www ISR
For ISR updates, send us your Email Address

Back to home page

ISR Issue 49, September–October 2006


Capital Volume 1


CAPITAL IS Marx's masterpiece, a work he labored over for more than thirty years, but never finished. Volume 1, which first appeared in German in 1867 with the title Das Kapital, analyzes the process of capitalist production and was the only part of it published during his lifetime.1 Capital has a largely undeserved reputation for being a dry and difficult work. In fact, as one recent academic commentator put it, Volume 1 is “the greatest revolutionary work of the nineteenth century, an insurrectionary work of the highest order.”2

It is full of biting wit and passionate denunciations of the brutality of nineteenth-century capitalism, based on a penetrating account of its inner workings. Marx's analysis of capitalism in Capital provides the theoretical foundation for his political conclusions-that capitalism cannot be fundamentally reformed, that it must be overthrown by a revolution led by the working class, and that it must be replaced by a socialist society in which production is democratically controlled to meet human needs, not to make profits for the few. As the Marxist writer Hal Draper once succinctly put it:

Capitalism cannot, in the long run, solve the economic problem of providing a human life for the mass of the people.... This proposition is the basis of the class approach of Marxism. Without it you have no class approach, and cannot have one. If it is not true, there is no reason not to be a good liberal.3
Capital explains why being a “good liberal” is not sufficient.

The grain of truth in the claim that Capital is a difficult work to read, is that the first nine chapters are relatively abstract, although much of the rest of the book consists of gripping descriptions of how capitalism functions and a historical analysis of its origins.4 The opening chapters discuss commodities, value, money, capital, surplus value, and exploitation. They are vital because they provide the framework to show that the problems that Marx goes on to describe are not mere abuses or products of temporary or accidental historical circumstances, but rooted in the essential nature of capitalism itself.

It would, however, oversimplify the structure of Capital to suggest that Marx first sets out an abstract, theoretical framework, which he then straightforwardly applies to analyze and explain the workings and history of actually-existing capitalism. In an afterword to the second German edition of Volume 1, published in 1873, Marx makes clear that in presenting his results he employs a “dialectic method.” What this means is explained by the philosopher Allen Wood:

The dialectical structure of Marx's economic theory is perhaps best viewed as a hierarchy of theoretical models, ascending by successive approximation from very abstract models representing the basic social forms present in modern bourgeois society up to fuller, more detailed models of this society. The idea is to use the more abstract models to explain some things we can directly observe, and to show how their workings generate the complicating features which, when we integrate them into our theory, permit us to construct richer models which approximate more closely to other aspects of observable reality.5
In other words, the theoretical framework that Marx employs is itself enriched and articulated in the course of applying it to understand the concrete realities of capitalism. This is important to remember, because although Marx believes his initial abstractions capture the most important underlying features of capitalist economies, they cannot be expected to predict or explain all the complexities of modern economic life without considerable qualification, modification, and supplementation.6

Commodities, value, and money

Capital opens with the observation that the wealth of capitalist societies appears to us in the form of “an immense accumulation of commodities” (35),7 so Marx begins by examining the nature of a commodity-in other words, anything that satisfies some human want and that is produced in order to be exchanged or sold. Borrowing terminology from the Scottish philosopher and economist Adam Smith (1723-90), Marx calls the usefulness of a commodity (its capacity to satisfy some specific human desire) its “use value,” which he contrasts with its “exchange value,” the quantity of other commodities for which it can be exchanged at some particular time. So, for example, a pair of shoes may have the use value of allowing me to cover my feet in a comfortable way and an exchange value, expressed in dollar terms, of $100, which may be equivalent to twenty-five boxes of breakfast cereal, four gallons of paint, two electric toasters, a skateboard, and so on.

This, though, raises an obvious question. Why is it that such physically different items can have the same exchange value? Marx answers this question by making two assumptions that have generated enormous controversy. First he proposes that, underlying its exchange value, every commodity has a value, which is a measure of the cost of producing it to society as whole and which is equal to the quantity of socially necessary labor-time needed to produce it.8 By “socially necessary” labor-time Marx means the time “required to produce an article under the normal conditions of production, and with the average degree of skill and intensity prevalent at the time.” (39) Second, Marx proposes that the value of a commodity determines its exchange value, so that the exchange value is in some sense a reflection of the underlying value-“the only form in which the value of commodities can manifest itself or be expressed.” (38) Marx calls his second assumption “the law of value,” and his whole analysis of value is for obvious reasons generally known as the labor theory of value (although this is a label that Marx himself never uses for his own views).9

In the opening chapters of Capital, Marx discusses a highly abstract form of commodity production in which there are no capitalists and workers, but simply independent producers exchanging the goods they make in the marketplace. In this simplified model, there is perfect competition, the supply of any commodity can always be increased to meet demand, and there are no production costs other than labor. In such a model, exchange value will not simply reflect value, it will, on average, be directly proportional to it. The fact that Marx begins with this simplifying assumption has confused many of his critics (and quite a few of his defenders as well). One of the commonest criticisms of Marx is to cite examples of commodities whose exchange values are obviously not proportional to the socially necessary labor time it takes to produce them, such as uncultivated land or works of art.10 But Marx's first simple model is not intended to cover such cases. As Allen Wood notes, “Marx restricts his initial model to freely reproducible commodities because he regards the production of such commodities as the dominant economic form in bourgeois society, and hence views the laws of commodity exchange as basic to understanding the social forms in which land, rare goods, and so on also become objects of exchange.”11

Another common criticism is that the argument that Marx seems to make for the law of value in the opening section of Chapter I is not valid. Marx appears to argue that exchange value must be determined by value since “the exchange-value of commodities must be capable of being expressed in terms of something common to them all” and “[t]his common 'something' cannot be either a geometrical, a chemical, or any other natural property of commodities.” (37) Critics have responded that exchange value may simply reflect the subjective preferences of consumers, rather than something common to the commodities being exchanged, and that even if they do have something in common, Marx has not established that this common factor must be socially necessary labor time. But in fact Marx did not take himself to have proved the law of value by this “argument.”12 As he put it in a letter to his friend Ludwig Kugelmann (1830-1902) shortly after Volume 1 was first published, “The chatter about the need to prove the concept of value arises only from complete ignorance both of the subject under discussion and of the method of science.”13 Instead, the law of value is part of a broader scientific hypothesis that can only be evaluated in terms of its ability to explain the actual workings of capitalist society-it thus cannot be definitively proved before it has been applied. As Marx puts it, “even if there were no chapter on 'value' at all in my book, the analysis I give of the real relations would contain the proof and demonstration of the real value relation.” More precisely, Marx sees some very general reasons why something like the law of value must be true, and the question for science is the form that this law must take in a particular set of historical circumstances. The general reasons he appeals to have to do with the fact that every society must distribute labor to different sectors of production appropriately, and under capitalism this distribution is largely accomplished through the mediation of exchange values.14

Every child knows that any nation that stopped working, not for a year, but let us say, just for a few weeks, would perish. And every child knows, too, that the amounts of products corresponding to the differing amounts of needs demand differing and quantitatively determined amounts of society's aggregate labor. It is self-evident that this necessity of the distribution of social labor in specific proportions is certainly not abolished by the specific form of social production; it can only change its form of manifestation. Natural laws cannot be abolished at all. The only thing that can change, under historically differing conditions, is the form in which those laws assert themselves. And the form in which this proportional distribution of labor asserts itself in a state of society in which the interconnection of social labor expresses itself as the private exchange of the individual products of labor, is precisely the exchange value of these products. Where science comes in is to show how the law of value asserts itself. So, if one wanted to “explain” from the outset all phenomena that apparently contradict the law, one would have to provide the science before the science.15
Marx is well aware that in capitalist economies exchange value (expressed as a price) and value tend to systematically diverge from one another (“average prices do not directly coincide with the values of commodities” [166]), and he aims to explain some of the reasons why this is so.16 But unlike mainstream economists, Marx's main aim is not to develop a theory that can predict market prices (generally a hopeless goal, because of the large number of variables involved), but to develop an account of the underlying social relations that govern capitalism. Marx argues that in a capitalist economy there is a tendency to see what are in reality relations between people as simply relations between commodities, which “appear as independent beings endowed with life, and entering into relation both with one another and the human race.” (72) Marx calls this confusion the “fetishism of commodities.” One purpose of the law of value is to dispel this confusion and make the underlying social relations clearer.17

Marx discusses exchange value at length in Part I of Capital Volume 1, arguing that a society based on simple commodity production will develop the need for a “universal measure of value” (94), in other words money. So a society based on direct commodity exchange (or barter) will give way to one in which commodities are exchanged for money, which in turn can be used to buy new commodities. The stage is now set to explain how money becomes capital.

Capital, surplus value, and exploitation

One of the distinctive features of capitalism is that, unlike earlier forms of society, it is driven by the need to produce exchange values rather than use values. In pre-capitalist economies, most production is either for immediate consumption or to satisfy the desires of members of the ruling class, whether these are slave owners, feudal lords, or some other group of exploiters. Decisions about what to produce are based on what specific use values are needed. Of course some items are produced to be sold, but typically this is done so that the sellers can then buy products that they want but are unable (or unwilling) to make themselves. So one producer may produce apples to sell and use the money obtained to buy pots or furniture. In exchanges of this form, commodities are sold for money, which is then used to buy more commodities. In Marx's notation, the process is expressed as C-M-C. The role of money in transactions of this type is purely as an intermediary. “The result of the whole process is, so far as concerns the objects themselves, C-C, the exchange of one commodity for another, the circulation of materialized social labor. When this result is attained, the process is at an end.” (105-106)

In capitalism, however, things are different. The goal of capitalists is to make money and they buy commodities not, typically, to use them themselves, but to sell them to others for a profit. The typical process of exchange is not C-M-C, but rather M-C-M. In other words, money is used to buy commodities, which are then sold to get more money. Now this sort of exchange would obviously make no sense if the amount of money that the capitalist was left with at the end of the process were the same as the amount used to buy commodities at the beginning. The capitalist aims to have more money at the end of the process than at the beginning-M' rather than M, where M' is greater than M. So under capitalism, the exchange process takes the form M-C-M'.18 Money thus plays a very different role in a capitalist economy than it does in a simple commodity-producing economy. As Marx says, “The value originally advanced…not only remains intact while in circulation, but adds to itself a surplus-value or expands itself. It is this movement that converts it into capital.” (150) Or to put it more succinctly, “money which begets money, such is the description of capital.” (155)

One of the consequences of the difference between simple commodity exchange and exchange under capitalism, is that capitalism contains a distinctive drive to expand.

The repetition or renewal of the act of selling in order to buy is kept within bounds [in a society governed by use values] by the very object it aims at, namely, consumption or the satisfaction of definite wants, an aim that lives altogether outside the sphere of circulation. But when we buy in order to sell [as in capitalism], we, on the contrary, begin and end with the same thing, money, exchange-value; and thereby the movement becomes interminable. (151)
One recent commentator notes, “in most historical human societies, being use-value driven, unlimited desire for wealth is regarded as a vice, indeed an unnatural perversion of human nature. The Bible and Aristotle call it pleonaxia (covetousness), and the European Middle Ages follow them. Buddhism and Taoism likewise condemn this vice. But in the capitalist world, it is regarded as a virtue.”19 In medieval Europe, the miser who amassed great wealth was regarded as abnormal and ridiculed, but under capitalism the same behavior is praised. “This boundless greed after riches, this passionate chase after exchange-value,” observes Marx, “is common to the capitalist and the miser; but while the miser is merely a capitalist gone mad, the capitalist is a rational miser.” (153)

How, though, are capitalists able to make money by buying and selling? Where does the surplus value that makes M' greater than M come from? Some individuals may be able to make a profit by legitimately buying cheap (when there is a glut and prices are low) and selling dear (when there is a shortage and prices are high). Others may use deceptive practices to do the same. But this cannot explain the origin of surplus value in the economy as a whole, since if some make money by buying cheap and selling dear, others must lose it by selling cheap and buying dear. “The creation of surplus-value, and therefore the conversion of money into capital, can consequently be explained neither on the assumption that commodities are sold above their value, nor that they are bought below their value.” (161) All that such transactions can do is to redistribute value from one individual to another; they cannot create new value.

The source of surplus value lies in what takes place after capitalists buy commodities and before they sell them. Most capitalists do not simply buy and sell the same commodities; they use the commodities they have bought to produce something new. Wood and screws are used to produce a table. Steel, rubber, glass, and many other components are used to build an aircraft. But of course it is not capitalists who actually produce these items. They are produced, instead, by workers, who are hired to contribute their labor to the process of production. So capitalists buy commodities and hire workers, and the labor of the latter on the former results in new commodities with an increased value. This is how capitalists are able to make a profit. What they purchase is labor power-the capacity that workers have to perform labor. Now if we accept Marx's account of value, the value of labor power is equivalent to the labor time socially necessary to produce it (and not to the amount of labor it is capable of performing)-in other words the labor needed to clothe, feed, educate, and so on, workers so that they are capable of performing the work that they are hired to do.20 Marx's key insight is that the value of labor power is less than the value of the labor that it can perform. For instance, it may take on average four hours of socially necessary labor time to prepare a worker to perform eight hours of labor. Because of this, labor power is a commodity that can add more than its initial value during the process of production. By contrast, other commodities can add to the final product no more than their initial value, because they perform no labor in the process of production-they do not work but are worked upon.

Marx's explanation of the origin of surplus value demonstrates that capitalist profits are the result of exploitation, i.e., paying workers less than the value they add to the commodities that they produce. Exploitation is thus built into the very nature of capitalism, even though the manner in which it takes place is different to (and often less obvious than) the manner of exploitation in earlier class societies. As Marx put it, “The essential difference between the various economic forms of society, between, for instance, a society based on slave-labor, and one based on wage-labor, lies only in the mode in which the surplus-labor is in each case extracted from the actual producer, the laborer.” (217) The extraction of surplus value is the special form that exploitation takes under capitalism. “[C]apitalistic private property…rests on exploitation of the nominally free labor of others, i.e. on wage-labor.” (762)

If workers are exploited by capitalists, why do they sell their labor power to them in the first place? The simple answer is that they have no choice. Workers have the ability to perform labor, but unlike, say, feudal peasants, they do not possess the means of labor, such as tools, raw materials, or a workplace. In order to gain access to these things, workers have no choice but to sell their labor power to those who control them, the capitalists. From the capitalists' point of view, the wage bargain is a fair one, at least so long as workers are paid the market value of their labor power, but they are nevertheless able to take advantage of the workers' situation by paying them less than the value that their labor contributes in production and thereby extracting surplus value from them. For this reason Marx writes that even if capitalists purchase labor power “at its full price, so that equivalent is exchanged for equivalent, yet the transaction is for all that only the old dodge of every conqueror who buys commodities from the conquered with the money he has robbed them of.” (582)

Absolute and relative surplus value

Marx calls the money spent on hiring workers “variable capital” (v), because the labor that they perform adds value to the other commodities used in production, and he calls the money spent on these other commodities “constant capital” (c), because they do not add any new value during production. The rate of surplus value, or of exploitation, in an industry or workplace at any given time can then be represented as s/v, where s stands for the surplus value added in production. The greater the ratio of surplus value to variable capital, the greater the rate of exploitation. One can also think of the rate of exploitation in terms of a division in the workday. During the part of the day it takes workers to produce value equal to what they are paid, they are performing “necessary labor.” During the rest of the day, they are performing “surplus labor,” which is the source of surplus value. The more time spent on surplus labor during the day, the higher the rate of exploitation.

What concerns capitalists even more than the rate of exploitation, however, is the rate of profit-the return they get on their total investment in both constant and variable capital, or s/(c + v). Competition between capitalists forces each capitalist business to raise its rate of profit as high as it can, and this in turn means that it will attempt to keep the rate of exploitation high. In other words, capitalists want to get the largest amount of surplus value they can for a given investment in variable capital (i.e., labor power). Or, as Marx puts it in a vivid metaphor, “Capital is dead labor, that, vampire-like, only lives by sucking living labor, and lives the more, the more labor it sucks.” (233) Now, there are two ways for capitalists to increase the rate of exploitation. One is for them to increase the length of the working day or to decrease wages, so that for the same initial investment they get more hours of labor. Marx calls this increasing “absolute surplus value.” The second way to increase the rate of exploitation is to reduce the length of time that workers must work in order to produce the value of their own labor power. Marx calls this increasing “relative surplus value.”

In a chapter on “The Working Day,” Marx chronicles how the capitalists of his time attempted to increase the length of the working day as much as possible and how workers fought to reduce it. Capitalists, having paid for a day's labor-power, claim they are owed as many hours work as is possible. In response, Marx cites “the voice of the laborer”:

By an unlimited extension of the working-day, you may in one day use up a quantity of labor-power greater than I can restore in three. What you gain in labor I lose in substance. The use of my labor-power and the spoliation of it are quite different things…. You pay me for one day's labor-power, whilst you use that of 3 days. That is against our contract and the law of exchanges. (234)21
Thus, according to Marx, there is a clash of “right against right,” with each side claiming that justice is on their side.

Between equal rights force decides. Hence it is that in the history of capitalist production, the determination of what is a working-day, presents itself as the result of a struggle, a struggle between collective capital, i.e., the class of capitalists, and collective labor, i.e., the working class. (235)
In the lace industry of Marx's day, which was still unregulated, children as young as nine worked for up to twenty hours a day. In the pottery industry, seven-year-olds worked fifteen hours a day. Marx also describes how atrocious working conditions destroyed the health of workers in many industries, including phosphorous poisoning caused by match production-“Dante would have found the worst horrors of his Inferno surpassed in this manufacture.” (246)

By the early nineteenth century, the workday in England was generally considerably longer than it had been in the fourteenth century. Indeed, for several centuries, “statutes tried to lengthen it by compulsion” (271), but it was not until the late eighteenth century with “the birth of machinism and modern industry” that “[a]ll bounds of morals and nature, age and sex, day and night, were broken down.” (278) Attempts to limit the workday by legislation were attacked by capitalists and their intellectual supporters as economically harmful, just as efforts to increase the minimum wage are attacked by right-wingers today.22 In England, it was not until 1833 that the Factory Act restricted the workday in the textile industry to fifteen hours for adults, twelve hours for children between thirteen and eighteen, and eight hours for those between nine and thirteen. The act was passed only after many years of working-class resistance, and after a number of distinguished doctors gave testimony to the House of Commons detailing the cruelty and danger of the factory system. Even then, Marx points out that it was not enforced for more than a decade. When the workday was reduced to ten hours for women and children in 1847, employers slashed wages by 25 percent and forced workers to sign petitions against the law. It was not until the 1860s that the law was extended to cover other industries.

Marx's discussion of the brutal working conditions in England in the early nineteenth century is not just of historical interest. In the first place, similar conditions exist today in all economically developing countries, including China, India, Indonesia, and Brazil, and even in some economically more advanced countries, including the United States. According to one report,

A 1989 nationwide sweep by government inspectors uncovered wide-scale abuses of child labor laws [in the U.S.].... In large urban centers...[i]nspectors have found nineteenth-century-style sweatshops where poor immigrants-young girls of twelve years and above-hold daytime jobs, missing out on school altogether. And a million to a million and a half migrant farmworker children-some as young as three and four years-are at work in the nation's fields.23
But more than this, Marx is pointing to a tendency built into the very nature of capitalism, whether or not this tendency is temporarily or imperfectly restrained by legislation. In the mid-1970s, for example, when U.S. capitalism began experiencing a crisis of profitability, business leaders went on an aggressive offensive to push down wages and weaken unions. BusinessWeek wrote at the time that American workers would have to “swallow…the idea of doing with less so that big business can have more.”24 Today, real hourly wages in the U.S. are lower than they were in 1973, and workers have only been able to maintain their living standards by working longer hours, representing a huge gain in absolute surplus value for American capitalists.25

But capitalists can also increase their rate of profit by accumulating more relative surplus value. In fact, Marx argues that as capitalism develops, there is a shift toward increasing relative surplus value as long work hours threaten to destroy the workforce, and as more sophisticated production techniques are introduced. Relative surplus value is increased when the amount of labor required to produce the goods and services that workers need in order to be ready to work, is reduced, typically through some technical innovation. When commodities can be produced with less labor, their value declines. Since the value of labor power is equal to the value of the inputs needed to produce it, if the value of the inputs falls, then the value of labor power does as well. Suppose that at one time it took four hours' worth of labor to produce a day's worth of labor power, but that due to developments in agriculture, which allow food to be produced more efficiently, the amount of labor needed is reduced to three hours. This means that it now takes workers one hour less to replace the value of their wages,26 and that they can produce a correspondingly greater quantity of surplus value for their employer during a workday of the same length.

Since relative surplus value is produced as a result of an increase in labor productivity, Marx goes on to trace the development of capitalist production, from the simple technology acquired from pre-capitalist society to modern industry. He argues that, as productivity and mechanization increase, the degree of control that workers have over their work activities grows smaller and smaller. Marx also shows that as capitalism develops, most production comes to be organized in larger and larger workplaces, in which workers are increasingly dependent on one another in a complex division of labor.

Accumulation and crises

We saw previously that capitalism is driven by the pursuit of exchange value, which makes it fundamentally different from earlier forms of society. Capitalists, according to Marx, obey the maxim “Accumulation for accumulation's sake, production for production's sake.” (595) This is not, fundamentally, because they are greedy individuals (though most of them may be), but because the logic of competition with other capitalists forces them to act in this way. This is why Marx calls the capitalist a “rational miser.”

Fanatically bent on making value expand itself, [the capitalist] ruthlessly forces the human race to produce for production's sake; he thus forces the development of the productive powers of society.… [H]e shares with the miser the passion for wealth as wealth. But that which in the miser is a mere idiosyncrasy, is, in the capitalist, the effect of the social mechanism, of which he is but one of the wheels. Moreover, the development of capitalist production makes it constantly necessary to keep increasing the amount of the capital laid out in a given industrial undertaking, and competition makes the immanent laws of capitalist production to be felt by each individual capitalist, as external coercive laws. It compels him to keep constantly extending his capital, in order to preserve it, but extend it he cannot, except by means of progressive accumulation. (592)
Today, the most important capitalist businesses are organized as corporations, with boards of directors, managerial hierarchies, and shareholders, but they continue to be motivated in the same “fanatical” way. Indeed, the business corporation is legally required to maximize profits on behalf of its shareholders, without regard for its effects on others (so long as these effects do not compromise profits), leading the legal scholar Joel Bakan to brand it a “pathological institution.”27 What leads it to behave in this way, however, are not the legal requirements, but the need to compete successfully with its business rivals. The legal framework within which it acts is simply a consequence of this underlying economic reality. That is why the behavior of corporations can only be fundamentally changed by changing this economic reality.

Capitalists who do not ruthlessly (or successfully) pursue profit, will be out-competed by those that do and will either go out of business, or be bought out by their more successful competitors. Capitalist firms thus tend to get both bigger (or more concentrated) as a result of reinvesting surplus value, but also fewer (or more centralized) as the successful ones absorb the failures. In the contemporary world that is more evident than ever, with a handful of multinational corporations whose assets are greater than the Gross Domestic Products of many countries, dominating the world economy.

Competition between capitalists is the motor of capitalism's phenomenal growth, but it is also, according to Marx, its Achilles' heel. Marx does not take up the question of capitalist crises in detail until Volumes 2 and 3, where he argues that the unplanned nature of capitalist production leads inevitably to a cycle of boom and slump and, since labor is the source of value, to a general tendency for the rate of profit to fall as industry becomes more capital intensive.28 However, early in Volume 1 he does offer a brief but devastating criticism of the view that supply and demand will always smoothly balance out in a market economy.

Nothing can be more childish than the dogma, that because every sale is a purchase, and every purchase a sale, therefore the circulation of commodities necessarily implies an equilibrium of sales and purchases…. No one can sell unless some one else purchases. But no one is forthwith bound to purchase, because he has just sold…. If the interval in time between the two complementary phases of the complete metamorphosis of a commodity become too great, if the split between the sale and the purchase becomes too pronounced, the intimate connection between them, their oneness, asserts itself by producing-a crisis. (113-14)
The characteristic form that crises take in capitalism is overproduction-too many commodities are produced than can be profitably sold on the market. As a consequence, workers are laid off, reducing the demand for consumer goods. The producers of such goods then have to reduce their own production, laying off more workers and cutting back on orders for means of production. The system spirals downward and moves into recession. Paradoxically, however, the waste to which this gives rise can permit the economy to recover. The pressure of unemployment forces workers to accept lower wages and worse working conditions,29 while the smaller, less efficient capitals go out of business. Huge amounts of accumulated capital are written off or destroyed. Businesses that survive can buy plant and equipment more cheaply, investment begins to take off once more, and the cycle of boom and slump begins again.

I noted earlier that the ultimate test of Marxist economics is its ability to explain actual events. During the past thirty-five years, the U.S. and world economies have suffered a series of sharp crises, for which economists drawing on Marx's ideas have been able to offer clear explanations.30 It is surely a strong count in favor of Marx's ideas that they can be used to offer compelling analyses of large-scale economic developments over the last several decades, something that mainstream economists have been unable to do.

From primitive accumulation to socialist revolution

The final section of Volume 1 answers in detail the question of how capitalism emerged in Britain, and how, in particular, a minority of the population came to control the means of production, leaving the majority owning nothing more than their own labor power. Marx begins by dismissing the bourgeois fairy tale about how this supposedly came about.

In times long gone by there were two sorts of people; one the diligent, intelligent, and, above all, frugal elite; the other, lazy rascals, spending their substance, and more, in riotous living…. And from this original sin dates the poverty of the great majority that, despite all its labor, has up to now nothing to sell but itself, and the wealth of the few that increases constantly although they have long ceased to work. Such insipid childishness is every day preached to us in the defense of property. (713-14)
In reality, the birth of capitalism required the forcible and brutal expulsion of much of the peasantry from their land, in response to new economic opportunities in the late fifteenth and early sixteenth centuries.

The rapid rise of the Flemish wool manufactures, and the corresponding rise in the price of wool in England, gave the direct impulse to these evictions. The old nobility had been devoured by the great feudal wars. The new nobility was the child of its time, for which money was the power of all powers. (718)
The expropriations accelerated with the confiscation of church lands during the English Reformation and resumed again in Scotland in the eighteenth century. Reduced to vagabonds, the former peasants were further brutalized by harsh laws passed by successive monarchs.

Thus were the agricultural people, first forcibly expropriated from the soil, driven from their homes, turned into vagabonds, and then whipped branded, tortured by laws grotesquely terrible, into the discipline necessary for the wage system. (737)
The process of expropriation thus laid the basis for capitalist agriculture in the countryside, while creating a workforce for industrialists in the towns and a domestic market for food, clothing, and other products. Primitive accumulation was given a further boost by the influx of wealth from the slave trade and the first wave of European colonial exploitation. As Marx remarks, “the veiled slavery of the wage-workers in Europe needed, for its pedestal, slavery pure and simple in the new world.” (759-60) No one who reads Marx's account of the origins of capitalism can come away with the idea that capitalism is in any sense a “natural” system. Capital, he writes, comes into the world “dripping from head to foot, from every pore, with blood and dirt.” (760)

Having explained the expropriation on which capitalism was based, Marx goes on to look forward to the future expropriation of the capitalists themselves. Capitalism produces “misery, oppression, slavery, degradation, exploitation,” but it also produces a disciplined working class whose interests are increasingly at odds with those who control the system.

The monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with, and under it. Centralization of the means of production and socialization of labor at last reach a point where they become incompatible with their capitalist integument. Thus integument is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated. (763)
A final word

Marx's Capital reveals the underlying dynamic of capitalist production and provides socialists with a set of concepts that are indispensable for understanding the development of capitalist society. But the categories can't simply be applied in a mechanical way. As capitalism develops it assumes new forms, and each new generation of Marxists is faced with the challenge of developing and extending Marx's theory to understand those changes. Capital cannot give us all the answers, but it does offer us an indispensable scientific framework for attempting to find them ourselves.

Phil Gasper is a professor of philosophy at Notre Dame de Namur University in northern California. He is the editor of The Communist Manifesto: A Road Map to History's Most Important Political Document (Haymarket Books, 2005) and on the editorial board of the ISR.

1 Volumes 2 (1885) and 3 (1894) were prepared from Marx's notes by his friend and collaborator, Frederick Engels. Volume 2 (on the circulation of capital) was nearly complete at the time of Marx's death in 1883. (Volume 2 contains Marx's theory of the business cycle, based on a division of the economy into a capital-goods and a consumption-goods sector and a study of their tendencies toward imbalance.) But Volume 3 (which deals with capitalist production as a whole, and contains the basis of Marx's theory of capitalist crisis) existed only in a much sketchier form, and it took Engels a decade to turn it into a readable work. In accordance with Marx's plans, Engels also intended to use material from notebooks Marx compiled in the early 1860s to produce a fourth volume, with Marx's analysis and critique of the ideas of earlier political economists, but he was unable to do so before his own death in 1895. A version of these notebooks with the title Theories of Surplus Value was first published by the German Marxist Karl Kautsky between 1905 and 1910, and is sometimes referred to as Capital Volume 4. This article will focus almost exclusively on the ideas contained in Volume 1.

2 Jonathan Wolff, Why Read Marx Today? (New York: Oxford University Press, 2002), 66.

3 Hal Draper, “Marx, 'Marxism,' and Trade Unions,” reprinted in Socialism From Below (Atlantic Highlands, N.J.: Humanities Press, 1992), 209,

4 Anyone who finds the opening chapters difficult can start reading at Chapter X and return to the beginning later. Another strategy is to begin with Part VIII, the final section, before tackling the rest of the book.

5 Allen Wood, Karl Marx, second edition (New York: Routledge, 2004), 227.

6 Marx criticizes the English political economist David Ricardo (1772-1823) for attempting to apply highly abstract models to economic realities too quickly. Instead of identifying key mediating factors, Ricardo “omits some essential links and directly seeks to prove the congruity of the economic categories with one another.” Theories of Surplus Value, Part 2, Ch. X, A.2,

7 Parenthetical page references in the text are to Capital, Vol. 1 (New York: International Publishers, 1967). This edition uses the original English translation by Samuel Moore and Edward Aveling, edited by Engels. Author has Americanized the spelling.

8 More precisely, the kind of labor that underlies value is what Marx calls “abstract” labor. “On the one hand all labor is, speaking physiologically, an expenditure of human labor-power, and in its character of identical abstract human labor, it creates and forms the value of commodities. On the other hand, all labor is the expenditure of human labor-power in a special form and with a definite aim, and in this, its character of concrete useful labor, it produces use-values.” (46)

9 For discussion of the controversies and a sophisticated defense of Marx's approach, see Alfredo Saad Filho, The Value of Marx: Political Economy for Contemporary Capitalism (New York: Routledge, 2002).

10 Sometimes Marx's critics make the most elementary errors. For example, ignoring the crucial distinction between socially necessary labor and actual labor, the Austrian economist Eugen von Böhm-Bawerk (1851-1914) claimed at the end of the nineteenth century that needlework done at home is a counter-example to Marx's theory, since the extra hours required for its production do not increase its value.

11 Wood, Karl Marx, 234.

12 Wood suggests that the discussion in Chapter I, Section 1 “is best regarded as an expository device, part of Marx's avowed attempt to 'popularize' his discussion of value [in] Capital.” (Karl Marx, 236.)

13 Marx to Kugelmann, July 11, 1868. Available at:

14 If there is not enough labor in one sector of production, goods produced by that sector will be in short supply, and their exchange value (expressed as a price) will tend to increase. The increased profits that this brings will attract new investment, leading to a redistribution of investment, increased supply, and falling exchange values (prices).

15 Marx to Kugelmann, July 11, 1868.

16 In Volume 3, Ch. 9, Marx argues that commodities produced in capital-intensive industries will tend to sell above their value while commodities produced in labor-intensive industries will tend to sell below their value.

17 Some recent critics of Marx's theory of value, influenced by the Italian economist Piero Sraffa (1898-1983), have argued that from a mathematical perspective there is nothing privileged about labor and that one could equally well construct a corn theory of value (in which the value of a commodity is determined by the quantity of corn used to produce it), a coal theory of value, or a theory of value based on any other commodity. While formally this may be true, such theories would obscure rather than clarify the social relations that Marx wants to highlight.

18 Sometimes, of course, capitalists are unable to sell the commodities they own for a profit, but if this happens on a regular basis such capitalists will be driven out of business.

19 Andrew Collier, Marx (Oxford: Oneworld Publications, 2004), 74.

20 In Marx's words, “the value of labor-power is the value of the means of subsistence necessary for the maintenance of the laborer.” He adds, however, that unlike “the case of other commodities, there enters into the determination of the value of labor-power a historical and moral element.” (171) In other words, workers may come to expect a certain standard of living, and will not be satisfied with the necessities for bare physical survival.

21 In a footnote, Marx notes that this argument is based on a manifesto published “[d]uring the great strike of the London builders, 1860-61, for the reduction of the working-day to 9 hours.”

22 In an earlier section of Volume 1 titled “Senior's 'Last Hour',” Marx refutes the argument of the Oxford economist Nassau Senior (1790-1864), who had claimed that a bill limiting the workday to ten hours would be disastrous for the textile industry, because all its profits were made in the last hour of an eleven-and-a-half hour day.

23 Juliet Schor, The Overworked American (New York: Basic Books, 1991), 26-27,

24 BusinessWeek, October 12, 1975.

25 In 2002, the average American family was working 11 percent longer than in 1975. See Lawrence Mishel, Jared Bernstein, and Sylvia Allegretto, The State of Working America 2004/5 (Ithaca, NY: Cornell University Press, 2005).

26 Assuming, of course, they are being paid the value of their labor power.

27 Joel Bakan, The Corporation: The Pathological Pursuit of Profit and Power (New York: Free Press, 2004), 2.

28 For a brief account of Marx's theory, see Stuart Easterling, “Marx's theory of economic crisis,” ISR 32, November-December 2003,

29 In fact, Marx argues that capitalism depends on an “industrial reserve army” or unemployed workers to keep wages down. “The whole form of the movement of modern industry depends, therefore, upon the constant transformation of a part of the laboring population into unemployed or half-employed hands.” (633) Even at times of high employment, as in the U.S. today, millions of people are unable to find work.

30 See, for instance, Robert Brenner, The Boom and the Bubble: The U.S. in the World Economy (New York: Verso, 2002) and The Economics of Global Turbulence (London: Verso, 2004).

Back to top