensive are yielding surplus-profit for the latter and give a boost to the general rate of profit.
From the above follows that real domination depends much more than earlier capitalism on expansion. Its possibility is a condition for capitalism that becomes increasingly important because its scale-enhancement demands ever larger markets and ever more resources, because its tendential fall of the rate of profit begs for compensation through unequal exchanges of value.
But there are obstacles to its expansion. These obstacles are not static, except, in the end, the geographical one. There is no Planet B, like the slogan says. There’s only one that we can live in and its resources are not limitless. Apart from that, there are technological and political obstacles that change over time. New technology and knowledge open doors to the penetration of the value-form, to profit, that were not there before. The weight of the past, the ideological blindfolds of the capitalist class create political obstacles that may be lifted later on, so that a new era of growth becomes possible. But the limits to expansion always return, with a vengeance.
Decadence?
Before capital’s real domination spread over the earth, before it had created a global world market, the limits were more easily overcome. There was still plenty of “lebensraum” for advanced capitalism. So crises were limited in depth and scope. But in 1914 the bourgeoisie decided there was not enough lebensraum left. As we have argued before, there was no law that dictated that the resulting world war had to happen just then. 23But this war was different in scope and character from previous capitalist wars.
The formation of bourgeois nations and the primitive accumulation of capital went a pair with plenty of wars. The first caused mostly wars in which many soldiers died but the civilian society remained much less impacted. The second caused genocidal wars in extra-capitalist territories. The first world war opened a new period in warfare, in which genocide is brought into the hearthlands of capitalism, in which the destruction of capital is the principal objective result. They are therefore cannibalistic wars, in which capital devours large parts of its own constant capital (resources, infrastructure) and variable capital (workers). The proletariat is their principal victim.24
Behind the slaughter is the crisis of capitalism. Its productivity leads to overcapacity which, in the given technological, social and geopolitical conditions, cannot be resolved by opening new terrain for expansion. Forcing such expansion is the purpose of the war but the result is the elimination of vast quantities of capital, which recreates favorable conditions for new accumulation. The connection between crisis and war is not always direct. As noted before, history is complex, subjective factors and contingencies play important roles. Still we can say that real domination, at a certain point in its development, made massive devalorization of capital (a death-sentence for many millions of proletarians) a recurring necessity for capitalism. That doesn’t mean that it goes from then on through cycles of crisis-war-reconstruction. Neither the facts nor sound theoretical analysis support such a mechanistic view of capitalism’s trajectory. History is more complex, the obstacles to expansion change, and war is not the only way in which capital devalorizes, crisis itself has that effect and, in our times possibly, catastrophic climate change.
You agree that the onset of world war I indicated a radical change in the capitalist world.
You write: “1914 remains a key date for me, not of the ‘entry into decadence’ type, but it is an important step in the evolution of capitalism: the death of social democracy, the integration of the unions into the state, and the closure of the national question.” Well yes, we agree on that. But what caused these earth-shattering political consequences? What had changed in capitalist society, in the mode of production itself? On this, your concepts of real domination finished by 1850 and of decadence measured by productivity or rate of sv don’t shed any light.
The name is not important. You call it “an important stage”, not decadence like we and you used to do, because capitalism was still growing, the development of the productive forces hadn’t stopped, and didn’t Marx write that capitalism wouldn’t disappear until it had exhausted all its potential to develop the productive forces? Yes he did, without explaining why that was necessarily so, and I think he was wrong. In IP we generally don’t use the term decadence anymore, because of its association with productivist concepts which we reject. You still defend the idea that capitalism’s decadence sets in when it loses its capacity to grow, when it can’t increase productivity. But instead of continuing to defend the untenable view that this happened in 1914, you now claim that it began at the start of this century. Finally, we have arrived, it seems. What does this change politically, is not spelled out in your text. We agree that the current crisis is very deep and heading towards catastrophic devalorization. But, if this happens and there is no proletarian revolution (or if it fails), then this devalorization would create new room for accumulating capital. Then, in conditions we can’t imagine, there may be new growth, rising productivity. Will you say then that we’re in ascendant capitalism again with decadence still in the future?
We have been using the term “social retrogression of capital” to indicate the ‘important stage’ which began in 1914. It’s not a perfect term but it has the advantage that it looks at the change in capitalism from the point of view of the only social force which can end it. From that point of view capitalism, despite its uncountable crimes, was progressive in that it created that social force, the collective worker, in that it objectively unified that force through the formation of the world market, in that it developed labor productivity to a level that would facilitate a post-capitalist world without exploitation, real communism.
From 1914 on, the interests of capital and the collective worker, antagonistic from the start, become irreconciliable. Therefore the political autonomy of the latter becomes even more crucial but is undermined by real domination, by the penetration of the value-form which swallows its old organizations and formats people in ways that efface their class identity.
The inevitability of depression, war and other catastrophies, the rape of the natural environment and other conditions of survival, including its impact on mental health, make this period, despite the rise in real wages, ripe for revolution. The necessity is there, the possibility is there. In 1914 and today. What lacks is revolutionary class consciousness. It can’t be injected. But understanding how capitalism and the working class got to this point can help to find the way out of it.
Sanderr
2/15/2023
Annex: Point 24 from the text “Internationalist Perspective and the tradition of the Communist Left” , second part (IP 58/59)
Did this necessity of destruction exist when World War I broke out? It didn’t, or at least not yet urgently. There was no general crisis but there were signs that the transition to real domination was bringing the contradictions of the value-form to the surface. As a result of its progress, the rate of profit was declining where the transition to real domination had begun and was most developed, in Britain. This discouraged domestic investment: the productivity-growth of British industry fell to zero in the decades before the war. But this was more than compensated by the profit resulting from the export of capital to countries which were at a lower stage in the transition to real domination. There, productive capital, because it had a lower organic composition (was more labor-intensive), yielded a higher rate of profit. It also had a much lower productivity and would not have been able to compete with the cheaper production of more developed industrial countries. But global competition was limited, both by material obstacles such as high transportation costs, and political obstacles, protectionism. These limitations made it possible for real domination to emerge in country after country. When the advances of real domination diminished the material obstacles — railroads and steamships were bringing transportation costs down dramatically — increased protectionism raised the political obstacles. They shielded the profitable metabolism between the young modern industry and their environment of pre-capitalism and formal domination from intrusion and allowed the US in the 1880’s and Germany in the first decade of the 20th century to surpass the industrial capacity of Britain. When the scale enhancement of production brought on by real domination made the domestic market too narrow for the larger industry, protectionism became counter-productive. But it still had a grip on the mindset of the capitalist class and was not abandoned.
Competition imposes uniform market values and prices for the same commodity. The absence of uniform prices on the world market therefore reflected the limited international competition in global trade. But with the development of real domination and its growing need for wider markets, international trade had grown tremendously. Despite protectionism, in 1913 foreign trade per capita was more than 25 times higher than in 1800. At the turn of the century, for the first time in human history, international competition imposed uniform prices for the same commodities on the world market. And these prices were falling: the lower value-content of production under real domination imposed itself on the world. Real domination had conquered the globe, not in the sense that it was present everywhere nor that its development was completed, but in that it had fashioned an integrated worldwide system of production and circulation in which the different parts no longer were able to follow their own path to development but were conditioned by their place in the whole. That system would continue to grow but it would grow now as an integrated whole in which the least productive, least competitive, parts, were permanently forced to unfavorable specialization. This made the perspective of an autonomous path to development, of ‘national liberation’, objectively impossible.
Real domination was boosted by the wave of technological innovation (the internal combustion engine, electrification, chemistry, etc) at the end of the 19th century and the beginning of the 20th (the so-called second industrial revolution). This improved and cheapened transportation and commodities in general and thereby widened the market and allowed for its deeper penetration. A wave of new technology always means a return to surplus profits, as it creates ample opportunities to increase productivity, to bring the individual value of a commodity under its market value. The surge of surplus profits stimulated a powerful acceleration of the concentration of capital. But in a unified market, with many real domination- competitors, the movement of capital over time tends to close the gaps in productivity, thereby eliminating the surplus profits. In order to withstand the leveling effect of competition, then as now, the most developed capitals strive for monopolistic market positions, to hold on to their surplus profits, or for the formation of cartels, agreements between competitors to prevent prices from falling. In Germany the number of cartels grew from 4 in 1875 to almost 1000 by 1914. In this way, the most developed capitals made the rest of the economy pay for their own declining rate of value creation.
As the scale of production of real domination outgrew the market available to it, a global overcapacity began to build. While not yet dramatic, it led to falling prices on the world market and attempts to conquer a larger part of that market through dumping practices (selling cheaper abroad, even below costs, than at home), especially by Germany. In the US, Senator Albert Beveridge expressed the needs of capital in 1897 as such: “American factories are making more than the American people can use; American soil is producing more than they can consume. Fate has written our policy for us; the trade of the world must and shall be ours”. ‘Fate’, or rather, real domination, wrote the same policy for the other developed capitalist nations. A global war for “the trade of the world” was in the cards, as Engels had predicted.
The slowing pace of new value creation threatened to cut off a substantial part of capital from valorization. Therefore capital looked for a safe haven to escape the pressure to devalorize. So the deflationary trend of capital in its commodity-form went hand in hand with an inflationary trend of financial assets, as their prices were bid up. In the US, the paper value of non-agrarian companies doubled between 1900 and 1912, while the GDP had an average annual growth of 3,9%. A global bubble of fictitious capital was beginning to form.
So the three ways in which the contradictions of the value-form block the accumulation process, were far from absent at the eve of World War I, even though they had not yet provoked a global systemic crisis. But apart from necessity, we must also consider the possibility created by real domination: the possibility to apply mass production technology to military production, the possibility to make use of a vast supply of recruits, already subjectivated for their role by the collective discipline of factory-work, all of which allowed capitalism to wage war considerably more effectively than before. But to explain why World War I happened when it did, as well as how it developed, a great number of factors have to be taken into account, including the weight of the past on the capitalist class, of an entire history in which economic gains and territorial conquest went hand in hand, of the successes of protectionism which reinforced the idea that state power was the key to market expansion. Other contingent factors played a role. However, instead of seeing those as competing explanations, we should look at how these factors interacted within the context of a a slowly building need to devalorize, caused by the maturation of the contradictions of the value- form.
A systemic devalorization, a vast destruction of value, did not have to happen in 1914. But it did. It marked indeed the beginning of a new phase in the trajectory of capital, in which expansive growth would again and again lead to the necessity of massive value destruction. We no longer call this period “decadence”, since this term is derived from, and points to, traditional Marxism’s teleological stage-ist view of history. Instead, we have been using terms like “capitalism’s era of social retrogression”, which focuses on the fact that in this period, while capitalism continues to grow and develop the productive forces, a stark antagonism develops between capitalist needs and social needs , between the survival of the value form and the survival of humankind.
NOTES
1Capital, vol 3, chpt 15, p.262 (New World Paperbacks)
2Capital, vol 1, “Results of the immediate process of production”, Appendix, p. 960 (Penguin edition)
3Capital, vol 3, op.cit. p. 230
4Capital, vol 3, op.cit. p. 229
5 Capital vol 3, chpt.14, p.233-234
6See: Artificial Scarcity in a World of Overproduction: An Escape that isn’t. In:Internationalist Perspective 54 (2010)
7 Capital vol 3, chpt.14, p. 240
8Capital ,vol 1, “Results…”, p.1034
9Capital, vol 1, chpt. 15, p.548
10 Idem
11 Idem
12Capital ,vol 1, “Results…”, p.1040
13Internationalist Perspective and the Tradition of the Communist Left, Part 2 (2014)
14See Capital, vol1, p.580
15Capital, vol 1. “Results..” p.1021
16Idem, p. 1026
17“I call surplus-value which is produced by the lengthening of the working day, absolute surplus-value. In contrast to this, I call that surplus-value which arises from the curtailment of the necessary labor-time (…) relative surplus-value”. (Capital 1, p.432). In other words, absolute sv increases the unpaid part of the labor-time, relative sv decreases the paid part.
18Capital, vol 1, chpt 16, p.646
19Cap 3, chapt 14, p.233
20Idem, p.235
21Cap1, p.533
22 Capital, vol.3, p. 238
23More on this in the text annexed to this one.
24More on this in Mac Intosh: “Theses on war” in Internationalist Perspective 40 – Fall 2002