Das Kapital

Distinct Role of Commercial Capital

Commercial capital is a distinct and critical form of capital that predates the capitalist production system. It plays a vital role in transforming products into money, facilitating the transition to capitalist production.

Initially, commercial capital existed as an independent and dominant form. It served as the primary intermediary for exchanging commodities between undeveloped communities. In this capacity, commercial capital often relied on overreaching and fraud to generate profits.

Over time, as the capitalist production system emerged, commercial capital evolved to become an agent serving productive capital. It contributed to the formation of the general rate of profit, rather than operating independently. This transition reflects the growing centralization of capital in the production process and the decentralization of capital in the circulation process.

The independent development and predominance of commercial capital is inversely related to the overall economic development of society. In more advanced economies, commercial capital's role becomes more specialized and integrated with productive capital, rather than maintaining its former independent status.

Key Insight: Distinct Role of Commercial Capital

• Commercial capital is historically the first free form of capital, predating the capitalist production system. It plays a critical role in transforming products into money, facilitating the transition to capitalist production.

• Commercial capital has evolved from a dominant independent form to an agent serving productive capital, contributing to the formation of the general rate of profit.

Examples:

• Commercial capital is "older than the capitalist system—is, as a matter of fact, historically the oldest free form of existence of capital." It exists wherever there is "simple circulation of commodities and money", even in pre-capitalist societies like "primitive community or on slavery, or whether it be peasant production, or plebian production."

• The development of commercial capital "gives the impulsion to produce more than the producer requires for his own individual needs, in order to exchange the surplus for treasure or means of enjoyment." It "impresses on production a character tending ever more and more towards exchange-value."

• Initially, commercial capital existed in an "undiluted state, separated from the processes of production between which it serves as intermediary." This is seen in the "history of the carrying trade—e.g. in Venice, Genoa, Holland etc.—where the export of their own products by the countries concerned is but a subsidiary source of profit."

• Over time, commercial capital becomes "deprived of its former independent existence, and becomes a specific form of capital investment in general; and the equalisation of profits reduces its rate of profit to the level of the average rate." It now "functions only as the agent of productive capital."

Primitive Accumulation as Capitalist Genesis

The concept of primitive accumulation describes the historical process that dispossessed producers from their means of production, a necessary precursor to the rise of capitalist society. This involved acts like the enclosure of common lands and the implementation of draconian vagrancy laws, which set the stage for the creation of a workforce free to sell their labor.

Prior to the emergence of capitalism, most people were tied to the land or bound to feudal lords. The process of primitive accumulation forcibly separated these workers from their traditional means of subsistence, transforming them into a proletariat - a class of people with no choice but to sell their labor in order to survive. This mass of "free and unattached" workers was essential for the development of the capitalist system.

The methods used to drive this transformation were anything but "idyllic", as the political economists claimed. Instead, they involved conquest, enslavement, robbery, and murder - a history "written in the annals of mankind in letters of blood and fire." This violent uprooting of the peasantry laid the groundwork for the rise of industrial capitalism.

Here are the key examples from the context that support the insight on primitive accumulation as the genesis of capitalism:

• The "historical movement which changes the producers into wage-workers" involved their "emancipation from serfdom and from the fetters of the guilds" as well as being "robbed of all their own means of production, and of all the guarantees of existence afforded by the old feudal arrangements."

• The "expropriation of the peasant from the soil" is described as "the basis of the whole process" of primitive accumulation. This refers to the forcible removal of peasants from the land they previously owned or had access to.

• The context describes how in England, "serfdom had practically disappeared in the last part of the 14th century", setting the stage for the creation of a class of "wage-labourers" in the latter half of the 14th century.

• The "usurpation of the common lands" allowed farmers to "augment greatly his stock of cattle, almost without cost", impoverishing the "mass of the agricultural people" in the process.

• The "thinning-out of the independent, self-supporting peasants" supplied "the town industries with a mass of proletarians entirely unconnected with the corporate guilds", creating a pool of workers available for industrial capitalism.

The key concepts illustrated here are:

• Dispossession: The forcible removal of producers from their means of production, like land and guilds
• Proletarianization: The creation of a class of workers free to sell their labor, but lacking ownership of the means of production
• Enclosure: The privatization and fencing off of common lands, depriving peasants of access

These examples demonstrate how the historic process of primitive accumulation laid the groundwork for the emergence of capitalist social relations.

Dynamics of Industrial Reserve Army

The industrial reserve army is a crucial component of capitalist systems. As capital accumulates, it creates a surplus labor force that serves to regulate the labor market and affect wage levels. This reserve army is essential for understanding the cyclical nature of capitalist economies and the precarious existence of workers.

The industrial reserve army expands and contracts in response to the periodic changes in the business cycle. When the economy is booming and capital is expanding, the reserve army shrinks as more workers are absorbed into productive employment. Conversely, when the economy contracts, the reserve army grows as workers are pushed out of jobs.

This dynamic exerts constant pressure on employed workers. The threat of being pushed into the reserve army forces workers to accept longer hours, lower wages, and harsher working conditions. Meanwhile, the reserve army itself suffers from enforced idleness and poverty. In this way, the industrial reserve army enriches individual capitalists while degrading the overall condition of the working class.

Understanding the role of the industrial reserve army is key to grasping the inherent instability and exploitation at the heart of capitalist production. It reveals how the system's need for a flexible, disposable workforce condemns a significant portion of the population to insecurity and hardship.

Key Insight: Dynamics of Industrial Reserve Army

The context describes how the "industrial reserve army" is a key component of capitalist systems, referring to a surplus labor force that emerges as capital accumulates. This reserve adjusts the labor market, affects wage levels, and is essential for understanding capitalist economic cycles and the precarious life conditions of workers.

Examples:

• The "law by which a constantly increasing quantity of means of production... may be set in movement by a progressively diminishing expenditure of human power" leads to the "inverse form that the labouring population always increases more rapidly than the conditions under which capital can employ this increase for its own self-expansion." This creates a relative surplus population or "industrial reserve army."

• The "condemnation of one part of the working-class to enforced idleness by the over-work of the other part" is a "means of enriching the individual capitalists, and accelerates at the same time the production of the industrial reserve army on a scale corresponding with the advance of social accumulation."

• The example of England is given, where the "technical means for 'saving' labour are colossal" but if labor was reduced to a "rational amount", the "working population to hand would be absolutely insufficient for the carrying on of national production on its present scale." This shows how the industrial reserve army is essential for maintaining current production levels.

• The "general movements of wages are exclusively regulated by the expansion and contraction of the industrial reserve army, and these again correspond to the periodic changes of the industrial cycle." This demonstrates how the industrial reserve army is key to understanding wage dynamics and economic cycles under capitalism.

Credit as a Double-Edged Sword

The credit system is a double-edged sword in capitalist economies. On one hand, it reduces the costs of circulation and bridges gaps in capital flow, enabling greater economic activity. However, it also perpetuates speculation and crises.

This ambiguity plays a crucial role in capitalist development. The credit system expands productive capacity by mobilizing capital and enabling large-scale projects. Yet it also pushes the economic system towards instability. The ability to obtain credit allows capitalists to invest beyond their means, leading to overproduction and financial bubbles.

Ultimately, the credit system is an essential but volatile component of capitalism. It facilitates growth and progress, but also sows the seeds of economic turmoil. Understanding this duality is key to comprehending the dynamics of capitalist economies.

Here are examples from the context that support the key insight about credit as a double-edged sword:

• Credit reduces circulation costs: The context notes that credit "reduces the costs of circulation" in three ways - by reducing the need for money in transactions, accelerating the circulation of money, and substituting paper money for gold.

• Credit bridges gaps in capital flow: The context explains how credit "extends over an ever wider area, from one person to another as far as the consumer" by allowing producers to advance commodities to manufacturers who then advance them further down the supply chain.

• Credit perpetuates speculation: The context states that credit "serves as basis for speculation" by allowing the processes of buying and selling to be longer separated.

• Credit pushes the system towards instability: The context notes that credit "constitutes the instruments par excellence for impelling the capitalist system of production beyond its own natural limits; and become powerful means for producing crises and promoting fraud."

So in summary, the context highlights how credit has both beneficial and detrimental effects - it expands productive capacity by facilitating capital flows, but also leads to speculation and economic instability. This ambiguous role of credit is a key insight into the capitalist system.

Communism’s Aim to Transform, Not Abolish

Communism aims to transform, not abolish, existing institutions like the family and personal property. The target is bourgeois property relations - the system of production and appropriation based on class antagonisms and the exploitation of the many by the few.

Communism does not seek to do away with personal property - the fruits of one's own labor. Rather, it seeks to abolish private property in the form of capital, which allows the few to subjugate the labor of the many. In a communist society, property would lose its class character, becoming the common possession of all.

The bourgeois family, built upon capital and private gain, will vanish as its complement - the practical absence of family among the proletariat - disappears with the demise of capital. Education, too, will be rescued from the influence of the ruling class. Communism aims to transform these social institutions, not destroy them outright.

Here are the key insights and supporting examples from the context:

Key Insight: Communism seeks to transform, not abolish, institutions like private property and the family.

Examples:

• "The distinguishing feature of Communism is not the abolition of property generally, but the abolition of bourgeois property."
• "But modern bourgeois private property is the final and most complete expression of the system of producing and appropriating products, that is based on class antagonisms, on the exploitation of the many by the few."
• "We Communists have been reproached with the desire of abolishing the right of personally acquiring property as the fruit of a man's own labour, which property is alleged to be the groundwork of all personal freedom, activity and independence. Hard-won, self-acquired, self-earned property! Do you mean the property of petty artisan and of the small peasant, a form of property that preceded the bourgeois form? There is no need to abolish that; the development of industry has to a great extent already destroyed it, and is still destroying it daily."
• "Or do you mean the modern bourgeois private property? But does wage-labour create any property for the labourer? Not a bit. It creates capital, i.e., that kind of property which exploits wage-labour, and which cannot increase except upon condition of begetting a new supply of wage-labour for fresh exploitation."

The key point is that Communism targets the bourgeois property relations based on class antagonisms and exploitation, not personal or small-scale property. It seeks to transform these relations, not abolish all property.

Capital’s Circulation and Time Implications

The circulation phase of capital is crucial for realizing the value created during production (C'-M'). Capitalists have a strong incentive to minimize time lags in this circulation phase. This is because the turnover rate of capital directly impacts the amount of surplus-value that can be produced.

The faster capital can complete its circular flow from money to commodities and back to money (M-C-M'), the more surplus-value the capitalist can extract over a given time period. Capitalists therefore strive to optimize the turnover of their capital, as this allows them to enhance their surplus-value production and profits.

This imperative to accelerate capital's circulation and turnover is a fundamental driver of capitalist behavior. Capitalists constantly seek ways to reduce circulation time and increase the velocity of their capital, as this translates directly into higher surplus-value and profits. Minimizing circulation time is thus a key strategic priority for capitalists operating within the capitalist system.

Here are the key insights from the context information and examples to support them:

• The circulation phase of capital (M-C and C'-M') is crucial for realizing the value created in production and generating surplus-value. As the text states, "the capitalist throws his commodities into the stream of circulation, in order to sell them" and "he draws, through the sale of his products, a greater value from the process of circulation in the form of money, than he originally threw into it."

• Capitalists must minimize time lags in the circulation phase to enhance the turnover rate of capital and maximize surplus-value production. The text notes that "the longer the time of circulation lasts, therefore, the smaller, proportionately, is the surplus-value produced. Inversely, the more the capitalist succeeds in reducing the time of circulation, the greater will be the surplus-value."

• Examples of time lags in the circulation phase include:

  • The time required for the commodities to be sold after production is complete
  • The time between purchasing labor power and materials, and when payment is due
  • The time required to accumulate surplus-value into a sufficient amount of money capital to reinvest

• The text states that the capitalist "must further have a stock of raw materials in hand, and it must be remembered that the implements of labour, machines etc. consume much time in the course of the process of production without producing anything" - these represent capital lying idle and not generating surplus-value.

• Overall, the circulation phase and minimizing time lags within it are crucial for the capitalist to realize the surplus-value created in production and continue the cycle of capital accumulation.

Quotes

Let's take a look at some key quotes from "Das Kapital" that resonated with readers.

In reality, the laborer belongs to capital before he has sold himself to capital. His economic bondage is both brought about and concealed by the periodic sale of himself, by his change of masters, and by the oscillation in the market price of labor power. Capitalist production, therefore, under its aspect of a continuous connected process, of a process of reproduction, produces not only commodities, not only surplus value, but it also produces and reproduces the capitalist relation; on the one side the capitalist, on the other the wage-laborer.

The worker is already tied to the capitalist system before they even sell their labor. This bond is hidden by the fact that they can change employers and that the price of their labor fluctuates in the market. In reality, the production process not only creates goods and profit, but also perpetuates the relationship between the capitalist and the worker, with the former holding power and the latter being exploited. This cycle of production reinforces the existing social hierarchy.

Education is free. Freedoom of education shall be enjoyed under the condition fixed by law and under the supreme control of the state

The government ensures that education is accessible to all without any financial burden. However, the state exercises oversight and sets certain regulations to govern the education system. This means that while education is free, it is still subject to certain rules and guidelines that are enforced by the authorities. This balance between freedom and control aims to promote a well-regulated education system.

As, in religion, man is governed by the products of his own brain, so in capitalistic production, he is governed by the products of his own hand.10

In capitalism, people are controlled by the things they produce, rather than being in control of them. The products of their labor become a force that dominates their lives, shaping their experiences and opportunities. This is similar to how, in religion, people are often governed by the ideas and beliefs they create, which can take on a life of their own and exert power over them.

Chapter Notes

INTRODUCTION

Here are the key takeaways from the chapter:

• The Enduring Influence of Marx and Engels: Despite being dismissed by some as irrelevant, there has been a renewed interest in the works of Karl Marx and Friedrich Engels, particularly their seminal works "Das Kapital" and "The Communist Manifesto," which have continued to inspire revolutions and shape political and economic thought.

• The Manifesto vs. Das Kapital: The "Communist Manifesto" is a concise and accessible work that lays out the core ideas of Marxism, while "Das Kapital" is a more complex and technical analysis of the inner workings of capitalism, written for a more specialized audience.

• The Dialectical Approach: Marx and Engels were influenced by Hegel's dialectical philosophy, which views the world as constantly evolving through the tension and resolution of opposing ideas (thesis, antithesis, and synthesis).

• Capitalism vs. Communism: The chapter presents capitalism and communism as binary opposites, with Marx and Engels arguing that the inherent contradictions and exploitation within capitalism will inevitably lead to its downfall and the rise of a communist society.

• The Distortion of Marxism: The chapter acknowledges that attempts to implement Marxist-inspired communist states have often deviated from Marx's foundational philosophical principles, leading to the centralization of power and totalitarian regimes, which Marx would have condemned.

• The Resurgence of Marxism: The chapter suggests that the current political and economic realities, such as the failure of neoliberal policies, rising inequality, and the appeal of right-wing authoritarianism, have contributed to a renewed interest in Marxism and socialist ideas, as people search for alternatives to the status quo.

• The Ongoing Conflict of Ideas: The chapter concludes by posing the question of whether the "war" between Marxism and capitalism has been lost or if it is an ongoing historical battle, with the future of economic evolution in the 21st century yet to be determined.

I. BOURGEOIS AND PROLETARIANS

Here are the key takeaways from the chapter:

• History of Class Struggles: The history of all societies is the history of class struggles between the oppressed and the oppressor classes, such as freeman and slave, patrician and plebeian, lord and serf, guild-master and journeyman.

• Bourgeoisie and Proletariat: Modern society has simplified class antagonisms into two main classes: the bourgeoisie (the capitalist class) and the proletariat (the working class).

• Rise of the Bourgeoisie: The bourgeoisie has played a revolutionary role in overthrowing feudal society and establishing a new mode of production and social relations based on capitalism.

• Exploitation of the Proletariat: The bourgeoisie exploits the proletariat through the wage-labor system, where workers are reduced to mere commodities and appendages of machines, with their work becoming increasingly monotonous and repulsive.

• Proletarian Struggle: The proletariat initially engages in scattered, individual struggles against the bourgeoisie, but gradually develops into a more organized, class-conscious, and politically active movement.

• Contradictions of Capitalism: The productive forces developed by the bourgeoisie have become too powerful for the existing capitalist relations of production, leading to periodic crises of overproduction and the destruction of productive forces.

• Inevitability of Proletarian Revolution: The proletariat, as the truly revolutionary class, is destined to overthrow the bourgeoisie and establish a new, classless social order.

II. PROLETARIANS AND COMMUNISTS

Here are the key takeaways from the chapter:

• Communists are part of the proletarian movement, not a separate party: The Communists do not form a separate party opposed to other working-class parties. They have no interests separate from those of the proletariat as a whole, and do not set up any sectarian principles of their own.

• Communists represent the interests of the proletarian movement as a whole: The Communists are distinguished from other working-class parties in that they point out and bring to the front the common interests of the entire proletariat, independently of nationality. They represent the interests of the movement as a whole in the various stages of the struggle of the working class against the bourgeoisie.

• Communists have a clear understanding of the proletarian movement: The Communists have a theoretical advantage over the great mass of the proletariat in that they clearly understand the line of march, the conditions, and the ultimate general results of the proletarian movement.

• Communists aim to form the proletariat into a ruling class: The immediate aim of the Communists is the same as that of all other proletarian parties: the formation of the proletariat into a class, the overthrow of the bourgeois supremacy, and the conquest of political power by the proletariat.

• Communism abolishes bourgeois property, not personal property: The distinguishing feature of Communism is not the abolition of property generally, but the abolition of bourgeois property, which is the final and most complete expression of the system of producing and appropriating products based on class antagonisms and the exploitation of the many by the few.

• Communism does not abolish personal appropriation of the products of labor: Communism does not intend to abolish the personal appropriation of the products of labor, which is necessary for the maintenance and reproduction of human life. It aims to abolish the miserable character of this appropriation, under which the laborer lives merely to increase capital.

• Communism abolishes the bourgeois notion of "free" selling and buying: The bourgeois notion of "free" selling and buying, and other "brave words" about freedom, have no meaning when opposed to the Communistic abolition of buying and selling, of the bourgeois conditions of production, and of the bourgeoisie itself.

• Communism does not abolish the family, but transforms it: The bourgeois family, based on capital and private gain, will vanish as a matter of course when its complement, the proletarian family, vanishes. Communism seeks to rescue education from the influence of the ruling class, not to abolish the family.

• Communism does not abolish countries and nationality, but transforms them: The working men have no country. Communism will cause national differences and antagonisms between peoples to vanish faster, as the exploitation of one nation by another is put to an end.

• Communism will revolutionize the mode of production through gradual, despotic inroads on the rights of property: In the beginning, the proletariat will use its political supremacy to centralize all instruments of production in the hands of the state, through measures that may appear economically insufficient and untenable, but which will necessitate further inroads upon the old social order.

III. SOCIALIST AND COMMUNIST LITERATURE

Here are the key takeaways from the chapter:

• Feudal Socialism: The aristocracy in France and England wrote pamphlets against modern bourgeois society, but their criticisms were a mix of lamentation, lampoon, and reactionary prophecies. They tried to rally the people by waving the proletarian alms-bag, but the people saw through their feudal agenda.

• Petty-Bourgeois Socialism: This form of socialism arose from writers who sided with the proletariat against the bourgeoisie, but used the standards of the peasant and petty bourgeois classes. It provided a detailed critique of the contradictions in modern production, but its positive aims were either to restore the old means of production and exchange, or to constrain the modern means within the old property relations.

• German or "True" Socialism: This was the German appropriation of the French socialist and communist literature, where the German literati translated the French ideas into their own philosophical language, removing the practical significance and class struggle elements. It became a weapon for the German government to fight the bourgeoisie, and represented the interests of the German petty-bourgeois Philistines.

• Conservative or Bourgeois Socialism: This form of socialism aims to redress social grievances in order to secure the continued existence of bourgeois society. It includes economists, philanthropists, and reformers who want the advantages of modern social conditions without the struggles and dangers. It seeks administrative reforms that do not affect the capital-labor relations.

• Critical-Utopian Socialism and Communism: These are the socialist and communist systems of thinkers like Saint-Simon, Fourier, and Owen, which arose in the early, undeveloped period of the proletariat-bourgeoisie struggle. They saw the class antagonisms and decomposing elements of society, but the proletariat was still in its infancy, so they sought to create fantastic conditions for proletarian emancipation through personal inventive action, rather than through historical action and class organization. As the modern class struggle developed, their fantastic standing apart from the contest lost practical value.

IV. POSITION OF THE COMMUNISTS IN RELATION TO THE VARIOUS EXISTING OPPOSITION PARTIES

• Communists' Relationship with Existing Working-Class Parties: The Communists fight for the immediate interests of the working class, while also representing and taking care of the future of the movement. They form alliances with various opposition parties, such as the Social-Democrats in France, the Radicals in Switzerland, and the party advocating for agrarian revolution in Poland, while maintaining a critical stance and instilling the working class with the recognition of the antagonism between the bourgeoisie and the proletariat.

• Communists' Approach in Germany: The Communists focus their attention on Germany because the country is on the eve of a bourgeois revolution that will be more advanced than previous revolutions in Europe, and this bourgeois revolution will be followed by an immediate proletarian revolution.

• Communists' Support for Revolutionary Movements: The Communists support every revolutionary movement against the existing social and political order, bringing the property question to the forefront as the leading issue in each movement.

• Communists' Openness about their Views and Aims: The Communists do not conceal their views and aims, openly declaring that their ends can only be attained by the forcible overthrow of all existing social conditions. They call upon the proletarians of all countries to unite.

I. THE ACCUMULATION OF CAPITAL

Here are the key takeaways from the chapter:

• Continuous Reproduction: A society must constantly reconvert a part of its products into means of production in order to continually produce and maintain its wealth at a given level.

• Capitalist Surplus-Value: In a capitalist society, all means of production serve as capital, as they enable the capitalist to reap surplus-value by employing wage-labor. The capitalist aims to reap surplus-value continuously, not just once.

• Wages as Deferred Payment: The labourer is not paid until after they have expended their labor power and realized its value and surplus-value in commodities. Wages are a portion of the product that the labourer continuously reproduces.

• Capitalist Consumption of Surplus-Value: If the capitalist were to completely consume the surplus-value every year, it would result in simple reproduction. However, the capitalist typically consumes only a portion, and reinvests the rest, leading to the accumulation of capital.

• Conversion of Capital into Capitalized Surplus-Value: Over time, the continuous process of production and reproduction converts every capital into capitalized surplus-value, even if the capital was originally acquired through the capitalist's own labor.

• Perpetual Reproduction of the Proletariat: The continuous process of production and reproduction perpetually reproduces the conditions for capitalist production, including the proletariat lacking means of production and subsistence.

• Productive and Individual Consumption: The labourer's productive consumption, where they consume means of production to create products of higher value, is distinct from their individual consumption of means of subsistence.

• Capitalist Appropriation of Labourer's Consumption: The capitalist views the labourer's individual consumption beyond what is necessary for their reproduction as "unproductive consumption," and seeks to reduce it as much as possible.

• Capitalist Ownership of Laborer's Skill: The capitalist considers the labourers' skill, which is transmitted and accumulated across generations, as part of the capital that belongs to them by right.

• Accumulation of Capital from Surplus-Value: Surplus-value is converted into additional capital through a process of accumulation, where the capitalist reinvests a portion of the surplus-value to expand production.

• Capitalist Property as Appropriation of Unpaid Labor: The ownership of capital, which is the result of the accumulation of surplus-value, is ultimately the ownership of the unpaid labor of others, rather than the capitalist's own labor.

• Capitalist Development as Means to Higher Society: The historical justification of the capitalist is their role in forcing the development of the productive powers of society, which lays the material foundation for a higher form of society with the free development of every individual.

II. INFLUENCE OF THE ACCUMULATION OF CAPITAL ON THE WORKING CLASS.-THE INDUSTRIAL RESERVE-ARMY.-THE THEORY OF THE GROWING IMPOVERISHMENT OF THE MASSES

Here are the key takeaways from the chapter:

• Accumulation of Capital and Demand for Labour: As capital accumulates, the demand for labour increases, leading to a rise in wages. However, this rise in wages is limited, as the capitalist mode of production requires a surplus population of unemployed or underemployed workers to maintain profitability.

• Changing Composition of Capital: As capital accumulates, the ratio of constant capital (machinery, raw materials) to variable capital (labour) increases. This means that a smaller proportion of the capital is used to employ workers, leading to a relative decrease in the demand for labour.

• Industrial Reserve Army: The relative surplus population, or "industrial reserve army," is a necessary product of capitalist accumulation. This reserve army of unemployed or underemployed workers serves as a source of cheap labour that can be drawn upon as needed, allowing capitalists to maintain profitability.

• Centralization of Capital: The process of centralization, where larger capitalists absorb smaller ones, accelerates the accumulation of capital and the development of the productive forces. This further reduces the demand for labour relative to the growth of capital.

• Pauperization of the Working Class: The development of the capitalist mode of production leads to the impoverishment and degradation of the working class. As capital accumulates, the conditions of the working class worsen, with increasing unemployment, overwork, and pauperization.

• Inverse Relationship between Productivity and Labour Demand: The higher the productivity of labour, the greater the pressure on workers, as a smaller number of workers can produce more. This makes the workers' conditions more precarious, as their employment becomes more dependent on the self-expansion of capital.

• Capitalist "Law of Population": The capitalist mode of production has its own "law of population," where the relative surplus population is constantly produced and absorbed by the dynamics of capital accumulation. This is in contrast to the "natural" laws of population that apply to plants and animals.

III. THE SO-CALLED PRIMITIVE ACCUMULATION

Here are the key takeaways from the chapter:

• Primitive Accumulation: The historical process that created the conditions for capitalist production by separating the producers from their means of production. This involved the forcible expropriation of the agricultural population from the land, the destruction of the feudal system, and the creation of a class of "free" wage laborers.

• Enclosure of the Commons: The seizure of communal lands by landlords, which drove peasants off the land and into the cities, providing a pool of cheap labor for the emerging industries.

• Dissolution of the Feudal System: The breakdown of the feudal system, which had tied peasants to the land, allowed for the development of capitalist agriculture and the creation of a mobile workforce.

• Suppression of the Monasteries: The Reformation and the suppression of the monasteries in England led to the confiscation of church lands, which were then sold off or given to the nobility, further concentrating land ownership.

• Legislation against Vagrancy: The dispossessed peasants who were driven off the land were often criminalized as "vagrants" and subjected to harsh legislation, including whipping, branding, and execution.

• Emergence of the Capitalist Farmer: The expropriation of the peasantry allowed for the rise of the capitalist farmer, who employed wage laborers and produced for the market rather than for subsistence.

• Destruction of Domestic Industry: The separation of agriculture and industry, driven by the enclosure of the commons and the rise of capitalist production, led to the destruction of rural domestic industries, creating a larger market for manufactured goods.

• Colonialism and the Slave Trade: The colonial system, the slave trade, and the exploitation of the colonies provided a crucial source of wealth and resources for the development of capitalism in Europe.

• Public Debt and Taxation: The growth of public debt and the development of new systems of taxation were important mechanisms for the primitive accumulation of capital, as they allowed governments to finance their activities and expropriate resources from the population.

• Protectionism and Commercial Wars: Protectionist policies and commercial wars between European powers were used to promote the development of domestic industries and the accumulation of capital.

IV. WHAT CAPITALIST ACCUMULATION LEADS TO

• Primitive Accumulation of Capital: The historical genesis of capital accumulation involves the expropriation of the immediate producers, i.e., the dissolution of private property based on the labor of the owner. This process transforms the peasants and artisans, who were the private owners of their means of production, into wage-laborers.

• Petty Mode of Production: The petty mode of production, where the laborer is the private owner of their means of labor, is the foundation of small-scale industry. This mode of production is compatible with only a limited, primitive social production and is incompatible with the development of social productive powers.

• Transformation to Capitalist Production: The annihilation of the petty mode of production and the transformation of the scattered, individualized means of production into socially concentrated ones is the prelude to the history of capital. This process involves the expropriation of the mass of people from the land, means of subsistence, and means of labor.

• Capitalist Private Property: Capitalist private property, which rests on the exploitation of the nominally free labor of others (i.e., wage-labor), replaces the self-earned private property based on the fusion of the isolated, independent laborer with the conditions of their labor.

• Centralization of Capital: As the capitalist mode of production becomes established, the further socialization of labor and transformation of the means of production take a new form. This involves the centralization of capital, where one capitalist always kills many, leading to the concentration of capital in fewer hands.

• Contradictions of Capitalist Production: The centralization of capital and the cooperative form of the labor process, the application of science, and the entanglement of all peoples in the world market lead to the growth of misery, oppression, and exploitation. However, this also leads to the revolt of the growing, disciplined, and organized working class, which ultimately results in the negation of capitalist private property.

• Transition to Socialized Property: The transformation from capitalist private property to socialized property based on the cooperative and common possession of the land and means of production produced by labor is a less protracted, violent, and difficult process than the initial transformation from scattered private property to capitalist private property.

V. MONEY

Here are the key takeaways from the chapter:

• Commodities require a medium of exchange: Commodities cannot exchange themselves directly, so they require a medium of exchange that is generally recognized by all commodity owners. This medium of exchange is money.

• Money as a universal equivalent: Money serves as a universal equivalent, allowing commodities to express their values in relation to one another. Gold and silver are well-suited to serve as money due to their uniform qualities and divisibility.

• Money as a measure of value: Money serves as a measure of value, allowing the values of different commodities to be expressed in a common denomination. The value of money itself is determined by the labor-time required for its production.

• Circulation of commodities: The circulation of commodities involves the exchange of one commodity for money, and then the exchange of that money for another commodity (C-M-C). This circulation breaks down the local and personal bounds of direct barter.

• Velocity of money circulation: The quantity of money required for circulation is determined by the sum of commodity prices divided by the velocity of money circulation. Increased velocity of circulation reduces the amount of money needed.

• Metallic money and token money: Metallic money (coins) can wear down over time, leading to the possibility of replacing them with token money (e.g. paper money) that is not based on intrinsic value.

• Hoarding: Hoarding of money arises from the need to hold onto exchange value in the form of money, rather than immediately exchanging it for other commodities. Hoarding serves as a conduit for the supply and withdrawal of money from circulation.

• Money as means of payment: With the development of credit, money increasingly functions as a means of payment, where the sale of a commodity is separated in time from the realization of its price.

• Credit money: Credit-money, such as bills of exchange, arises from the function of money as a means of payment, allowing debts to be transferred between parties.

VI. THE CIRCULAR COURSE OF CAPITAL AND THE TIME REQUISITE FOR ITS CIRCULATION

Here are the key takeaways from the chapter:

• The Circular Course of Capital: Money capital goes through three phases in its circular course: 1) M-C (money is used to purchase commodities), 2) the production process, and 3) C'-M' (the commodities are sold for more money than was originally invested).

• Necessary Conditions for Production: For the production process to commence, the capitalist must purchase the necessary means of production (Mp) and labor power (L). The amount of Mp and L must be proportional to each other to ensure efficient production.

• The Capital-Labor Relationship: The capital-labor relationship is already established in the M-L phase, as the worker does not control the means of production and must sell their labor power to the capitalist.

• Selling the Commodities: After production, the capitalist must sell the commodities (C') in order to convert the capital-value and surplus-value back into money form (M'). The entire commodity output must be sold.

• Necessity of Circulation: The circular course of capital requires the general circulation of commodities, as capital needs to assume the commodity form to function in production, and then needs to cast off this form to resume the money form.

• Storing Up Money: The capitalist must store up money (treasure) to account for the time lag between purchasing labor power (which must be paid weekly) and purchasing means of production (which can have longer payment periods). This money storage is necessary for the regular functioning of capital.

• Accumulation of Surplus-Value: Surplus-value must be accumulated until it reaches a sufficient size to expand production. This surplus-value is stored as potential money capital until it can be invested.

• Capitalist Demand vs. Supply: The capitalist's demand for commodities (for means of production and labor) is always less than their supply of commodities, as the capitalist aims to produce a surplus-value greater than their initial investment.

• Time of Production vs. Labor Time: The time of production can exceed the actual labor time due to necessary interruptions in the production process. This non-labor time does not create value or surplus-value.

• Time of Circulation: The longer the time of circulation (selling the commodities), the less surplus-value is produced proportionally. Reducing the time of circulation is a key capitalist aim.

VII. COMMERCIAL ACTIVITY

• Purchase and Sale: The process of converting the value of commodities from a commodity form into a money form, and vice versa, does not create any additional value. This labor of purchase and sale is a necessary function, but it does not produce value. If the owners of commodities are not capitalists but independent producers, the time spent on purchase and sale must be deducted from their productive labor time.

• Bookkeeping: Bookkeeping is a necessary function that becomes more important as the scale of production increases. While it does not create value, it helps control and epitomize the production process. The costs of bookkeeping diminish with the increased concentration of production.

• Cost of Money: The use of money as a medium of circulation incurs social costs, as a portion of social wealth is assigned to this unproductive form. The wear and tear of money also necessitates its continuous replacement, which is a significant cost for highly developed capitalist nations.

• Costs of Storage: The costs of storing commodities to ensure continuous production and reproduction can, to some extent, be incorporated into the value of the commodities. These costs maintain or increase the use-value of the commodities, but do not increase their exchange value.

• Transport Costs: The transport of commodities completes the production process by making them available for consumption. The capital invested in transport adds value to the commodities, both by transferring value from the means of transport and by the addition of value through the labor required for transport.

• Unproductive Labor: The labor involved in purchase and sale, bookkeeping, and the use of money as a medium of circulation does not create value. It is necessary for the circulation of commodities, but it is unproductive labor that must be deducted from the surplus-value or surplus-product.

VIII. COMMERCIAL CAPITAL AND THE WORK OF THE COMMERCIAL EMPLOY’S

Here are the key takeaways from the chapter:

• Role of Commercial Capital: Commercial capital takes over the functions of buying and selling commodities from the industrial capitalist, allowing the latter to focus on the production process. This division of labor reduces the overall capital required for these commercial activities.

• Rotation of Commercial Capital: The same commercial capital can facilitate the rotation of capital across multiple manufacturers and industries, replacing the individual money reserves that each manufacturer would otherwise need to maintain.

• Commercial Profit: Commercial capital does not create surplus value, but rather obtains a share of the surplus value created by the productive capital. This is achieved by the merchant selling the commodities at a higher price than they were purchased for, without actually increasing the value of the commodities.

• Formation of the General Rate of Profit: Commercial capital participates in the formation of the general rate of profit in proportion to its size relative to the total capital. The average profit rate includes the share accruing to commercial capital.

• Commercial Employees: Commercial employees are wage laborers whose work transforms values but does not create new value. Their wages are determined by the value of their labor power, not the product of their labor. Their unpaid labor allows the merchant to appropriate a share of the surplus value.

• Inclusion of Commercial Wages in Selling Price: The variable capital used by the merchant to pay his employees' wages must be recouped through the selling price of the commodities, without this constituting an arbitrary increase in price above the value of the commodities.

• Relationship between Productive and Commercial Capital: As productive capital becomes more centralized, commercial capital becomes more decentralized. This can lead to an imbalance that reduces the advantages of the division of labor between the two forms of capital.

IX. THE INFLUENCE OF COMMERCIAL CAPITAL ON PRICES

• Influence of Commercial Capital on Prices: The chapter explores how the influence of commercial capital, i.e., the capital invested in the buying and selling of commodities, affects the prices of those commodities.

• Relationship between Price of Production and Commercial Profit: The price of production of a commodity does not affect the rate of profit, but it does play a decisive role in determining the size of the commercial profit added by the tradesman to the selling price.

• Limits on Tradesman's Selling Price: The tradesman's selling price is limited by two factors: the price of production of the commodity (which the tradesman does not control) and the average rate of profit (which the tradesman also does not control).

• Difference between Productive and Commercial Capital: Productive capital's profitability is determined by the number of rotations it undergoes, while commercial capital's profitability is determined by the general rate of profit and the relative size of the commercial capital.

• Effect of Rotation on Commercial Profit: The more frequently commercial capital rotates, the smaller the addition made to the selling price of the commodities by the tradesman's profit. This is because the tradesman's profit is determined by the amount of money capital advanced, not the amount of commodities capital in rotation.

• Appearance of Arbitrary Price Determination: From the perspective of commercial capital, the rotation itself appears to determine prices, giving the impression of an arbitrary price determination process, independent of the underlying production process.

• Misconceptions about Competition: The notions of tradesmen, stock exchange speculators, and bankers about the capitalist system of production are necessarily quite wrong, while the manufacturer's view is falsified by the nature of the circulation process and the equalization of the general rate of profit.

• Limits of Competition: Competition can only reduce the general rate of profit to a single level, but it cannot determine that level itself. The limits of value and surplus-value are necessary to understand how competition transforms values into prices of production and trading prices.

• Surplus Profit and Ground Rent: If an individual tradesman can accelerate the rotation of their capital compared to the average in their branch, they can make surplus profit, which can be partially converted into ground rent if the conditions enabling the faster rotation are themselves purchasable.

X. THE HISTORICAL DEVELOPMENT OF COMMERCIAL CAPITAL

Here are the key takeaways from the chapter:

• Commercial Capital is Distinct from Productive Capital: Commercial capital is not a form of productive capital like mining, agriculture, manufacturing, etc. It is a differentiated part of productive capital that becomes independent and performs the functions necessary to transform commodities into money and vice versa.

• Historical Development of Commercial Capital: Commercial capital is historically the oldest free form of capital, existing before the capitalist system of production. It can exist in various forms of social organization, as long as there is commodity exchange.

• Role of Commercial Capital in Production: The development of commercial capital impresses a character of exchange-value on production, encouraging the production of commodities beyond the producer's own needs. However, commercial capital alone is insufficient to bring about a transition in the mode of production.

• Decline of Independent Commercial Capital: Within the capitalist system, commercial capital loses its former independent existence and becomes a specific form of capital investment, with its rate of profit equalized to the average rate. It now functions as an agent of productive capital.

• Commercial Profit and Exploitation: In the early stages of commercial capital's development, its profits often derived from overreaching and fraud, exploiting the lack of civilization in producing communities. This "system of plunder" was common among ancient and medieval trading peoples.

• Relationship between Trade and Production: Trade exercises a dissolving influence on existing modes of production, but the extent and outcome of this process depends on the nature of the old system. The transition from feudalism to capitalism was not solely driven by the expansion of trade, but also required the development of the conditions for capitalist production.

• Modes of Transition to Capitalist Production: The transition can occur in three ways: 1) the merchant directly becomes an industrial producer, 2) the merchant uses small masters as intermediaries without altering their production system, or 3) the producer becomes a merchant producing wholesale for trade.

XI. INTEREST AND THE PROFIT DERIVED FROM INDUSTRIAL UNDERTAKINGS

Here are the key takeaways from the chapter:

• Money as Capital: Money can be employed as capital, transforming it from a given value into an increasing one. This allows the capitalist to appropriate a definite quantity of unpaid labour from the labourers.

• Interest as Part of Profit: Interest is a special name for designating a part of the profit yielded by capital. The money capitalist sells the use-value of capital, which is the capacity to produce a surplus-value, to the industrial capitalist.

• Determination of Interest Rate: The interest rate is not determined by a "natural" rate, but by the demand and supply of loanable capital on the money market. It is a part of the average profit, and its fluctuations are regulated by competition.

• Distinction between Interest and Profit: The division of profit into interest and "undertaker's profit" (or net profit) is a qualitative differentiation, not just a quantitative one. This distinction arises from the capitalist's perspective, where interest appears as the fruit of capital itself, while the undertaker's profit appears as the fruit of the capitalist's own activity.

• Work of Superintendence: The work of superintendence and management is necessary in any production involving the collaboration of many workers. However, in the capitalist system, this work is seen as a justification for the capitalist's exploitation of the labourers, with the undertaker's profit appearing as the wages of this superintendence.

• Cooperative Factories and Joint-Stock Companies: The cooperative factories and joint-stock companies demonstrate that the capitalist is not an indispensable functionary in the production process, and that the undertaker's profit is independent of the wages of superintendence and administration.

XII. CREDIT AND BANKS

Here are the key takeaways from the chapter:

• Credit Reduces Costs of Circulation: Credit reduces the costs of circulation in three ways: (a) by reducing the need for money in many transactions, (b) by accelerating the circulation of money through technical methods and the acceleration of commodity turnover, and (c) by substituting paper money for gold.

• Credit Shortens the Reproduction Process: Credit shortens the various phases of the circulation process and the overall reproduction process. However, it also allows the processes of buying and selling to be separated, serving as a basis for speculation.

• Joint-Stock Companies and the Socialization of Capital: The development of joint-stock companies represents a step towards the socialization of capital. It allows for an immense extension of the scale of production, the separation of ownership and management, and the transformation of the capitalist into a mere "director" of other people's capital.

• Credit Gives Capitalists Control over the Capital and Labor of Others: Credit gives individual capitalists a degree of control over the capital and labor of others, beyond their own personal wealth. This undermines the notion that capital originates from individual saving.

• Cooperative Factories as a Positive Breach of Capitalist Production: The cooperative factories of the working class represent a positive breach of the capitalist mode of production, as they suppress the antagonism between capital and labor, albeit within the limits of the existing system.

• Bank Capital and Fictitious Capital: Bank capital consists of cash (gold or notes) and various financial instruments, many of which represent "fictitious capital" - claims on future production or income streams, rather than real capital. This creates an illusion of capital being "self-valorizing".

• Credit System Socializes Capital Distribution: The credit system takes the distribution of capital out of the hands of private capitalists and usurers, transforming it into a social function. However, it also serves as a powerful lever for pushing the capitalist system beyond its limits and promoting crises and fraud.

• Credit's Role in the Transition to Social Production: Credit can serve as a powerful lever during the transition from capitalist production to production by social labor, but only as part of a broader set of radical transformations in the mode of production.

XIII. CRISES

• Simple Reproduction: The chapter assumes a scenario of simple reproduction, where the process of production is carried on at the same scale without expansion, and products are exchanged according to their value.

• Composition of the Annual Product: The annual product of society can be divided into two main parts: (I) Means of production (mp) and (II) Means of consumption (mc). Each of these divisions can be further broken down into variable capital (v) and constant capital (c).

• Replacement of Constant Capital: The value of the constant capital (c) consumed in the production process must be replaced out of the annual product. This is accomplished through the exchange of the mp produced in division I for the mc produced in division II.

• Exchange between the Two Divisions: The labourers and capitalists in division I exchange their wages (v) and surplus-value (s) for the mc produced in division II. The capitalists in division II then use this money to purchase the mp produced in division I, thereby replacing their constant capital (c).

• Circulation of Money: The circulation of money facilitates the exchange between the two divisions, with the capitalists advancing money to pay wages and then recouping this money through the sale of their products.

• Necessary Means of Consumption and Luxuries: Division II can be further divided into (A) necessary means of consumption, which are consumed by both workers and capitalists, and (B) luxuries, which are consumed exclusively by the capitalists.

• Proportionality between the Two Divisions: For simple reproduction to be maintained, the value of the newly created value (v + s) in division I must be equal to the constant capital (c) in division II, and the wages paid for the production of luxuries must be smaller than the surplus-value of the capitalists producing necessary means of consumption.

Discussion

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