Capital.150: part 3 – struggle!

In the third and final part of my review of last week’s Capital.150 London symposium on the modern relevance of Marx’s Capital Volume One 150 years after it was published, I want to cover some of the presentations not mentioned so far.  This is going to be a quick compendium that won’t do justice to the presenters’ papers or to the debates on them.  But at least you can follow up by reading the papers that I shall refer to.

In the session on imperialism, the some old debates among Marxists were revived. As far as I understood the argument presented by Marcelo Dias Carcanholo from the Federal University Fluminense in Rio de Janeiro Brazil (Carcanholo PP) , Marcelo reckoned the ‘dependency’ was deepening, driven by ‘unequal exchange’ in trade with imperialism and significant ‘super-exploitation’ of labour in the peripheral economies.  This makes it increasingly difficult for national capitalist forces to engage the working class in the peripheral economies in class collaboration.  Both ‘dependency’ (of ‘colonial’ economies on imperialist ones) and ‘super-exploitation’ of labour (in the south by the north) as the main generator of profit, are controversial issues and the debate continues on the nature of modern imperialist exploitation and its implications for class struggle.  Raquel Varela from Lisbon New University argued that Marx’s theory of primitive accumulation as expounded in Volume One had new angles to take on modern capitalism – existing still in the poorest areas of so-called emerging economies like India, but Marx’s theory of exploitation of labour by capital was now dominant globally.

Tony Norfield, author of the best-selling book, The City, on London’s role in imperialism spoke on Das Kapital, finance, and imperialism. Tony seemed to be arguing that Marx’s law of value had “evolved” in the modern world of imperialism and finance capital and now “financial markets show more directly what the capitalist world economy allows” and so “equity markets, bond yields and FX markets are now the key market levers”, not the profitability of capital in the non-financial sectors.  That’s because the large tech corporations are really financial companies and use their financial power to appropriate more surplus value than they generate from production.  But that also means there is less profit available for productive investment.

In my view, Tony’s thesis suggests that capitalism has changed to the point that it is no longer the capitalism of Volume One.  This seems to me to destroy the relevance of Marx’s value theory in understanding the laws of motion of capitalism.  For me, stock and bond market prices reflect the vicissitudes of fictitious capital (speculative capital), but because this capital is fictitious, it will collapse when the productive sectors collapse with insufficient profits- and that is Marx’s point (and also the point of Carchedi’s paper – see my part one post,

So, far from stock prices being the best measure of capitalist health, surely they usually reflect speculative bubbles in assets that are eventually revealed to have no or less value?  For example, currently stock market prices are daily registering new highs and yet economic growth remains low and investment in productive capital flat.  It is not that Marx’s law of value should give way to stock prices, but that fictitious capital will eventually give way to value.  Maybe Tony meant that Marxists should take into the account the huge increase in fictitious capital and its impact of profitability.  If so, then some authors, including myself, have done so by either adding in financial assets to productive assets as part of the net worth of corporations (Debt matters) or by deducting fictitious profits from total profits.

The final sessions of the symposium covered the future of capital and the future of labour in 21st century capitalism.  Alex Callinicos author of Deciphering Capital: Marx’s Capital and Its Destiny reminded us that the current debate over the relevance of Marx’s law of the tendency of the rate of profit to fall started among Marxists just as soon as the publication of Volume 3 of Capital.  For example, there was a debate over its relevance between Benedetto Croce and Antonio Gramsci, with the latter defending the law. Hannah Holleman in her contribution brought to our attention the big new contradiction in capitalist accumulation that Marx had only noted in Capital: the destruction and pollution of the planet by the rapacious drive for profit, which has now culminated in global warming and climate change, possibly irreversibly.

Eduardo Motta Albuquerque of the Federal University of Minas Gerais, Belo Horizonte Brazil showed that Marx in Volume One also paid close attention to technological developments in 19th century capitalism as a guide to new waves of development (Albuquerque Marx Technology Divide).  Machines in England led to the destruction of Indian industry; with industries at the centre of imperialism and agriculture at the periphery.  The expansion of rail transport was accompanied by the global expansion of capital and the tentacles of imperialism.  “In sum: each technological revolution can reshape the international division of labour”. So what will be those new “starting points” in the 21st century?

And Fred Moseley, a longstanding Marxist economist and author of the recent book Money and Totality, updated his view of the relevance of the rate of profit for the future of US capitalism.  Fred argued that a key element for the growth of profitability was the relation between productive and unproductive labour, the latter being that part of labour not generating value or surplus value but only appropriating some of it.  These sectors were finance, government and other non-productive industries, but also supervisory and management workers in productive sectors.

The increasing appropriation of surplus value by these sectors sounds the death knell of economic resurgence by the US economy as it restricts profit for productive investment. Only a destruction of capital in these sectors could release more value for productive investment (Moseley PP).  For more on this, see the excellent new paper by Lefteris Tsoulfidis and Dimitris Paitaridis (MPRA_paper_81542).

The final Wednesday afternoon session at the Capital.150 symposium in London considered what would happen to labour in modern capitalism and how Marx envisaged society and labour would change under communism, Tithi Bhattacharya looked at the nature of modern labour in “Social reproduction theory: conceiving capital as social relation”. This produced a vigorous debate on whether social reproduction theory (SRT), around the issues of the exploitation of women at home and capitalist pressures on working class families, was a useful addition to Marx’s labour power theory in Volume One or not.

Lucia Pradella from King’s College looked at the impact of imperialism and migration on the power of labour and workers’ struggles.  Imperialism has created new disasters on world labour and a massive increase in the migration from the poorer to richer areas.  But just as in the 19th century with the migration of Irish people to work in British cities, that produced dangerous prejudices and divisions, it also opened up positive opportunities for global solidarity – something Marx also strived for in his day between English and Irish immigrant workers. Beverly Silver from John Hopkins University considered Marx’s general law of capital accumulation and the making and remaking of the global reserve army of labour. 

Finally, top Marxist scholar, Michael Heinrich analysed the nature of Communism as expounded in Marx’s Capital and other works.  His was a powerful account of the fundamental basis of a Communist society: ‘from each according to his/her abilities; to each according to their need’.  Can this ever be achieved in the 21st century?  Michael tolds us the story of somebody visiting Marx at his home in his later years.  He asked Marx, in effect, ‘what must we do?’  Marx paused before replying and then said just one word: “Struggle!”.

22 thoughts on “Capital.150: part 3 – struggle!

  1. Url-correction needed for ‘, Michael Heinrich analysed the nature of Communism as expounded in Marx’s Capital and other works’.

  2. Michael,
    You have misrepresented my views on modern capitalism and imperialism, and on what I see as the ‘value’ of Marx’s theory, so I will summarise my main points here.
    1. Marx’s theory of value analyses the forms taken by social labour under capitalism.
    2. So he moves from the exchange-value of commodities, based upon socially necessary labour-time, to the origin of surplus value, to the circulation of total social capital, to the formation of an average rate of profit whereby prices of production do not equal values, to the tendency of the rate of profit to fall, to the forms of merchant capital, interest-bearing capital, credit and fictitious capital, ground rent, etc.
    3. Hence, Marx himself analysed changes in the form of value, going far beyond what was presented in Volume 1. This did not mean for him, or for me by the way, that the earlier analysis is invalidated.
    4. For example, the credit system can appear to create new value, via bank credit creation and fictitious capital. But things come crashing down when the production of surplus value is insufficient to validate the loans made or the claims of the owners of financial securities, etc.
    5. Nowhere do I argue anything even vaguely resembling the view that ‘stock prices’ are the ‘best measure of capitalist health’, a statement that would be stupid.
    6. My view is that one cannot use official statistics to measure the rate of profit in Marx’s sense. Although these data may give a clue about trends, there are many changes in data coverage and methods, and disputes as to which data series is best or how to amend it. More substantially, there is the problem that the profits showing up for one company (or country) will derive from surplus value produced elsewhere. These problems are not overcome by using data for many countries.
    7. My analyses of Apple, Amazon and Facebook illustrate how these companies use fictitious capital, and the commercial and financial system more generally, to boost their wealth and market power. These are examples of how the form of value has evolved, and the privileged position of corporations from an imperialist power. A ‘rate of profit’ approach does not get you very far in understanding these things.
    8. The chart on global financial assets. My suggestion was to use data for global public debt, equity capitalisation, loans outstanding, etc, as an indication of the total claims made on whatever underlying surplus value was produced in the global system. As I put it in my presentation, this is ‘another way of exploring the problems of moribund capitalism’ although ‘even this has limitations’. The size of financial ‘assets’ has obviously been boosted by central bank/government policy that tries to prevent a collapse in prices and another seizure in the financial system. The irony is that this bankrupts pension funds worldwide and encourages other forms of speculation.
    9. Summary view: what Marx called the ‘law of value’ is today mainly expressed, or at least expressed more directly, via the markets for financial securities, rather than in the markets for commodities. Of course, the latter are important. But the financial system – who can get into it and on what terms – also reflects power in the imperialist world economy.
    There are fuller discussions of these issues on my blog (eg and in my book, The City: London and the Global Power of Finance.
    Tony Norfield, 27 September 2017

    1. Tony, thanks. I was not sure what you meant in your presentation, so my comments were a sort of question to which you have replied comprehensively.

      On your points 1-4, I agree. On point 5, I thought so. On point 6, I think we can do better in measuring profitability than you think. But, as you say, we still can get a ‘clue’ about trends and that is important. On 7, I don’t agree that Marx’s law of profitability “does not get you very far” with understanding modern imperialism. 8. I generally agree but as I said we can probably incorporate financial assets into value measurement. 9). Again, is the law of value expressed “more directly” in financial markets than productive sectors? Productive assets are not just commodities and remain by far the largest segment of capital accumulation even now. So I do not agree that the market for productive assets is now less relevant than financial assets.

  3. Tony I cannot agree with your conclusion. Marx called financialisation by its correct name, capitalisation. By this he meant money making money, or more precisely, establishing a claim on the stream of surplus value emanating from production. You allude to this correctly elsewhere in your reply to Michael. Leverage is not value. The means to pay for this leverage may have emerged from value produced in the past which now trapped in the realm of speculation. Leverage can take two forms, tier one and tier two, direct or indirect, a bet on the movement of real assets or a bet on a bet. So what. They represent claims on the existing sources of surplus value whose ebb and flow will determine the stability of this upside down pyramid of speculation some of it comprising accumulated and preserved past value some of it pure credit. The higher the leverage the greater the stresses between it and the sources of revenue.The growth of speculation since 1996 has to do with the gusher of surplus value once globalisation accelerated. The high rise buildings in the City, New York, Shanghai originates from the dormitories and hovels of the 400 million plus new workers in Asia and their poverty wages. What breaks my heart is the squandering of this surplus by the bankers and speculators. In any case the whole pyramid is wobbling more precariously. Apple’s shares are in trouble as is Facebook and Alphabet as advertisers wise up to having been misled by these corporations. I cannot guarantee a revolution in five years but I can guarantee that the FAANG corporation will have been de-fanged by then.

    1. “The high rise buildings in the City, New York, Shanghai originates from the dormitories and hovels of the 400 million plus new workers in Asia and their poverty wages.”

      And not just there and those: the “thing” about finance– about the distribution of profit– is that it draw upon all sources of surplus value in the capitalist network– so those high rises originate, as values, just as much in the surplus value expropriated from fast food workers, auto workers, nurses in the US; miners in Gambia, Chile, and Jberg; laid off steel workers in the Ukraine– it draws from everywhere

  4. I have a very basic or even beginner’s question on profit. Is it or should it be measured in relation to total past investment including initial capital layout and yearly layouts since (which to me seems sensible) or only in relation to the current year’s layouts? I fully agree with the tendency of the rate of profit to fall, so that’s why the first suggestion seems the right one to me. And how do ordinary capitalists measure profits? Would be really nice if you could give a simple explanation.

    1. In the Marxian measure, profit is measured against the stock of capital built up in previous years depreciated over time plus the variable capital (cost of labour) in that year. Accountants for capitalists do something similar. But there is a debate among Marxists about whether to measure the stock of capital in current costs or in previous historic costs and whether to include variable capital or not, or to adjust for the turnover of capital and the inclusion of inventories (stocks of unfinished goods) ie circulating capital. For more on all this, see my paper: and also this by Peter Jones

  5. It is perhaps worth expanding a little on what Marcelo Dias Carcanholo said. Unfortunately the translator was struggling with some of the material so I’m not sure it came over very clearly, and his slides are rather concise. Marcelo noted that Marx was concerned with capitalism in general and also with the specific characterisation of capitalism in particular locations. For the kind of dependent capitalism found in Latin America (and elsewhere) there is therefore a need to apply the general principles elaborated by Marx to the concrete realities on the dependent case. Marcelo noted 5 components of dependency
    (i) super-exploitation of labour
    (ii) Unequal exchange (value transfer)
    (iii) Surplus transfer (interests, profits…)
    (iv) Regressive distribution of income and wealth
    (v) Social problems
    Marxist dependency theory (as opposed to the more familiar Weberian version of writers such as Cardoso and Faletto) doesn’t just enumerate these five elements but theorises their interconnections and their connections to the global circuits of capital [recalling what Samir Amin called the Worldwide Law of Value]. All the above components are part and parcel of capitalism and not just of dependency. With regard to the critical question of super-exploitation, dependent capitalism has to 1) raise the rate of expropriation of surplus value (a general requirement for captialism in general too) and 2) it does this in ways specific to its context. Perhaps Marcelo’s key point was that to speak of both elements with the same name (dependency theory) causes great confusion.
    This is all in the context of the appropriation of surplus value by
    1) Simple extraction of surplus value
    2) International differences in the value vs price of commodities
    3) Capital transfers
    [For those who read Spanish, Enrique Dussel’s recent re-presentation of Marxist (Critique of ) Political Economy in the Context of Latin America is worth consulting on this, as is his trilogy of three texts on Marx’s Drafts of Capital – only the second of which is available in English).
    He went on to reflect on the recent history of Latin America, asking why LA economies didn’t prosper during the neoliberal period, did during the earlier years of the “pink tide” governments and are again faltering with consequent deepening of the problems of dependent capitalism and the increase of super-exploitation. His answer was that it was the result of external factors: cheap credit and the primary commodities boom that coincided with the rise of the centre left governments but which is now ending. In the first phase of the “pink turn”, governments had increased income and hence mounted compensatory social policies while in the latter phase public debt has grown and the State has tried to correct this with what he called a fictitious capital crisis (see for example Alberto Acosta’s critical comments on Ecuador So there is now a situation of “disguised neoliberalism” as dependent capitalism can no longer offer the option of “progressive government”. What he didn’t do, but might have, was link this analysis to a critique of the neo-extractivism ( that has swept Latin America, promoted as much by the centre-left governments as by the neoliberals.
    I hope that helps elaborate the argument – though others might have other points / interpretations to make.

  6. Michael.
    You wrote:
    “…stock and bond market prices reflect the vicissitudes of fictitious capital (speculative capital), but because this capital is fictitious, it will collapse when the productive sectors collapse with insufficient profits- and that is Marx’s point.”

    First, can I suggest the concept of fictitious capital be extended to encompass brands, goodwill and other forms of intangible capital?

    The only things on company balance sheets that play a direct role in value creation are physical assets (buildings, equipment, stocks etc).

    The balance sheets of the companies with the highest market valuation listed on the LSE at the end of 2015 reported that on average only 10 per cent of their assets were physical.

    The rest were various forms of intangible asset.

    Intangible assets are there to assert shareholders’ claims on the value-creation of a company’s employees. They also make possible capital flight and tax avoidance.

    Second, “fictitious capital” is fictitious only in the sense that it is a purely legal construct and has no physical characteristics (even cash on a balance sheet is actually a group of electronic digits).

    But in all other ways, intangible (fictitious) capital plays the role that capital has through the ages: to act as the vector through which its owners can exploit value-creators.

    The fall in the long-term rate of profit will not automatically lead to a collapse in intangible (fictious) capital. That’s because its existence and growth is unrelated to the value-creation process in an individual firm.

    Firms — through the manipulation of accounting codes and facilitated by legislation that encourages the creation of “intellectual” capital —
    can manufacture an intangible capital independently of the rate of profit.

    This is because firms that make intangibles (they account for the ovewhelming majority of output in the UK) value themselves by projecting future net income streams and developing a net present value for those projected streams.

    They do not use actual or historic profit rates (which, by the way, can be manipulated by firms’ accountants) but projected future ones.

    The value of firms that make services listed on the LSE is, therefore, not based on actual or historic profit rates, but projected ones. These are inventions.

    But, I hear you say, what happens when the future becomes the present?

    Owners of of shares in these firms can sell them before actual profitability is recorded (as will ultimately happen with Google, Facebook, Amazon, Uber etc).

    Those that hold shares in such firms when reality hits ultimately deposit their losses on banks which are then bailed out by the state, the ultimate creator of intangible (fictitious capital).

    This is what happened in 2008/09. But it is a process that can last into perpetuity.

    It can only end when.intangible (fictitious) capital is abolished through the process by which it’s created: legislation and accounting codes.

    The simplest way for this to happen is for companies to required to hold at least half their assets in a tangible form (buildings, equipment, stocks). There are other ways.

    But the point is this: capitalism can survive falling actual long-term profit through intangible capital creation.

    It’s the system’s survival mechanism.

    1. “This is because firms that make intangibles”

      How can you make an intangible? Moreover how can you sell one? And if what you make is intangible then why would you ever need to employ anyone to make it?

      “But, I hear you say, what happens when the future becomes the present?”

      This isn’t what I am thinking, I am thinking if all this wealth is fictitious how the hell is Mark Zuckerberg so goddam rich!

      Facebook makes money primarily from advertising right? So its customers are not the people who use facebook (they are the lure and the stock) but the companies who pay for adverts, and what the internet provides is a platform for cheaper advertising and a wider audience for that advertising. The same goes for Google etc.

      To be honest the idea that Amazon are about to be liquidated shows an awful lack of knowledge about, well just about everything. That would only happen in competition with other Amazon like companies, a revolutionary new technology which somehow Amazon managed to ignore or a revolution from below!

      Whether you are bailed out by the state or not isn’t dependent on whether you produce intangibles or not, it is more a case of are you too big to fail, so car industries are often subsidised by the state, as is agriculture. In fact when have the so called producers of intangibles been bailed out?

      2008/9 was not the result of a crisis in the ‘intangible’ sector of the economy!

      1. We are so far apart in our conceptual thinking, there may not be much point in continuing the dialogue.
        But I’ll try to make a foundational point.
        Education, healthcare, financial services, management consultancy etc are all industries where payment is made for things that have no physical characteristics. In other words, they are intangibles.
        Although the output of these industries has no physical characteristics, they can be perceived both by those that create intangibles and those paying for them.
        The producers subjectively believe they are creating something.
        Buyers subjectively they are getting something in return for payment.
        Intangibles are created (a better word than made) by people interacting constructively with each other (eg teacher+pupil; doctor+ patient; financial service provider + client).

      2. I agree with we are far apart because for you the energy consumed in being a Teacher, the psychical work that goes into drawing up a class schedule, a teaching method, marking, writing on the blackboard or computer, the energy needed to provide students with knowledge is not energy at all, the only expenditure of energy that counts in your conceptual scheme is that of the moving hand or moving machine part.

        In fact for you teaching, healthcare etc is not so much systems developed and refined to scientific precision but are a sort of mystery that can’t ever be grasped.

        Are you from Norwich by any chance?

        As for your statement that Amazon are about to implode, or how did you put it, owners will sell their shares, did you known that Amazon are responsible for most of the cloud computing infrastructure?

        Although I suspect for you cloud computing is another one of those mysteries of the universe that humans harness nut can never understand!

        I don’t know about anyone else but a doctor providing healthcare makes a lot more tangible sense to me than for example, novelty sunglasses!

      3. “But I’ll try to make a foundational point.
        Education, healthcare, financial services, management consultancy etc are all industries where payment is made for things that have no physical characteristics. In other words, they are intangibles.
        Although the output of these industries has no physical characteristics, they can be perceived both by those that create intangibles and those paying for them.
        The producers subjectively believe they are creating something.
        Buyers subjectively they are getting something in return for payment.”

        Except, of course, the capital relationship is not in the “buyer-seller” exchange of tangibles or intangibles. The capital relationship is in the employer, laborer exchange.

        So if that exchange, that purchase of labor-time by the employer leads to the expropriation of a surplus-labor time, we have the production of a surplus value embodied in a tangible relationship.

        Management consulting, financial advice do not produce surplus values, but claim a portion of the total surplus value, just as any other means of circulation claims a portion thereof.

      4. 1 What is a “capital relationship”?
        2 In intangibles, value is created by people (interacting constructively).
        The output — which is intangible and consequently unquantifiable — is shared and a payment is made.
        So there’s value creation and exchange.
        Just like in tangibles.

      5. 1. The capital relationship is the exchange of labor-power for a wage, a value equivalent to that required to reproduce the laborer.

        2. I’m not arguing that there aren’t intangibles or that some intangible don’t produce a surplus value. Nurses, etc. produce surplus value expressed in “intangibles.” However, the so-called “intangibles” like management consulting and financial advice don’t produce a surplus value, not because these are “intangibles” but because of their function, like finance in general, or advertising, or retail merchandising.

      6. “The output — which is intangible and consequently unquantifiable”

        It isn’t unquantifiable at all, as Marx say in relation to skill it is quantified by experience and having systems in place etc etc etc. The output of Nurses are absolutely measured by management, this has been facilitated by technological change. In the UK a feature of Blairism and neo liberalism actually has to bring such measuring into the so called ‘intangible’ jobs. But what you actually mean by intangible is not straightforwardly measured. That may be the case but it isn’t intangible.

        There are no intangibles period.

        A financial advice company employing financial advisers to offer the commodity of financial advice is potentially every bit as value creating as a firm offering novelty sunglasses!

      7. You said there are no intangibles.
        I say that it’s intuitively obvious they’re everywhere.
        That’s an unbridgeable cognitive gap.
        But I hope you won’t mind if I continue to pose my perspectives!

  7. Couple of things– Moseley’s been flogging that horse, about “unproductive labor” consuming too much of the surplus value, for years, while, during those years, capital has continued to expand, and contract, record increases in profit, and declines in profit. And so what? If we were dealing with quantum theory, I guess we’d have to ask is the horse dead, or is the horse alive? Fortunately, we’re not.

    Is there a structural obstacle to capital accumulation in this supposed unproductive consumption? Perhaps. Just as there is a structural obstacle to capital accumulation in the tendency of the rate of profit to decline. Neither however represents a vital obstacle to capital accumulation. Neither exists separate and apart from the “offsetting tendencies” the overcome the obstacles, temporarily, by re-erecting them further down the road.

    The structural tendency that manifests itself in slower growth, lower rates of investment, more intensive exploitation of cheaper labor sources is not identical with, does not become, the collapse of capital.

    And as for “fictitious capital”–usually a term used to describe the various credit mechanisms capitalism generates, this “fictitious capital” serves the same purpose credit in general serves, which is to bridge the gaps caused by the differing turnover rates among capitals. As such, these are mechanisms distributive of the general pool of surplus value. They are no more or less fictitious, in and of themselves, than money is. They are no less fictitious than any form of capital is, once demystified of its fetish powers.

    The point being, not that fictitious capital does or doesn’t exist, does or does not expand and contract, is or is not some sort of impairment on accumulation, but rather that ALL capital becomes fictitious when in cannot reproduce itself both quickly and profitably enough.

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