Get your own Free Home Page The process of reproduction of capital comprises the direct process of production, whose compelling motive is the production of surplus value, as well as the total circulation process which separates the production processes. "Consumption furnishes the impulse to produce, and also provides the object which acts as the determining purpose of production. If it is evident that, externally, production supplies the object of consumption, it is equally evident that consumption posits the object of production as a concept, an internal image, a need, a motive, a purpose” . This total process comprises both the productive consumption (i.e. the direct process of production) together with the conversions of form, i.e. exchanges, which bring it about, and the individual consumption. Individual consumption is that for which the labourers expend their wages and representatives of capital, the surplus value or a part of it, together with the conversion of form or exchanges by which it is brought about.
An essential part of the process of circulation is the realisation of values of all commodities produced. And this is an essential prerequisite for further reproduction of commodity economy. As soon as any surplus labour is squeezed out and has been embodied in commodities, surplus value has been produced (the production of this is limited by the productive power of capital and the resistance of wage-workers). However, this production of surplus value completes but the first act of the capitalist process of production _ the direct production process. Capital has absorbed so and so much unpaid labour. With the development of the process, the mass of surplus value thus produced swells to immense dimensions. Now comes the second act of the process. The entire mass of commodities i.e. the total product, including the portion which replaces the constant and variable capital, and that representing surplus value, must be sold. If this is not done, or done only in part, or only at prices below the prices of production, labourers have been indeed exploited, but their exploitation is not realised as such for capital, and this can lead to total or partial failure to realise the surplus value pressed out of the labourers, indeed even to the partial or total loss of the capital. The conditions of direct exploitation, and those of realising it, are not identical. They diverge in space and time.
To analyse the process of reproduction, the total production by wage labour is divided into two major departments engaged in the production of producer and consumer goods respectively. The two departments are interdependent and therefore bound to display a certain quantitative relationship, namely that one department must produce all the means of production and the other provisions for the workers and representative of capital of both the departments.This is purely a technical division and has no relation with the two class nature of capitalism.
In a closed capitalist system, which Marx assumed, comprehending simple reproduction, where all produced surplus value is consumed individually by the capitalist class as a whole (unproductively so to say), posed no problem. The production of commodities, and the process of circulation, where values are exchanged for values, and again production at the same scale can be shown to form a continuous circuit. But as soon as one tries to analyse extended reproduction within a closed capitalist system, one immediately runs into immense problems.
It is unpardonably naive to say that by projecting an ideal capitalist society, it was assumed that everything produced is sold and "the capitalist has absolutely no headaches over markets" (as Lenin had asserted in his characteristic style). To be fair to Marx, in taking an ideal capitalist society, he did not conjure away the process of circulation, of buying and selling, and never did he assume that everything produced is sold. Instead, a painstaking attempt was made to demonstrate that the circuit of circulation, the circuit of exchange of value for value can be completed. Though it was demonstrated in the case of simple reproduction, in the case of extended reproduction it ended in a failure.
Extended reproduction means that the total global capital accumulates, i.e. the total surplus value is not consumed by the class of representatives of capital but instead a part of it is used for further extension of production.
Assuming a closed society of capitalist commodity production, the circuit of circulation for extended reproduction cannot be completed. To be precise, the surplus value produced cannot be realised without subverting the elementary rules of commodity exchange, wherein commodity production abstracted to a global totality, all the values exchanged need to be balanced. For expanded reproduction what is required is more means of production, extra labourers or extra money to pay as wages _ for all of which extra values are required in their money form. These pre-requisites need to be satisfied by both the departments of production, which, how hard you try, is not possible logically under a closed capitalist society. Labourers there are aplenty within the reserve army of labour and means of production may be productively consumed by the department of production producing means of production. But the department producing means of subsistence needs to buy means of production from the other department and both the departments need to pay wages to the extra labourers. These cannot be shown to be possible in value terms in a closed capitalist society.
Stubbornly and stoically sticking to the original assumption of a closed capitalist commodity production there are two ways of theoretically surmounting this problem. One is to link the production of surplus value of gold producers with the growth of total capital. That is, the surplus value of gold producers, created in the form of gold, be made to be the sole fund from which all other branches of production would draw the material for conversion of their surplus product into money. For the product, gold, itself is the money commodity. It can be directly used to buy any other commodity. The magnitude of the surplus value of the gold producers would then have to be equal to the entire annual surplus value of society which is to be accumulated. An assumption which is universally accepted as absurd (Capital, vol. II, Chapter 21- ‘Accumulation and Reproduction on an Extended Scale’, see the introductory part and section 4 _ `Supplementary Remarks’). The second way is by theoretically deriving strict mathematical functions , to which the development of organic composition of capital or labour productivity of the two main branches of production need perforce to conform. By all means an equally absurd solution. This can be possible, only in the clean, controlled and rarefied world of experimental laboratories and not in the actual mundane world of commodity production.
An appropriate solution is that the realisation of surplus value for accumulation of total global capital, be actuated or mediated through exchange of commodities with non- capitalist commodity producers (see concept notes h, ‘The accumulation of capital : problem & solution’ , pg.42). A solution which was presented by Rosa Luxemburg in “The Accumulation of Capital”.
Non-capitalist or simple commodity production is the production of commodities without the use of wage labour. Being commodity production, this produce needs to compete in the market with products of capitalist commodity production (see concept notes f, ‘Law of Value’, pg.40). Necessarily in the long run simple commodity production loses in competition with capitalist commodity production because of the higher level of productivity of capitalist commodity production. Thus broadly stated, as capitalist commodity production accumulates and grows, simple commodity production contracts. Simple commodity production is an indispensable necessity for surplus realisation & accumulation of capital and accumulation of capital marginalises this mode of production. This contradictory process lays down the ultimate barrier to capital accumulation. There are some counteracting forces against the absolute contraction of simple commodity production, but that is besides the point, for they cannot, in the long run, halt the process of marginalisation of this mode of production. This theory of capital accumulation conforms to historical facts and present day reality
Distribution of labour in commodity producing society, in its totality i.e. including wage labour based commodity production and simple commodity production, is equilibrated through the operation of the law of value. Exchange between capitalist commodity production and non-capitalist commodity production, is the crucial and necessary link in the chain of extended reproduction of the capitalist mode of production. This theorisation locates the sources of conflict in the present day world, which can be explained by simplified political-economic analyses, to be either the antagonistic relation of capital and labour or the desperation borne of the marginalisation and pauperisation of simple commodity producers or inter-faction maneuvering. This conceptualisation shows politics based on concepts of oppressor and oppressed countries, national socialisms, labour aristocracy to be ridiculous.
Laying down of ultimate objective limits to the growth of global capital does not mean "automatic" collapse of commodity producing society. At the outset it should be mentioned that accumulation is a condition of preservation for individual factions of capital. The total global capital may, at least theoretically, expand, stagnate or even contract. Individual factions may, and quite often do, accumulate at the expense of other faction or factions, who in turn fade out in the competitive market. So the real meaning of this objective limits is that with accentuation of the problem of accumulation of total capital, competition tends to become sharper and fiercer. Perforce increase in productivity and search for markets become questions of life and death for each faction of capital. Trade wars, wars and catastrophes become a common occurrence. Factions of capital turn bankrupt which in today’s world means bankruptcies of whole state apparatuses. Left to itself nothing remains certain except the absolute uncertainty of the outcome.
The will to survive of a faction is expressed in increasing intensity of work and decreasing purchasing capacity of wages, reflected in increasing working hours for a wage- worker to survive. In short, increasing exploitation of labour. On the other hand, the pauperised simple commodity producers express themselves in extreme movements and mass upsurges. From within these concentrated uncertainties, humanity will have to search out a future.
Proletarian revolution is not an inevitable historic necessity, it is not pre-ordained, rather, it is a necessity for human survival and choice which human beings need to make. Between these two propositions there is a difference, a subtle difference perhaps, but still a difference which separates conscious acts from oracular prophecies.
All state apparatuses regulate the functioning of capital today and in this sense all countries are "capitalist countries". But each country has to a greater or lesser extent some segment of simple commodity production. This segment, of course, in the present is significant in the so called ‘third world’ countries. No country can be characterised as a non-capitalist country.
The problem of accumulation is faced by total global capital, transcending all national boundaries. How, in what form and to what extent this problem expresses itself in individual factions of capital is a totally different question. Desperate attempts by powerful factions of capital staking disproportionately large amounts of wealth for smoother access to markets, whether these expenses be on arms or advertisements; under-capacity production; ‘grants’ (lower taxations) by states to keep land fallow, are some of the expressions of the problem of global accumulation. The quantification of this process and its exact predictive potentiality is yet to be explored .
It is indeed very difficult to comprehend the mind set which shows extreme unreasonable obduracy in accepting this analysis of understanding the accumulation process of capital. This obduracy is either grounded on a reverential attitude towards marxian orthodoxy. Or, a far more disturbing possibility is that this stubborn inflexibility signifies a refusal, a refusal to be disturbed from the certainty and blissful reverie of a particular variety of state-capitalism. For if disproportion among branches of production is the sole basis of crises, national planning logically leads to dissolution of all possibilities of crises. And therefore a variety of state- capitalism whose chief characteristic is production based on national plan can be proved to be crisesless, as indeed a Bukharin had so forcefully asserted. That variety of state capitalism can be theoretically thus made to be the first stage of a jump towards communism. And then, the history of the Third International follows. The blatantly authoritarian act of formation of a standing army with the prefix red goes unchallenged to date. At worst hailed and actively participated in and at best overlooked by the advocates of emancipatory aspirations. Such is the deadweight of an uncritical acceptance of theorisations.
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