Marx's Capital Vol. 2 For Dummies

I wanted to keep making mini versions of Capital volumes because it'd be fun, besides hopefully being useful for others to get a conversational grasp on Marx's critique. Like, "Yeah, I've read Capital, in the form of these stupid little things." But while working on this and revisiting the second volume, now published on Itch, a thought struck me which I've included as a postface. Let's start with the content of the zine, and then I'll get into that.

1. Capital as Circuit

Capital as a process can be perceived from many perspectives, representing the forms into which value transforms: from money, to active production, and finally to commodities which are then sold for more money.

Although that sequence is “accurate”, when starting from capital as money, it’s also misleading because it appears like capital is a one-and-done process.  But it doesn’t stop there.

The money doesn’t just recuperate the costs of one production, but is thrown back into the capital circuit and spent again on more labor time, materials, and machinery to reboot production. This is circulation, the process through which capital reproduces itself.

2. Circulation Costs

A commodity’s ability to be circulated depends on its perishability and, thus, the maximum time for which it can sit around (or be transported to markets) without being bought.

Capital seeks to minimize the time and costs of storage, transport, and book-keeping since no value is realized until the commodity is purchased (although transport may generate extra value if socially necessary for a market).

The ability to renew production in turn depends on the market availability of commodities like (again…) labor time, materials, and machinery. Value is not generated nor realized, because this is just an exchange of value that already exists in money or commodities.

3. Capital Turnover

Turnover is the total amount of time it takes for a capital to valorize itself, by producing and circulating value (from money to production to commodities, all over again). It depends on the time a good takes to be produced and then for its value to be circulated.

Production time does not necessarily mean working time, since some goods like alcohol need time to mature until ready for market. Only when a good is ready for sale is it fully produced from the market’s perspective.

It’s important for a capital to optimize turnover because a firm with the same capital investment as another can still create more surplus value in the same time if it has a faster turnover.

4. Fixed & Fluid Capital

Fixed capital is constant capital used between turnovers, such as machines. These contribute their old value piece by piece, not all at once, because they are consumed (or “eroded”) gradually over multiple turnover periods.

Fluid capital is used in one turnover: (1) wages, or variable capital spent on labor time which yields surplus value; (2) raw materials, or constant capital which adds their existing value to the final commodities, but entirely instead of piecewise since they are consumed completely in their turnover.

Economists tend to confuse fixed with constant capital, or fluid with variable. But they’re different! One axis is about turnover, the other about value.

5. Accumulation

Capital is not one-and-done, nor does it just continue to reproduce itself, but it also generates surplus value during production which is then later realized via circulation.

The surplus value not spent personally by the owner is capitalized, meaning it is reinvested into the circuit of capital. Sometimes it is loaned to third parties;  later, the loaner extracts surplus value from the loanees by charging interest. This is how banks work.

Increasingly short turnovers, resulting from competition between firms and a desire to better valorize one’s capital, require a constantly increasing money supply to encapsulate the value being accumulated before reinvestment.

6. Social Capital

The previous conclusions hold true for an individual capital, but also for our society’s total aggregate capital in the form of money and also of production and all commodities in circulation.

All society’s production falls under two departments: (1) Means of Production, used to make other things; (2) Articles of Consumption. Each department has variable capital and constant capital, and both generate surplus value from its production of commodities.

If workers spend their wages on AOCs and if the capitalists spend all surplus value generated on AOCs, the capital would reproduce itself but not expand (holding a constant... constant capital). But firms must grow to compete.

7. Social Crises

Individual capitals’ labor-exploitation to generate and reinvest surplus value condemns capitalist society to endless expansion which devalues its products by improving labor’s productivity, thus devaluing value itself.

So, economic crisis is not incidental to capitalism but is a structural feature—inherent to how capital functions.

However, the centralization of capital (as big capitals “eat” smaller capitals) also corresponds with the socialization of production. Though monopolies are still anti-social when controlling prices, their vertical integration of production hints at another form of society being possible—one based on meeting needs rather than infinite growth.

Postface 

I’ve talked before about the instabilities inherent to a C-M-C economy: producers still need to generate surplus in order to account for contingencies (so, M-C-M’ is already occurring) as well as as to expand production in order to compete with other producers. If you remove money from the equation like in a hypothetical barter economy or more historical gift economy (essentially a delayed barter economy), not only does the surplus drive still exist for those same reasons, but especially in gift economies the giving of surplus puts the receiver in a position of debt which functions social capital for the giver; essentially, unlike how Graeber characterizes it, the gift economy structurally devolves into anti-social dick measuring and accumulation of power over means of production.

But Marx in Volume 2, Chapter 20 illustrates an interesting situation of a nominally capitalist economy reproducing itself “simply”—that is, without expanding via accumulation. This hypothetical assumes that the capitalists of both departments just spend their surplus value on purchasing and consuming commodities, maybe saving some for necessary expansion, but otherwise negating the function of surplus value as such. It’s only because firms are driven to capitalize their surplus value, due to competition with each other etc., that social capital accumulates in turn.

Doesn’t this imply that the mythical C-M-C economy can only truly exist when there is only one (aggregate but centralized) agent in the economy? By extension, doesn’t this imply that the function of money as a medium of exchange withers away since no transactions really take place? Whereas gift economy already contains a germ of capitalism, does capitalism in this sense contain a germ of socialism? Well, that’s what Marx and Lenin already explicitly said elsewhere, but having made the connection in this context feels really interesting.