Exploring Capital

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The current crisis of capitalism has coincided with a renewed interest in Marx's Capital. Socialist Review spoke to Alex Callinicos about his forthcoming book examining Marx's understanding of capitalism.


There's been a revival of interest and debate in Marx's Capital. Why do you think this is and why did you want to intervene in these debates with your new book?

The main reason is because of the radicalisation and resistance to neoliberalism that we've seen since the 1990s. Initially there were critiques of neoliberalism and capitalism on very diverse intellectual bases.

But over time there's been a greater and greater focus on the Marxist critique of political economy, and that's involved going back to Capital. We can see this very clearly in the high profile of David Harvey's lectures on Capital and the books that are a spin off from it.

A secondary factor is that we've seen a renaissance of Marxist political economy and of scholarly discussion by Marxists of Capital, which is partly related to the gradual appearance of the MEGA, the Marx-Engels complete works, which gives us increasing access to Marx's preparatory manuscripts and notebooks.

So it's a very interesting time in the study of Capital, and it's being studied not as a purely scholarly activity but in the context of trying to understand what's happening to capitalism and, of course, particularly what's been happening to it since the crash in 2007-8.

Personally I've had a lot of interest in Capital. I wrote my doctoral thesis on it back in the 1970s and I'd wanted to return to Capital and study it in depth, which I've now done.

A key argument in the book is the need to understand Capital as a relation, a web of social relationships. Why do you place so much emphasis on that notion?

Well, partly because I think it's the right way to grasp what Marx is doing. He says right from the 1840s onwards that capital isn't a thing or a quantity of money; it's a social relationship that he comes to see as defined by two dimensions.

First is the relationship between wage labour and capital and the exploitation of the worker with the extraction of surplus value, and secondly, the relationship among capitals themselves, what Marx in the Grundrisse, the first draft of Capital, calls "many capitals".

In particular this takes the form of competition among rival capitals. It's these two relationships and their interconnections that for Marx define the nature of capitalism. I think that's a crucial insight.

But in a lot of the discussion of Capital it's not understood like that. So you get Capital presented as a kind of substance, an inert element that simply parasitically battens off what Hardt and Negri in their books call "the multitude".

You place Marx's confrontation with the great British classical economist David Ricardo at the centre of your interpretation of Capital. What do you think Marx takes from Ricardo and what do you think he rejects?

I place a lot of emphasis on Marx's critique of Ricardo because there's an enormous amount of discussion of Marx's relationship to Hegel and how much Capital is indebted to Hegel's Science of Logic which Marx famously said he read when he was working on the Grundrisse in the late 1850s.

There's much less attention paid to Marx's relationship with Ricardo. But if you read Marx's economic writings Hegel is a presence and it's very important to make sense of his relationship to Hegel, but there are very few references to Hegel.

But with Ricardo you find tons of references, and the crucial part of what's probably intellectually the most important draft of Capital, the so-called 1861-63 Manuscript, is dominated by a critique of Ricardo.

So to understand what Marx does in Capital, you have to see him in relation to both Hegel and Ricardo.

What Marx took from Ricardo was a very clear statement of the labour theory of value - in other words, the idea that commodities exchange according to the socially necessary labour involved in their production and, following from that insight, a very stark representation of the antagonistic relationship between capital and wage labour.

What Marx thought was problematic in Ricardo was, first of all, that Ricardo naturalises capitalism. So he sees the relationship between capital and wage labour, and more generally what Marx calls the laws of motion of capitalism, as a consequence of universal features of production as such.

To put it simply, Ricardo doesn't think there's anything that can be done about the kind of contradictions he reveals in capitalism, whereas Marx understands capitalism as historically limited and transitory, just one particular form of social production.

For Marx this is associated with Ricardo's method, which is to affirm the truth of the labour theory of value, but not to adequately confront all the different ways capitalism as a system operates. For example, the behaviour of financial markets where people seem to make money out of thin air and not through the exploitation of wage labour.

All these different concrete aspects of capitalism aren't really integrated into the labour theory of value in Ricardo.

Marx's crucial debt to Hegel is that in Hegel he finds a method in which it's possible properly to integrate all these different apparently contradictory elements into an articulated whole.

Marx developed analytical tools to help uncover the inner nature of capitalist production, particularly the notion of "rising from the abstract to the concrete". Could you outline what is significant about Marx's method in Capital?

"Rising from the abstract to the concrete" is a phrase that Marx uses in the introduction to the Grundrisse to describe the scientifically correct method for understanding capitalism. It's a slogan that he takes from Hegel. So it's at this point that we see the very important influence of Hegel.

What Marx is doing goes back to what I was saying earlier about his relationship to Ricardo. In Ricardo you have a juxtaposition between the labour theory of value and all these other features of capitalism - the financial markets, rent and so on - which don't fit the labour theory of value.

Marx says at several points that Ricardo's mistake was failing to connect the abstract proposition of the labour theory of value with these concrete features through a series of "intermediary stages".

In other words, if you want to understand capitalism you have to show how the concrete workings of capitalism arise from the basic extraction of value and surplus value, the process of exploitation in production, and how the different elements involved in capitalist production when taken together with the labour theory of value show how capitalism actually behaves.

Particularly in the third volume of Capital, Marx talks a lot about how deceptive the appearances of capitalism are, how the fundamental relationship of exploitation in production is masked and concealed, but also that these appearances are "real" in the sense of being necessary to the functioning of capitalism.

The method of rising from the abstract to the concrete, which means progressively introducing the more and more complex features of the system, is intended to reveal why capitalism appears to be so different from what it fundamentally is as a system of value creation and exploitation. By introducing these features at the right point in the analysis you come to see how they fit into the system as whole.

One of the areas where it's clear that these are not just theoretical debates about Capital but they have political consequences is when you argue that there is a tendency to downplay the role of wage labour in discussions of Capital. Can you outline some of these debates and give us some examples.

Hardt and Negri are a good example of this. In their last major book, Commonwealth, they say that capital has become essentially something parasitic. We have the world of nature and human beings and all sorts of creative things are happening, and capital comes as it were from outside and extracts value from this creative, natural and human world.

So for them rent, which both Marx and Ricardo see as a form of surplus value that arises not from the exploiter being involved in organising production, but simply from the fact of inert ownership of land as a necessary condition of production, becomes the dominant form in which surplus value is now extracted.

That's the clearest case, but it's quite striking how common some version of this idea is. Even Harvey through his notion of "accumulation by dispossession" sometimes makes too many concessions towards this kind of idea.

What this leaves out is what is central to Capital, above all the volume that Marx actually published, Volume One, which is the process through which wage labourers are employed by capitalists and then exploited in production and in the process create value and surplus value.

The crucial question is, which picture better fits the world in which we live? It's the picture that Marx paints that continues to fit the world very well. What's the most important fact about capitalism over the last generation? It's the expansion of industrial capitalism in East Asia. Has this involved primarily the seizure of natural resources, grabbing land and pushing peasants off the land? Of course it's involved all that, and that's the sense in which Harvey is right about accumulation by dispossession, but critically, it has involved the development of massive industrial complexes, where wage labourers toil to produce manufactured commodities that are central to the existence and reproduction of capitalism.

And this goes back to something fundamental in Marx, which is that Marx sees capitalism as a deeply exploitative system which is deeply destructive and wasteful but also immensely productive.

In the chapter on crisis, you note that Marx had "a multi-dimensional" conception of crises but that he places the tendency of the rate of profit to fall and how this interacts with the financial markets at its centre. Can you expand on this?

Marx originally intended Capital to be part of a massive six-volume work that would culminate in a book on the world market and crises.

So understanding crises was very important to him, but he never got anywhere near completing that project and he probably gave it up.

Marx never developed a systematic analysis of crises. But if you follow through the successive drafts of Capital, you see more and more clearly delineated a quite complex account of crises emerging.

Now there are a number of different dimensions to it. I identify six. The crucial ones for me are the two that you mention.

First is the theory of the tendency of the rate of profit to fall. This is an idea that Marx inherited from Ricardo and transformed. Ricardo thought the rate of profit fell because productivity in agriculture would fall, so wages would rise and profits would fall. Marx on the contrary thought the rate of profit tended to fall because labour becomes more productive. This leads to the famous "organic composition of capital" (the relationship between capital invested in means of production and capital invested in employing workers) rising. As a result of that the rate of profit falls.

But what you see developing, from the original version of that idea in the Grundrisse to the draft of Volume Three of Capital, is the notion of the falling rate of profit becoming more complex. This is because Marx lends more and more weight to what he calls the counteracting tendencies.

In other words, there are forces built into capitalism as an economic system that both bring down the rate of profit but also help to bring it back up again.

The most important of these counteracting tendencies are what Marx calls the devaluation or destruction of constant capital - capital invested in means of production. And he comes to see crises as tremendously important because that's where capital that's been accumulated, but is no longer profitable to employ, gets destroyed on a large scale.

Marx sees the behaviour of financial markets as playing a critical role in this process. Mid-19th century capitalism experienced a series of spectacular financial crashes which Marx spent a lot of time trying to understand from his vantage point in London.

He sees the oscillation between bubble and panic that happens on financial markets, something we're very familiar with today, as in the first place stimulating the accumulation process - when there are bubbles it's easier to raise the funds to invest.

But when financial panics take place they carry through the kind of destruction of capital that's necessary to restore the rate of profit to levels that will allow the system to start expanding again.

So we have here the elements of what is a very sophisticated theory of crises which I think is very relevant to understanding what happened in the lead up to the 2007-8 crash and also understanding why the system is finding it so hard to emerge from the recession that the crash produced.

There is a cliche that Marx is outdated, that capitalism has changed in unrecognisable ways since he wrote Capital. You insist, on the contrary, the picture Marx paints fits the world today more, not less, than the world he himself inhabited. Why do you so?

Very early on Marx develops a clear understanding that capitalism is a global system. He says in the Grundrisse that the creation of a world market is inherent in the very concept of capital.

To see Marx as just writing a portrait of Victorian industrial capitalism is tremendously misleading. I'm not saying that there aren't bits that are genuinely out of date, but it's the actuality of his writings that is striking.

So he's really interested in China and sees China as very important for the future of global capitalism. There's a fascinating letter that he wrote to Engels in 1858 where he says, "I'm confident the revolution will happen in Europe, but the problem is that capitalism is storming ahead in America and China. What happens if we succeed in Europe but are then flanked by these new capitalisms in the rest of the world?"

Of course, he was behind by 100 years about the development of capitalism in China, although he was dead right about the significance of what was happening in the US.

One of the reasons why Marx never finished Capital was because he wanted to accumulate enough data to understand what was happening in America.

Nevertheless, the eventual emergence of China as a major centre of capital accumulation is something that's kind of built into the kind of analysis Marx was developing. You see the coexistence of expansion with crises, environmental destruction and above all the exploitation of wage labour on a growing, a global, scale.

That particular nexus is crucial to Marx's understanding of capital and it's crucial to making sense of the world today. When, for example, you read about factory workers in Vietnam rioting in protest against China flexing its muscles geopolitically in East Asia, you see how important these almost entirely new industries that have developed in Vietnam in the last 15 or 20 years are to global capitalism and to the world market.

They don't just riot to protest against China; they riot for higher wages and so on. So you see how relevant what Marx wrote is to making sense of what's happening all around us in the world today.

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