The 14th of September this year marked the 150th anniversary of the publication of the first volume of Capital, written by Karl Marx. The aim of this book, whose second and third volumes were completed by Engels after the death of Marx, was to “lay bare the economic law of motion of modern society – that is, capitalist, bourgeois society”. Based on his thorough analysis of the capitalist mode of production, Marx identified the fundamental contradiction of this system, whose resolution would lead to socialism.
Marxism emerged as a continuation of the most advanced thought that had been developed by the best minds in 19th century Europe. It was a further development of German philosophy, English political economy and French socialism.
The materialist philosophy of Marxism considers the various philosophical, religious and political views prevailing at a particular stage of society to be a reflection of the economic relations of the time. Having recognised that political institutions and ideas are a superstructure on the economic foundation, Marx devoted his greatest attention to the study of the economic system of capitalist society.
The rise and growth of capitalism in Europe had been accompanied by various socialist theories that presented the vision of a superior system, a society without the exploitation of some by others. However, the early theories of utopian socialism could not show what social force would create such a new system of society.
Based on his analysis of the contradictions inherent to capitalist society, Marx identified the proletariat as that class of persons who have the interest and the capacity to dig the grave of capitalism and usher in the new socialist society. He thereby provided a scientific foundation for the movement for socialism.
Marx wrote in a letter to Weydemeyer dated March 5, 1852." What I did that was new was to prove: (1) that the existence of classes is only bound up with the particular, historical phases in the development of production (2) that the class struggle necessarily leads to the dictatorship of the proletariat, (3) that this dictatorship itself only constitutes the transition to the abolition of all classes and to a classless society."
Theory of Surplus Value
The First Volume of Capital began with a penetrating analysis of the ‘commodity’, which is the individual cell of the organism of capitalist production.
The economic theorists of Europe in the 18th and early 19th centuries had discovered that the exchange of commodities is governed by the law of value. The law of value stipulates that commodities are exchanged with one another in proportion to the quantity of social labour required for their production. If, on average, commodities of equal value are exchanged in the market, how is it that capitalists are able to go on expanding their wealth all the time? How are they able to take out more than what they put into the economy, thereby pocketing a profit? Nobody could provide a clear answer to this question, until Karl Marx put forward his theory of surplus value.
Marx showed that the source of capitalist profit is the unpaid labour of the working class – that is, the new value which their labour creates in excess of their wages. Workers get paid only what is required to produce the commodity they are selling – that is, to reproduce labour-power.
The labour of the workers creates value in excess of what is required for maintaining themselves at the same standard of living. This excess or surplus value is pocketed by the owners of capital in the form of profit, interest and rent. A worker is in effect producing his own wages in the first few hours of work every day. For the rest of the time, he is producing surplus value for the capitalist class.
The General Law of Capitalist Accumulation
Proceeding from the theory of surplus value, Marx showed that the capitalist system inevitably accumulates wealth at one pole and poverty at the other pole. As the productivity of human labour rises, the owners of capital become richer while those who work remain poor and their exploitation becomes more intense.
As the productivity of human labour rises, the composition of the total capital changes. The share of constant capital (what is spent on purchasing material inputs) rises while the share of variable capital (what is spent on the wages of workers) declines. The increasing use of machinery, which is an important driver of the rise in labour productivity, is one factor. The increasing quantity of raw materials that are converted into finished products per human-hour, which is a result of the rise in productivity, is another factor. Both these factors cause constant capital to rise relative to variable capital.
The increase in the ratio of constant to variable capital means that less and less workers are required for the same amount of constant capital. The very process of capitalist accumulation produces a relative surplus population, which Marx called the reserve army of the unemployed.
Marx showed that the reserve army of unemployed workers provides the capitalists class with a readymade supply of additional labour power whenever they need, and enables them to intensify the exploitation of the employed workers. He wrote:
“The overwork of the employed part of the working class swells the ranks of the reserve, whilst conversely the greater pressure that the latter by its competition exerts on the former, forces these to submit to overwork and to subjugation under the dictates of capital. The condemnation of one part of the working class to enforced idleness by the overwork of the other part, and the converse, becomes a means of enriching the individual capitalists, and accelerates at the same time the production of the industrial reserve army … ”1
Marx explained why the development of production under capitalism, driven by the motive of private profit maximisation, leads to repeated crises and upheavals. He showed that the growth of the productive forces comes into conflict with the insufficient purchasing power of the working people, leading to repeated crises of overproduction. When such a crisis breaks out, there is an oversupply of goods, but the workers cannot afford to buy them.
Marx concluded that the recurring crises of increasing severity can come to an end only through a revolution led by the proletariat, a revolution that would replace capitalist private property by social ownership of the means of production. That would resolve the contradiction between the social character of production and the private character of enjoyments of its fruits. It would put an end to the exploitation of the toiling majority of people by a wealthy minority.
Validity of Marx’s theory
Throughout the past 150 years and more, numerous so-called experts of the bourgeoisie have concocted all kinds of spurious theories to allegedly disprove Marxism, whose conclusions threaten the interests of their class. However, real life experience has repeatedly confirmed the validity of Marx’s theory of the fundamental contradiction of capitalism and his doctrine of scientific socialism.
Whenever the capitalist system enters a period of crisis, bourgeois economists pin the blame on this or that government policy. They keep on spreading the illusion that crises can be avoided through appropriate policy reforms. However, life experience keeps shattering such illusions. For instance, all the policy measures taken by the major capitalist states of the world, in the name of addressing the crisis that broke out in 2008, have not succeeded in lifting society out of crisis.
All the facts and phenomena on the world scale show that capitalism is unable to prolong its life without intensifying exploitation and poverty, and without falling repeatedly into crisis. They confirm the validity of the scientific analysis contained in Marx’s Capital, proceeding from his theory of surplus value.
It is the bounded duty of all communists to defend the Marxist theory of scientific socialism and lead the struggle to establish the dictatorship of the proletariat, so as to carry out the overthrow of capitalism and the creation of a society without any form of exploitation.
Capital, Volume I, Chapter 25: The General Law of Capitalist Accumulation; Section 3: Progressive Production of a Relative surplus population or Industrial Reserve Army