How does one summarize Karl Marx’s “Capital”? Most people have only read the first book of his trilogy (if they have read anything of Marx at all) and this critique is only on the first volume. The other two volumes were published posthumously, edited by Friedrich Engels. The two were close collaborators but Carl Marx’s voice is unquestioned in volume one.
Marx is closely associated with the political/economic systems of communism and socialism. However “Capital” is not about either. It is a scholarly description of capitalism. As academic as he is, Marx does let his biases show, although he keeps his criticism of capitalism within reason.
Capitalism is often confused with Free Market. They are different mechanism, independent of each other. They often work hand in hand but both are compatible with other economic mechanisms. They are not mutually dependent on each other. To understand Free Market, read Adam Smith’s “Wealth of Nations”. To understand capitalism, read Karl Marx’s “Capital”.
Economics is a social system in that everyone participates in it. As such, economics has a very profound effect on the lives of the populace. We cannot divorce economics from the daily existence of society at large. The very base of all economic systems is the exchange of commodities. Commodities are the products and services that society finds valuable, either for the individual to use or to exchange for another commodity. Marx is influenced by the Industrial Revolution and his focus is on commodities as the combination of labor and resources to produce a produce. But his concepts apply to services also, which is labor only.
We place value on commodities based on our needs and wants. We create something that is useful, which Marx appropriately calls “Use Value”. People can also create commodities that are not useful for the individual but useful to exchange for other commodities that the individual needs or wants. Marx calls this “Exchange Value”.
Everyone must meet their basic needs for survival, which includes both their physical and social life. They can accomplish this by either creating Use Value commodities or trade for it with Exchange Value commodities. The value of one commodity can be compared with another, and another and another. We have a relative value of each commodity compared to each other. Gold and silver are viewed as commodities also. Coins created from bullion (gold and silver) have a symbolic value that is independent of their comparative value with other commodities. The wear and tear of use reduces the actual volume of bullion, yet their value as an exchange commodity remains the same. Even when governments devalue the coins by mixing with lesser valuable metals, their exchange value is unchanged.
Labor and resources are converted into a commodity. The wear and tear on the means of production are all converted into the value of the commodity. This is his explanation of depreciation without calling it such. The tools are slowly wearing out but their value is converted into a commodity. The value of the raw materials are converted into a commodity as well as the labor. This is commonly called the production cost.
Money is used as an intermediary between commodity exchanges. We use labor to create a commodity, exchange it for money and then use the money in exchange for another commodity. The commodity is often consumed but the money continues to exist. People are converting their labor into money. Money is not always used in exchanges of commodities. Selling a commodity with the promise to pay in the future creates a debit/credit relationship. These debts become commodities in themselves as they are also exchanged. Adam Smith describes these types of exchanges but Marx warns that the overuse of buying and selling debt leads to economic depressions.
Money makes exchanges convenient and he puts forth the argument that nomads developed the concept of money, making exchanges easier for people on the move. I am under the impression that the earliest coins were made of mud and represented a quantity of grain. However, I suppose that herders and farmers developed roughly around the same time and it does make sense that nomads would develop an exchange commodity that is easy to carry. Very much like the Northwest Indians and the use of dentalium shells.
From creating a commodity to exchange for money to exchange for another commodity Marx then reverses this with an exchange of money for a commodity to exchange for money as the basis of his definition of Capitalism. One may view the exchange of commodity for money for commodity for money as one long continuum and Capitalism inserts itself in the money portion of this line. The goal of Capitalism is not to acquire a useful commodity but to acquire money in the form of profit. Capitalism has moved away from the Use Value of a commodity to strictly its Exchange Value. And even here it limits it to only exchange for money.
This basic exchange by itself does not create profit. The value of the commodity is exchanged for relatively similar value. What creates the surplus value is the extra labor that goes into creating the commodities. The laborer must work to obtain the necessities for their survival, then work to obtain the necessity of survival for the Capitalist. If the Capitalist wants to grow his capital in the form of profit, the worker must labor more.
The labor is a commodity for Capitalism and is negotiated. However the labor is credited towards production as most labor is paid after production and not before. This would normally set up the relationship between labor and Capitalist with the Capitalist being in debt to the laborer. But the Capitalist does not necessary sell the commodities on credit and the laborer often does not have the resources to support themselves and must go into debt in order to survive.
The relationship between capitalist and labor was the view of labor as another machine. The longer the machines ran, the more commodities produced. This is a direct criticism of the industrial revolution by Marx. He argued against the prevailing view of the industrialist that their profit was not in the last few hours of the work day but a percentage during any time a laborer worked. The value of the commodity is inherit and aside from losing value do to age, it retains the value put into it. When the commodity is sold, then its value is released, a portion going to the cost of production and a portion going to profit. It would not matter which hour the Industrialist worked the laborers, his profit was assured. Industrialist could also work many laborers in a shorter day and still create the surplus labor for profit.
A third aspect of Capitalism that Marx describes is the constant attention to details. The Capitalist looks for ways to lower cost and increase profits, this leads to efficiencies of production and divisions of labor. The Capitalist divides the work load down to its minute parts in order to value each aspect of the work required. This division of labor created the dichotomy of skilled and unskilled labor. Capitalism is dependent on this division of labor. The more singular the task the better for the manufacturer. This allows the Capitalist to continue to lower cost as they can identify skilled work vs unskilled work. They continue to fragmentize the division of labor to a point where the worker does not create anything useful by themselves but together the workforce produces a commodity. By dividing up skill and unskilled and even dividing up the skilled labor, the Capitalist can negotiate wages according the specific skill sets. There is an emphasis on staying within a skill set, especially if it takes time to become competent. This fragmentation of labor also produces cognitive labor or “thinking” as another division of labor. Middle management is created to oversee the workforce, something unique to Capitalism. He makes the argument for unions in that the value of the products cannot be done without the cooperation of the work force, yet the workforce is treated as individuals and paid less. By becoming more efficient, producing more commodities per worker and pushing the wages down as low as possible the Capitalist increases their profits. With greater demand from the consumer as motivation, capitalist are more willing to look for efficiencies and cost savings with production. One of the few times Marx acknowledges the consumer.
There are two ways the division of labor can be organized. Several products can come together, each crafted by a skill laborer working anywhere and then assembled at a factory. The other requires several skills working together to make one product. Factories requires cooperation. Can be a cooperative where several people work in sequence, each worker does his one job at their own pace. The workers are interchangeable in that if one does not produce anything it does not slow down the others. Or the cooperation is organized where each member is crucial for the completion of the product. If one member does not do their job, the whole suffers.
He contrast the Capitalist organization of the workforce against ancient civilization workforce. In ancient societies great projects like the great monuments of Egypt were built to keep a homogenous population busy while the Capitalist create a large diverse workforce to achieve their profit goals.
He notes a counter problem with capitalism and the extreme division of labor. Those that are highly competent in a valuable skill are problematic. They have authority and leverage. The production cannot be completed without their skill and the time it takes to acquire the skill makes it difficult to replace the laborer. However with the increase of technology the dependence on skilled labor is lessened.
The historical context Marx is writing is very telling. The eight or ten hour working day limitations was argued between parliament and industrials for over 50 years. Parliament would pass labor laws, not fund them, and industry would subvert the laws. Marx calls it a 50 year pro slavery revolt as industrialist manipulating the laws or ignoring them completely. Laws that were passed allowing a certain amount of time to be put aside for breaks, the industrialist circumvent them by giving breaks at the beginning and end of the shifts. Industrialist were concerned that the limited day would not only cut into their profits but they would lose time restarting the machines. By giving breaks during the day, the machines, often furnaces, would cool down and they would waste time restarting them. The industrialist viewed the majority of commodities created during the day went to pay for the cost of production and the commodities created in the last hour was their profit. Time was money. As mentioned above, Marx proves this to be untrue and as we see today, industry has no problem with making a profit with an eight hour workday.
During his time, industry worked both children and adults long hours. 12 hour days were short in comparison. Some children worked 36 hours straight. One can only imagine how long the adults worked. Parliament continued to commission investigations and the reports were seldom positive. Children were viewed as unskilled labor and cost the company less. Industrialist argued against restrictions citing “Freedom of Labor” which echoes eerily contemporary arguments of the “right to work”.
Industrialist argued that work was morally good for the children, otherwise they will get into mischief. However reports to Parliament not only documented children’s long hours but the lack of basic knowledge. Children did not know basic math, nor did they know what country they lived in nor the fundamental tenets of Christianity.
The pro industrial academics argued for low wages for the workforce. The consensus, articulated by Jacob Vanerlint, was to pay the laborer just enough to keep them hungry but not starving, so they don’t walk off the job once their needs are met. They were concern about keeping a workforce working, regardless of the economy. Marx notes that during depressions, the factories that don’t go out of business continue to work their laborers long hours, even though they are not selling the commodities they produce. These commodities are stored and sold when the market returns.
Many observers noted the effects of the constant attention to specific, repetitious labor of factory work as being detrimental to the intellectual development of the person. Depression, stress related diseases, atrophy of the mind and a short life span were noted as part of the pathology associated with industrial manufacturing. Both Marx and Adam Smith, who commented on the destruction of the mind, argued that an educated populace was better for society. However, many pro industrialist academics argued against educating the populace. An uneducated workforce would not be able to reveal trade secrets and why spend the resources to educate a workforce that will upset the division of labor that industry was dependent on. Why have an overeducated janitor. An illiterate workforce was needed to keep order in society.
There seemed to be an unlimited supply of laborers, either gathered from the countryside or immigrants. Marx compares the treatment of the Industrial workers to slavery in America, pithily commenting “Meanwhile, late by night, self-denying Mr. Glass-Capital, primed with port-wine, reels out of his club homeward droning out idiotically. ‘Britons never, never shall be slaves!’” He contrast the motivation; slaves where whipped, factory workers where starved.
He acknowledges that the specialization of labor can produce quality products, (the meat from the Kings table is better). This implies that the consolidation of resources both labor and materials, provides the quality materials that a talented individual can utilize. Marx also notes that many specializations spontaneously develop with cooperation between individuals of a group and between regions. Unfortunately they evolved into caste systems that keep the laborers in their place. Marx notes that the capitalist increase production, and the increases benefit to a consumer society in the form of quality, cheaper products, comes at the expense of the laborer.
Marx noted a couple of historical events that I have read from other sources but not found in your average history books. He mentions Virginia and Kentucky’s main industry as slave producers. The two states bred and exported slaves to the rest of the Antebellum South. Also both Marx and Adam Smith talk about a Roman system of indebting the labor force to keep them enslaved. Something that Industrialist also used with their easy credit at a company store.
He ends the book with his only, if very brief, description of a communist community. Villages in India held the land and resources in common, each person making decisions on where they fit in society, as farmers, as artisans etc. These stable societies lasted for centuries and when the population got big enough they would strike out and establish a new village. It did not matter who or how the overall kingdom was ruled, these societies continued to function. This only hints at his ideal community and seems to be an important influence on Marx’s thinking.
Marx has no qualms about lambasting economist that he disagrees with. So it is with some delight to find his appreciation of Adam Smith’s “Wealth of Nations.” He agrees or is only slightly critical of the free market theory. It is also evident his admiration of Charles Darwin as he uses Darwin’s evolutionary theories to describe social progress. Unfortunately this is the beginnings of what has become known as Social Darwinism which is a misinterpretation of Darwin’s evolution. Although I don’t think Marx is going down the direction of superiority of races that ended up with Nazism and White Supremacy, he does assume the progression of one social mechanism leading to another and the harsh competition for survival he assumes is found in the animal world.
Marx makes a compelling case but leaves out one important aspect of capitalism. Creating commodities in vast numbers at cheaper cost is good but it is worth nothing without the consumer demand. He only devotes a paragraph’s worth of scattered sentences in his entire book to the perceived value of the consumer. What is the relationship between capitalist and consumer? If the capitalist need to control the laborer in order to expand their profits, how much are they willing to allow freedom of choice, which is a cornerstone of Adam Smith’s free market, amongst the consumer, especially when the capitalist has invested and risked their capital? He acknowledge perceived value as a social value or what society finds valuable but the dominate focus of “Capital” is on the laborer and the production side of creating a commodity.